HireQuest, Inc.

Previous wording

This Quarterly Report on Form 10-Q and other documents incorporated herein by reference include, and our officers and other representatives may sometimes make or provide, certain estimates and other forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act, including, among others, statements with respect to future revenue; franchise sales and system-wide sales; net income and Adjusted EBITDA (a Non-GAAP Financial Measure); operating results; dividends and shareholder returns; cost synergies of any mergers or acquisitions including those we have completed in 2023 and 2024; intended office openings or closings; expectations of the effect on our financial condition of claims and litigation; strategies for customer retention and growth; strategies for risk management; all other statements that are not purely historical and that may constitute statements of future expectations; and the impact of any global pandemic including COVID-19. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and similar references to future periods.

Current wording

This Quarterly Report on Form 10-Q and other documents incorporated herein by reference include, and our officers and other representatives may sometimes make or provide, certain estimates and other forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act, including, among others, statements with respect to future revenue; franchise sales and system-wide sales; net income and Adjusted EBITDA (a Non-GAAP Financial Measure); operating results; dividends and shareholder returns; statements regarding any proposed transaction; benefits and synergies of any proposed transaction and future opportunities, including statements regarding value, profitability or growth prospects; cost synergies of any mergers or acquisitions including those we have completed in 2023 and 2024; intended office openings or closings; expectations of the effect on our financial condition of claims and litigation; strategies for customer retention and growth; strategies for risk management; and all other statements that are not purely historical and that may constitute statements of future expectations. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and similar references to future periods.

Previous wording

While we believe these statements are accurate, forward-looking statements are not historical facts and are inherently uncertain. They are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. We cannot assure you that these expectations will occur, and our actual results may be significantly different. Therefore, you should not place undue reliance on these forward-looking statements. Important factors that may cause actual results to differ materially from those contemplated in any forward-looking statements made by us include the following: the level of demand and financial performance of the temporary staffing and permanent placement industry; the financial performance of our franchisees; our and our franchisees’ customers’ ability to navigate successfully the challenges posed by instability in the financial and capital markets and the overall economic environment including the impact of any potential recession; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses including, without limitation, successful integration following the acquisitions of Ready Temporary Staffing, TEC Staffing Services, MRI Network, Snelling Staffing, LINK, Recruit Media, Dental Power, Temporary Alternatives, Inc., and subsequent or smaller acquisitions; changes in customer demand; the extent to which we are successful in gaining new long-term relationships with customers or retaining existing ones: the level of service failures that could lead customers to use competitors’ services; workers' compensation expenses that fluctuate from period to period based on the mix of classifications, the level of payroll, recent claims resolution and cumulative experience; significant investigative or legal proceedings including, without limitation, those brought about by the existing regulatory environment or changes in the regulations governing the temporary staffing industry and those arising from the action or inaction of our franchisees and temporary employees; disruptions to our technology network including computer systems and software whether resulting from a cyber-attack or otherwise; natural events such as pandemics, severe weather, fires, floods, and earthquakes, or man-made or other disruptions of our operating systems or the economy including by war or political turmoil; the factors discussed in the “Risk Factors” section below and in our most recent Annual Report on Form 10-K; and the other factors discussed in this Quarterly Report and our Annual Report.

