What was the total value of Management Recruiters' indefinite-lived intangible assets as of December 31, 2021?
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 total value of their indefinite-lived intangible assets as of December 31, 2021, was $2,226,149. This figure represents the net value of their domain name, as there was no accumulated amortization deducted from the gross value.
Intangible assets are recorded at fair value, and Management Recruiters tests these assets for impairment annually or when circumstances suggest the carrying value may not be recoverable. This process involves management's judgment in determining key assumptions such as projected revenue, royalty rates, and discount rates. However, in both 2021 and 2022, there were no intangible asset impairment charges.
For a Management Recruiters franchisee, understanding the company's intangible assets can provide insight into the stability and value of the brand. Indefinite-lived assets like domain names are not amortized, reflecting their ongoing value to the company. The absence of impairment charges in recent years suggests that Management Recruiters' management believes these assets retain their value. A prospective franchisee may want to inquire about the specific factors considered in assessing the value of these intangible assets and how they contribute to the overall business strategy.