What is the estimated useful life for Management Recruiters' customer lists?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
ars ended December 31, 2022 and December 31, 2021, respectively.
Note 10 – Intangible Assets
The following table reflects our intangible assets (in thousands except useful life):
| December 31, 2022 | December 31, 2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Estimated useful life (in years) | Gross | Accumulated amortization Net | Gross | Accumulated amortization | Net | |||||
| Finite-lived intangible assets: | ||||||||||
| Franchise agreements | 15 | $ | 25,556 | $ | (2,413) | $ | 23,144 | $ 19,916 | $ (1,068) $ | 18,848 |
| Customer lists | 10 | - | - | - | 227 | (227) | - | |||
| Purchased software | 7 | 3,200 | (571) | 2,629 | 3,200 | (114) | 3,086 | |||
| Internally developed software | 5 | 2,294 | (38) | 2,256 | 916 | - | 916 | |||
| Total finite-lived intangible assets | $ | 31,050 | $ | (3,022) | $ | 28,028 | $ 24,259 | $ (1,409) $ | 22,850 | |
| Indefinite-lived intangible assets: | ||||||||||
| Domain name | Indefinite | $ | 2,226 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, the estimated useful life for customer lists is 10 years. This means that Management Recruiters amortizes the value of its customer lists over a decade for accounting purposes. Amortization is a method of spreading the cost of an intangible asset over its useful life, reflecting the gradual decline in its value.
For a prospective Management Recruiters franchisee, understanding the useful life of assets like customer lists is important for assessing the long-term financial implications of the franchise. The customer lists are considered finite-lived intangible assets.
The FDD also provides the estimated useful life for other assets, such as franchise agreements (15 years), purchased software (7 years), and internally developed software (5 years). These figures are relevant for understanding how Management Recruiters manages and depreciates its assets, which can impact the overall financial health and stability of the company.