Current wording

While we believe these statements are accurate, forward-looking statements are not historical facts and are inherently uncertain. They are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. We cannot assure you that these expectations will occur, and our actual results may be significantly different. Therefore, you should not place undue reliance on these forward-looking statements. Important factors that may cause actual results to differ materially from those contemplated in any forward-looking statements made by us include the following: the level of demand and financial performance of the temporary staffing and permanent placement industry; the financial performance of our franchisees; our and our franchisees’ customers’ ability to navigate successfully the challenges posed by instability in the financial and capital markets and the overall economic environment including the impact of any potential recession; the possibility that any strategic target will not agree to consummate a transaction or that any such transaction is consummated on different terms than currently anticipated; the possibility that conditions to the completion of a proposed transaction, including the receipt of any required shareholder approvals and any required regulatory approvals, will not be met; the possibility that we may be unable to achieve expected synergies and operating efficiencies within an expected time frame or at all and to successfully integrate any acquired operations with ours; the possibility that such integration may be more difficult, time-consuming, or costly than expected, or that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, or suppliers) may be greater than expected following a proposed transaction or the public announcement of a proposed transaction; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses including, without limitation, successful integration following the acquisitions of Ready Temporary Staffing, TEC Staffing Services, MRI Network, Snelling Staffing, LINK, Recruit Media, Dental Power, Temporary Alternatives, Inc., and subsequent or smaller acquisitions; changes in customer demand; the extent to which we are successful in gaining new long-term relationships with customers or retaining existing ones: the level of service failures that could lead customers to use competitors’ services; workers' compensation expenses that fluctuate from period to period based on the mix of classifications, the level of payroll, recent claims resolution and cumulative experience; significant investigative or legal proceedings including, without limitation, those brought about by the existing regulatory environment or changes …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

As of March 31, 2025 we had 424 franchisee-owned offices and 1 company-owned office in 44 states, the District of Columbia, and 13 countries outside of the United States, and we licensed our trade names to 6 offices in California. In addition, on such date, there were 12 MRI locations that provided contract staffing services only. We provide employment for an estimated 80 thousand temporary employees annually working for thousands of clients in many industries including construction, healthcare, recycling, warehousing, logistics, auctioneering, manufacturing, hospitality, landscaping, retail, and dental.

Current wording

As of June 30, 2025 we had 413 franchisee-owned offices and 1 company-owned office in 43 states, the District of Columbia, and 13 countries outside of the United States, and we licensed our trade names to 6 offices in California. In addition, on such date, there were 12 MRI locations that provided contract staffing services only. We provide employment for an estimated 65 thousand temporary employees annually working for thousands of clients in many industries including construction, healthcare, recycling, warehousing, logistics, auctioneering, manufacturing, hospitality, landscaping, retail, and dental.

Previous wording

The following table displays our Consolidated Statements of Operations for the three-month periods ended March 31, 2025 and March 31, 2024. Percentages reflect the line item as a percentage of total revenue (in thousands, except percentages).

Current wording

The following table displays our Consolidated Statements of Operations for the three-month and six-month periods ended June 30, 2025 and June 30, 2024. Percentages reflect the line item as a percentage of total revenue (in thousands, except percentages).

Previous wording

Total revenue for the three months ended March 31, 2025 was approximately $7.5 million compared to $8.4 million for the three months ended March 31, 2024, a decrease of approximately 11.2%. For the quarter ended March 31, 2025, there was a $15.6 million or 11.7% decrease in underlying system-wide sales from $134.0 million for the three months ended March 31, 2024 to $118.4 million for the three months ended March 31, 2025. The decrease in system-wide sales was primarily driven by a decline at MRI of $8.9 million, HQ Direct of $2.8 million and Snelling/HQ of $2.9 million. Revenue as a percentage of system-wide sales was 6.3% for the three months ended March 31, 2025 compared to 6.3% for three months ended March 31, 2024.

Current wording

Total revenue for the three months ended June 30, 2025 was approximately $7.6 million compared to $8.7 million for the three months ended June 30, 2024, a decrease of approximately 12.0%. For the quarter ended June 30, 2025, there was a $20.3 million or 13.9% decrease in underlying system-wide sales from $146.1 million for the three months ended June 30, 2024 to $125.9 million for the three months ended June 30, 2025. The decrease in system-wide sales was primarily driven by a decline at MRI of $10.3 million, HQ Direct of$5.9 million and Snelling/HQ of $3.4 million. MRI declines resulted from a combination of a depressed economic environment and loss of franchisees who exited the system due to retirement or for other reasons. Revenue as a percentage of system-wide sales was 6.1% for the three months ended June 30, 2025 compared to 5.9% for three months ended June 30, 2024.

