How often does The Standardx evaluate the likelihood of funding under performance and other guarantees?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
- Performance and other guarantees—On a quarterly basis, we evaluate the likelihood of funding under a guarantee. To the extent we determine an obligation to fund is both probable and estimable based on performance during the period or facts and circumstances of the underlying indemnification liability, we record a separate contingent liability and recognize expense in other income (loss), net on our consolidated statements of income.
- Debt repayment guarantees—At guarantee inception and on a quarterly basis, we evaluate the risk of funding under a guarantee. We assess credit risk based on the current and forecasted performance of the underlying property, whether the property owner is current on debt service, the historical performance of the underlying property, and the current market, and we record a separate liability and recognize expense in other income (loss), net or equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income based on the nature of the guarantee.
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the company evaluates the likelihood of funding under performance and other guarantees on a quarterly basis. If The Standardx determines that an obligation to fund is probable and can be estimated based on performance or circumstances of the underlying indemnification liability, they record a contingent liability and recognize the expense in their consolidated statements of income.
In addition to performance and other guarantees, The Standardx also evaluates debt repayment guarantees. At the start of the guarantee and then quarterly, the company assesses the risk of funding under the guarantee. This assessment involves looking at the current and expected performance of the underlying property, whether the property owner is current on their debt service, the historical performance of the property, and the current market conditions.
Based on this risk assessment, The Standardx records a separate liability and recognizes the expense in their consolidated statements of income. This detailed quarterly evaluation process ensures that The Standardx is continuously monitoring its financial obligations related to guarantees and can adjust its financial statements accordingly.