What was the total value of Management Recruiters' intangible assets 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, |
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 intangible assets as of December 31, 2022, was $33,834. This figure is calculated by taking the gross value of intangible assets ($36,856) and subtracting accumulated amortization ($3,022). The intangible assets are broken down into finite-lived assets like franchise agreements, customer lists, and purchased/internally developed software, as well as indefinite-lived assets such as the domain name and trade name.
For a prospective Management Recruiters franchisee, understanding the composition and valuation of these intangible assets is crucial. Finite-lived assets are amortized over their estimated useful lives (ranging from 5 to 15 years), reflecting the gradual decline in their value. Indefinite-lived assets, like the domain name and trade name, are not amortized but are tested for impairment annually. The franchise agreements had a gross value of $25,556 with accumulated amortization of $2,413 resulting in a net value of $23,144.
The value of intangible assets can significantly impact the overall financial health and attractiveness of Management Recruiters. Franchisees should pay attention to how these assets are managed and maintained, as any impairment could affect the franchisor's financial stability. Additionally, understanding the amortization schedules for finite-lived assets can provide insights into the long-term value and sustainability of these assets.
It's also important to note that Management Recruiters' management uses considerable judgment to determine key assumptions such as projected revenue, royalty rates, and discount rates when assessing intangible assets. These assumptions can influence the valuation and should be carefully considered by potential franchisees when evaluating the franchise opportunity.