Previous wording

Franchise royalties for the three months ended March 31, 2025 were approximately $7.0 million, a decrease of approximately 11.2% from $7.8 million for the three months ended March 31, 2024. Our net effective royalty rate (as a percentage of external system-wide sales) was 5.9% for the three-month period ended March 31, 2025 and 5.9% for the three months ended March 31, 2024. Our net effective royalty rate will generally fluctuate due to mix of business among the various royalty models under which we operate, as well as incentives we offer during the year. A summary of franchise royalties by brand for the three months ended March 31, 2025 and March 31, 2024 follows:

Current wording

Franchise royalties for the three months ended June 30, 2025 were approximately $7.3 million, a decrease of approximately 11.2% from $8.2 million for the three months ended June 30, 2024. Our net effective royalty rate (as a percentage of external system-wide sales) was 5.8% for the three-month period ended June 30, 2025 and 5.6% for the three months ended June 30, 2024. Our net effective royalty rate will generally fluctuate due to mix of business among the various royalty models under which we operate, as well as incentives we offer during the year. A summary of franchise royalties by brand for the three months ended June 30, 2025 and June 30, 2024 follows:

Previous wording

Service revenue for the three months ended March 31, 2025 was approximately $512 thousand, a decrease of $76 thousand from the three months ended March 31, 2024, when service revenue was approximately $588 thousand. Interest income, which is included in service revenue was $240 thousand for the three months ended March 31, 2025 and $185 thousand for the three months ended March 31, 2024. Fluctuations in interest generally follow the mix of aged accounts in our accounts receivable, although relatively few age over 42 days and result in service revenue for us. Many of our franchisees have elected tocharge back accounts early in order to avoid or reduce the interest charge. Therefore, there will not be a proportionally large increase in service revenue even when there is a large increase in accounts receivable. We pride ourselves on maintaining quality, creditworthy customers who pay timely. We view the imposition of higher interest rates on aged accounts receivable to serve as an incentive for our franchisees to select credit-worthy customers. Service revenue is expected to fluctuate from quarter-to-quarter. The increase in interest income was primarily offset by a $95 thousand increase in liability insurance.

Current wording

Service revenue for the three months ended June 30, 2025 was approximately $354 thousand, a decrease of $125 thousand from the three months ended June 30, 2024, when service revenue was approximately $479 thousand. Interest income on overdue customer accounts receivable, which is included in service revenue was $215 thousand for the three months ended June 30, 2025 and $189 thousand for the three months ended June 30, 2024. Fluctuations in interest generally follow the mix of aged accounts in our accounts receivable, although relatively few age over 42 days and result in service revenue for us. Many of our franchisees have elected tocharge back accounts early in order to avoid or reduce the interest charge. Therefore, there will not be a proportionally large increase in service revenue even when there is a large increase in accounts receivable. We pride ourselves on maintaining quality, creditworthy customers who pay timely. We view the imposition of higher interest rates on aged accounts receivable to serve as an incentive for our franchisees to select credit-worthy customers. Service revenue is expected to fluctuate from quarter-to-quarter. The increase in interest income was primarily offset by a $88 thousand decrease in liability insurance.

Previous wording

Total Operating expenses for the three months ended March 31, 2025 were approximately $6.0 million compared to $6.3 million for the three months ended March 31, 2024. The decrease of $0.3 million was primarily driven by a $0.5 million decrease in Workers compensation expense. Overall, operating expenses represented 5.1% of system-wide-sales in the three months ended March 31, 2025 versus 4.7% of system-wide sales in the three months ended March 31, 2024.

