What was the net value of Management Recruiters' internally developed software as of December 31, 2021?
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 | $ |
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, 2021, was $916. This figure represents the gross value of the software ($916) less any accumulated amortization (which was zero at that time). The estimated useful life of this software is 5 years.
For a prospective franchisee, this indicates the value Management Recruiters places on its proprietary software. It also shows how the company depreciates this asset over time. Since the amortization was zero as of December 31, 2021, the software was relatively new at that point.
It's important to note that intangible assets like software are subject to impairment testing. If the carrying value exceeds the fair value, Management Recruiters would recognize an impairment charge. However, the FDD states that there were no intangible asset impairment charges in 2021 or 2020. This suggests that Management Recruiters believed the software's value was sustainable during those years.
This information is relevant for franchisees because the software is one of the resources Management Recruiters provides. Understanding its valuation and amortization schedule can offer insights into the company's investment in technology and its potential impact on the franchisee's operations.