What was the gross value of Management Recruiters' trade name as of December 31, 2022?
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 | $ | - | $ | 2,226 | $ 2,226 | $ - | $ 2,226 |
| Trade name | Indefinite | 3,580 | - | $ | 3,580 | - | - | - | ||
| Total intangible assets | $ | 36,856 | $ | (3,022) | $ | 33,834 | $ 26,485 | $ (1,409) $ | 25,076 |
The following table provides the estimated future amortizati
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, the gross value of the trade name as of December 31, 2022, was $3,580. This valuation is categorized as an indefinite-lived intangible asset, meaning it is not subject to amortization. Accumulated amortization for the trade name was $0 as of this date, resulting in a net value of $3,580.
For a prospective Management Recruiters franchisee, understanding the valuation of the trade name is important as it reflects the brand's perceived value and recognition in the market. A strong trade name can contribute to easier client acquisition and franchisee success. The fact that the trade name is considered an indefinite-lived asset suggests that Management Recruiters believes the brand will maintain its value over the long term.
It's also worth noting that the valuation of intangible assets, including the trade name, is considered a critical audit matter due to the significant estimates and assumptions involved. This means that the valuation is subject to scrutiny and may be adjusted based on market conditions or other factors. Franchisees should be aware of these potential fluctuations and how they might impact the overall financial health of the company.
While the FDD provides the gross value, it does not detail the specific methodology used to determine this value. A prospective franchisee may want to inquire about the factors considered in the valuation, such as brand recognition, market share, and future growth potential, to gain a more comprehensive understanding of the trade name's worth.