Current wording

Total Operating expenses for the three months ended June 30, 2025 were approximately $5.9 million compared to $5.3 million for the three months ended June 30, 2024. The increase of $573 thousand was primarily driven by approximately $929 thousand in transaction expenses, partially offset by a $420 thousand decrease in Workers compensation expense. Overall, operating expenses represented 4.7% of system-wide-sales in the three months ended June 30, 2025 versus 3.6% of system-wide sales in the three months ended June 30, 2024.

Previous wording

Workers' compensationexpensewas approximately $28 thousand for the three months ended March 31, 2025, a decrease of $544 thousand when compared to a netexpense of approximately $572 thousand recorded in the three months ended March 31, 2024. Our workers' compensation reserves provide benefits following a workplace injury. Benefits are usually statutory in nature and are generally provided in partial or complete replacement of the injured worker’s recourse to the liability system. Payments may include medical treatment, rehabilitation, lost wages, and survivor benefits. Workers compensation rating is typically based on job classification, and our workers fall in hundreds of classifications. Annually, we use third-party actuaries to ensure that the overall ratings are sound, that individual insurer rates are adequate, and that individual risks receive a fair rate that reflects both the characteristics of the job classification and the Company's risk experience. The company pays premiums, actual claims, and establishes reserves for future claims. In turn we charge our franchises a percentage of payroll as determined by our workers' compensation carrier, plus or minus certain incentives and charges we provide for good or bad workers' compensation claims history. The overall charge is an estimate of the fully developed future costs and may not always coincide with the actual costs we incur resulting in expense or benefit in a given period. Over the long-term, our workers' compensation expense should equal the amounts we collect from franchisees and essentially be a pass-through cost. In the short-term, we cannot accurately predict the effects of workers' compensation in specific future periods, and historical trends are not indicative of future results.

Current wording

Workers' compensationexpensewas approximately $127 thousand for the three months ended June 30, 2025, a decrease of $420 thousand when compared to a netexpense of approximately $547 thousand recorded in the three months ended June 30, 2024. Our workers' compensation reserves provide benefits following a workplace injury. Benefits are usually statutory in nature and are generally provided in partial or complete replacement of the injured worker’s recourse to the liability system. Payments may include medical treatment, rehabilitation, lost wages, and survivor benefits. Workers compensation rating is typically based on job classification, and our workers fall in hundreds of classifications. Annually, we use third-party actuaries to ensure that the overall ratings are sound, that individual insurer rates are adequate, and that individual risks receive a fair rate that reflects both the characteristics of the job classification and the Company's risk experience. The company pays premiums, actual claims, and establishes reserves for future claims. In turn we charge our franchises a percentage of payroll as determined by our workers' compensation carrier, plus or minus certain incentives and charges we provide for good or bad workers' compensation claims history. The overall charge is an estimate of the fully developed future costs and may not always coincide with the actual costs we incur resulting in expense or benefit in a given period. Over the long-term, our workers' compensation expense should equal the amounts we collect from franchisees and essentially be a pass-through cost. In the short-term, we cannot accurately predict the effects of workers' compensation in specific future periods, and historical trends are not indicative of future results.

Previous wording

Compensation-related expenses include wages, payroll taxes, benefits, and stock-based compensation, and continue to be the largest component of operating expenses. Compensation and benefits for the three months ended March 31, 2025 was approximately $2.9 million which was slightly down compared to $3.0 million for the three months ended March 31, 2024.

Current wording

Compensation-related expenses include wages, payroll taxes, benefits, and stock-based compensation, and continue to be the largest component of operating expenses. Compensation and benefits for the three months ended June 30, 2025 was approximately $2.7 million which was flat compared to $2.7 million for the three months ended June 30, 2024.

Previous wording

Other SG&A was $2.2 million for the three months ended March 31, 2025, compared to $1.9 million for the three months ended March 31, 2024.

Current wording

Other SG&A was $3.1 million for the three months ended June 30, 2025, compared to $2.1 million for the three months ended June 30, 2024. The increase in other SG&A was primarily driven by approximately $929 thousand in transaction expenses.

