How are The Standardx's fair values of financing receivables classified in the fair value hierarchy?

According to The Standardx's 2025 Franchise Disclosure Document, the fair values of financing receivables are classified as Level Three in the fair value hierarchy. The company estimated these fair values to be approximately $440 million as of December 31, 2024, and $133 million as of December 31, 2023.

Level Three classification indicates that these fair values are based on inputs that cannot be corroborated by observable market data and reflect significant management judgment. The Standardx estimates these values using discounted future cash flow models, with the principal inputs being projected future cash flows and the discount rate, generally the effective interest rate of the loan.

For a prospective franchisee, this means that the valuation of financing receivables involves a degree of subjectivity and is heavily reliant on The Standardx's internal projections and assumptions. While this might not directly impact the day-to-day operations of a typical franchise, it is relevant for understanding the overall financial health and valuation practices of The Standardx. It also highlights the importance of understanding the assumptions and models used by The Standardx in their financial reporting.