What is the treatment of intercompany commission fee expenses in The Standardx's 'Distribution' segment Adjusted EBITDA?

According to The Standardx's 2025 Franchise Disclosure Document, the Distribution segment's Adjusted EBITDA includes intercompany commission fee expenses paid to the management and franchising segment. These intercompany commission fee expenses are then eliminated in consolidation. The Distribution segment generates earnings from distribution and destination management services offered through ALG Vacations and the boutique and luxury global travel platform offered through Mr & Mrs Smith.

For a prospective franchisee, this means that the financial performance of the Distribution segment, as reflected in its Adjusted EBITDA, initially includes commission fees paid to The Standardx's management and franchising segment. However, to avoid double-counting and to present a clearer picture of the overall financial health of The Standardx, these intercompany fees are removed when the company consolidates its financial statements.

This accounting practice is typical for franchise systems with multiple segments, ensuring that internal transactions do not distort the reported profitability of individual segments or the entire organization. Franchisees should focus on the consolidated figures to understand the true financial performance of The Standardx, while also recognizing the role of intercompany transactions in segment-level reporting.