Previous wording

Depreciation and amortization for the three months ended March 31, 2025 was approximately $734 thousand compared to $698 thousand for the three months ended March 31, 2024. This increase is the result of an IT project being placed in service causing amortization to begin.

Current wording

Depreciation and amortization for the three months ended June 30, 2025 was approximately $734 thousand compared to $697 thousand for the three months ended June 30, 2024. This increase is the result of an IT project being placed in service causing amortization to begin.

Previous wording

Interest income for the three months ended March 31, 2025 was approximately $134 thousand compared to $136 thousand for the three months ended March 31, 2024. Interest income represents interest related to the financing of franchised locations and the increase is due to the increase in Notes Receivables associated with the TEC acquisition in December 2023 as noted in Note 2-Acquisitions.

Current wording

Interest income for the three months ended June 30, 2025 was approximately $129 thousand compared to $151 thousand for the three months ended June 30, 2024. Interest income represents interest related to the financing of franchised locations.

Previous wording

Interest and other financing expense relates primarily to the Credit Agreement with Bank of America, N.A. Interest and other financing expense decreased from $243 thousand for the three months ended March 31, 2024 to $143 thousand for the three months ended March 31, 2025. Interest and other financing expense will fluctuate as we utilize the line of credit for acquisitions or other short-term liquidity needs. The decrease in interest expense is consistent with the decrease in the outstanding line of credit balance.

Current wording

Interest and other financing expense relates primarily to the Credit Agreement with Bank of America, N.A. Interest and other financing expense decreased from $253 thousand for the three months ended June 30, 2024 to $71 thousand for the three months ended June 30, 2025. Interest and other financing expense will fluctuate as we utilize the line of credit for acquisitions or other short-term liquidity needs. The decrease in interest expense is consistent with the decrease in the outstanding line of credit balance.

Previous wording

Income taxexpense was approximately $169 thousand for the three months ended March 31, 2025. We estimate an annual projected effective tax rate ("ETR") for the year to determine income tax expense or benefit in the interim periods. The estimated annual ETR does not include tax effects from significant unusual or infrequently occurring items. Such items are accounted for discretely during the period in which they occur. The ETR is primarily driven by the federal WOTC, which is included as part of income tax expense because it can be claimed only on the income tax return and can be realized only through the existence of taxable income. Other significant items affecting our tax rate are windfall tax deductions related to stock-based compensation, and overall limits on executive compensation. Our net ETR for the three months ended March 31, 2025 was 10.5%.

Current wording

Income taxexpense was approximately $56 thousand for the three months ended June 30, 2025. We estimate an annual projected effective tax rate ("ETR") for the year to determine income tax expense or benefit in the interim periods. The estimated annual ETR does not include tax effects from significant unusual or infrequently occurring items. Such items are accounted for discretely during the period in which they occur. The ETR is primarily driven by the federal WOTC, which is included as part of income tax expense because it can be claimed only on the income tax return and can be realized only through the existence of taxable income. Other significant items affecting our tax rate are windfall tax deductions related to stock-based compensation, and overall limits on executive compensation. Our net ETR for the three months ended June 30, 2025 was 5.0%.

Previous wording

Income tax expense for the three months ended March 31, 2024 was approximately $340 thousand. Our net ETR for the three months ended March 31, 2024 was 16.7%. The increase in the net ETR is driven by mix of our revenue, particularly the addition of MRI Network as the increase in executive, managerial and professional recruiting does not generate WOTC's at the same levels as staffing services.

Current wording

Income tax expense for the three months ended June 30, 2024 was approximately $557 thousand. Our net ETR for the three months ended June 30, 2024 was 21.2%. The decrease in the net ETR was driven by the level of WOTCs applied during the three months ended June 30, 2025.

