What was the allowance for losses on notes receivable for Management Recruiters as of December 31, 2022?

According to Management Recruiters' 2024 Franchise Disclosure Document, the allowance for losses on notes receivable was approximately $260,000 as of December 31, 2022. These notes receivable primarily consist of amounts due to Management Recruiters related to the financing of franchised locations.

Management Recruiters reports these notes receivable at the principal balance outstanding, less an allowance for losses. The notes generally bear interest at a fixed rate, and interest income is calculated by applying the effective rate to the outstanding principal balance. These notes are typically secured by the assets of each location and the ownership interests in the franchise.

Management Recruiters monitors the financial condition of their debtors and records provisions for estimated losses when they believe it is probable that debtors will be unable to make required payments. They evaluate potential impairment of notes receivable based on various analyses, including estimated discounted future cash flows, at least annually and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When a note receivable is deemed impaired, Management Recruiters discontinues accruing interest and only recognizes interest income when payment is received.