What is the estimated useful life in years for Management Recruiters' franchise agreements?
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 franchise agreements is 15 years. This means that Management Recruiters amortizes the value of its franchise agreements over a 15-year period for accounting purposes.
For a prospective franchisee, this 15-year timeframe is relevant in understanding how Management Recruiters accounts for these assets on its balance sheet. It also provides insight into the expected duration over which the franchisor anticipates benefiting from these agreements.
This accounting practice does not directly impact the franchisee's agreement term, but it reflects Management Recruiters' long-term view of its franchise relationships. Franchisees should refer to the franchise agreement itself for the actual term and renewal options.