Previous wording

Our total revenue consists of franchise royalties and service revenue we receive from our franchises. Revenue would also include staffing revenue with respect to owned locations, when applicable. Once a company-owned office is sold, disposed of, or otherwise classified as held-for-sale, it would not be reflected in revenue and instead reported as “Income from discontinued operations, net of tax.” Revenue does not include any owned locations for the three months ended March 31, 2025 or the three months ended March 31, 2024.

Current wording

Our total revenue consists of franchise royalties and service revenue we receive from our franchises. Revenue would also include staffing revenue with respect to owned locations, when applicable. Once a company-owned office is sold, disposed of, or otherwise classified as held-for-sale, it would not be reflected in revenue and instead reported as “Income from discontinued operations, net of tax.” Revenue does not include any owned locations for the six months ended June 30, 2025 or the six months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2025, other miscellaneous* income* was approximately $131 thousand, compared to other miscellaneousincome of $37 thousand for the three months ended March 31, 2024. This change was primarily driven by a gain on the disposal of a franchise business we took control of and then sold to another franchisee in the period ending March 31, 2024.

Current wording

For the six months ended June 30, 2025, other miscellaneous* income* was approximately $159 thousand, compared to other miscellaneousincome of $76 thousand for the six months ended June 30, 2024. This change was primarily driven by a gain on the disposal of a franchise business we took control of and then sold to another franchisee in the period ending June 30, 2024.

Previous wording

At March 31, 2025 , our current assets exceeded our current liabilities by approximately $27.3 million. Our current assets included approximately $2.1 million of cash and $42.2 million of net accounts receivable, which our franchisees have billed to customers and which we own in accordance with our franchise agreements. Our largest current liabilities as of March 31, 2025 included approximately $7.8 million due to our franchisees on pending settlement statements, $3.4 million related to our workers’ compensation claims liability, and $5.5 million of borrowings under our line of credit.

Current wording

At June 30, 2025, our current assets exceeded our current liabilities by approximately $28.6 million. Our current assets included approximately $2.7 million of cash and $42.8 million of net accounts receivable, which our franchisees have billed to customers and which we own in accordance with our franchise agreements. Our largest current liabilities as of June 30, 2025 included approximately $8.3 million due to our franchisees on pending settlement statements, $3.4 million related to our workers’ compensation claims liability, and $4.3 million of borrowings under our line of credit.

Previous wording

During the three months ended March 31, 2025, cash provided by continuing operations was approximately $1.9 million and included net income from continuing operations of approximately $1.4 million, adjusted by non-cash items (primarily depreciation and stock-based compensation) of approximately $1.3 million. These provisions were offset by changes in operating assets and liabilities requiring cash of approximately $0.8 million. During the three months ended March 31, 2024, cash used by continuing operating activities was approximately $0.9 million and included net income from continuing operations of approximately $1.7 million, adjusted by non-cash items of approximately $1.2 million. These provisions were partially offset by changes in operating assets and liabilities requiring cash of approximately $3.8 million.

Current wording

During the six months ended June 30, 2025, cash provided by continuing operations was approximately $4.5 million and included net income from continuing operations of approximately $2.5 million, adjusted by non-cash items (primarily depreciation and stock-based compensation) of approximately $2.3 million. These provisions were offset by changes in operating assets and liabilities requiring cash of approximately $305 thousand. During the six months ended June 30, 2024, cash used by continuing operating activities was approximately $669 thousand and included net income from continuing operations of approximately $3.8 million, adjusted by non-cash items of approximately $2.3 million. These provisions were partially offset by changes in operating assets and liabilities requiring cash (primarily accounts receivable) of approximately $6.8 million.

Previous wording

During the three months ended March 31, 2025, cash used by financing activities was approximately $2.3 million and included net payments on our revolving line of credit of approximately $1.4 million and the payment of approximately $0.8 million in dividends. During the period ended March 31, 2024, cash provided by financing activities was approximately $1.0 million and included the payment of dividends totaling approximately $0.8 million and proceeds from our revolving line of credit of approximately $2.0 million.

