What was the net value of Management Recruiters' internally developed software as of December 31, 2020?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
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Note 10 – Intangible Assets
The following table reflects our intangible assets:
| December 31, 2021 | December 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|
| Estimated useful | Accumulated | Accumulated | |||||
| life (in years) | Gross | amortization | Net | Gross | amortization | Net | |
| Finite-lived intangible assets: | |||||||
| Franchise agreements | 15 | $ 19,916,453 | $ (1,068,864) $ 18,847,589 | $ - | $ - | $ - | |
| Customer lists | 10 | 2,088,800 | (239,104) | 1,849,696 | - | - | - |
| Purchased software | 7 | 3,200,089 | (114,289) | 3,085,800 | - | - | - |
| Internally developed software | 7 | 916,304 | - | 916,304 | 342,697 | - | 342,697 |
| Total finite-lived intangible | |||||||
| assets | $ 26,121,646 | $ (1,422,257) $ 24,699,389 | $ 342,697 | $ - | $ 342,697 | ||
| Indefinite-lived intangible assets: | |||||||
| Domain name | Indefinite | $ 2,226,149 | $ - | $ 2,226,1 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, the net value of their internally developed software as of December 31, 2020, was $342,697. This figure represents the gross value of the software ($342,697) less any accumulated amortization.
For a prospective franchisee, this indicates the value Management Recruiters places on its proprietary software. It is important to note that the estimated useful life of internally developed software was seven years as of December 31, 2021, but decreased to five years as of December 31, 2022, which could impact future amortization expenses.
Intangible assets like software are subject to impairment testing, as described in the FDD. If the carrying value exceeds the fair value, Management Recruiters would recognize an impairment charge. Franchisees should inquire about the specific software used in their operations, how it is maintained and updated, and whether there are any planned changes or upgrades that could affect its value or functionality.