Current wording

During the six months ended June 30, 2025, cash used by financing activities was approximately $4.3 million and included net payments on our revolving line of credit of approximately $2.5 million and the payment of approximately $1.7 million in dividends. During the six months ended June 30, 2024, cash used by financing activities was approximately $394 thousand and included the payment of dividends totaling approximately $1.7 million and proceeds from our revolving line of credit of approximately $1.6 million.

Previous wording

At March 31, 2025, availability under the Senior Credit Facility was approximately $34.8 million based on eligible collateral, less letter of credit reserves, bank product reserves, and current advances, assuming continued covenant compliance. Our all-in-rate of borrowing was 5.7%and is repriced daily.

Current wording

At June 30, 2025, availability under the Senior Credit Facility was approximately $35.9 million based on eligible collateral, less letter of credit reserves, bank product reserves, and current advances, assuming continued covenant compliance. Our all-in-rate of borrowing was 5.5%and is repriced daily.

Previous wording

We refer to total sales generated by our franchisees as “franchise sales.” For any period prior to their conversion to franchises, we refer to sales at company-owned and operated offices as “company-owned sales.” In turn, we refer to the sum of franchise sales and company-owned sales as “system-wide sales.” In other words, system-wide sales include sales at all offices, whether owned and operated by us or by our franchisees. In addition, system-wide sales includes sales at company-owned offices that are classified as discontinued operations. System-wide sales is a key performance indicator, although we do not record system-wide sales as revenue. Management believes that information on system-wide sales is important to understanding our financial performance because those sales are the basis on which we calculate and record much of our franchise royalty revenue, are directly related to all other royalty revenue and service revenue and are indicative of the financial health of our franchisee base. Management uses system-wide sales to benchmark current operating levels to historic operating levels. System-wide sales should not be considered as an alternative to revenue.

Current wording

We refer to total sales generated by our franchisees as “franchise sales.” For any period prior to their conversion to franchises, we refer to sales at company-owned and operated offices as “company-owned sales.” In turn, we refer to the sum of franchise sales and company-owned sales as “system-wide sales.” In other words, system-wide sales include sales at all offices, whether owned and operated by us or by our franchisees. In addition, system-wide sales include sales at company-owned offices that are classified as discontinued operations. System-wide sales is a key performance indicator, although we do not record system-wide sales as revenue. Management believes that information on system-wide sales is important to understanding our financial performance because those sales are the basis on which we calculate and record much of our franchise royalty revenue, are directly related to all other royalty revenue and service revenue and are indicative of the financial health of our franchisee base. Management uses system-wide sales to benchmark current operating levels to historic operating levels. System-wide sales should not be considered as an alternative to revenue.

Previous wording

For the three months ended March 31, 2025, nearly all of our offices were franchised with the only exceptions being a portion of the Dubin operations acquired in the first quarter of 2022. The following table reflects our system-wide sales broken into its components for each period indicated. The Dubin operations are presented in the consolidated financial statements as discontinued operations because they are considered held-for-sale, but their system-wide sales are reflected along with all other offices in the table below. Percentages indicate the change in system-wide sales relative to the comparable prior period (in thousands, except percentages):

Current wording

For the six months ended June 30, 2025, nearly all of our offices were franchised with the only exceptions being a portion of the Dubin operations acquired in the first quarter of 2022. The following table reflects our system-wide sales broken into its components for each period indicated. The Dubin operations are presented in the consolidated financial statements as discontinued operations because they are considered held-for-sale, but their system-wide sales are reflected along with all other offices in the table below. Percentages indicate the change in system-wide sales relative to the comparable prior period:

Previous wording

The following table accounts for the number of offices opened and closed or consolidated during the three months ended March 31, 2025:

Current wording

The following table accounts for the number of offices opened and closed or consolidated during the six months ended June 30, 2025: