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Note 3 - Related Party Transactions | 12 Months Ended
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Dec. 31, 2021
Notes to Financial Statements |
Related Party Transactions Disclosure [Text Block] | Note 3 – Related Party Transactions Prior to entering into any related party transaction, the Audit Committee reviews all relevant information available. The Audit Committee, in its sole discretion, will approve the related party transaction only if it determines, in good faith and under all circumstances, that the transaction is in the best interests of the Company and its shareholders. The Audit Committee, in its sole discretion, may also impose conditions as it deems appropriate on the Company or the related party in connection with the approval of the related party transaction. Certain significant shareholders and directors of HQI also own portions of Jackson Insurance Agency; Bass Underwriters, Inc; Insurance Technologies, Inc.; and a number of our franchisees. Jackson Insurance Agency ("Jackson Insurance") and Bass Underwriters, Inc. ("Bass") Mr. Jackson, a Director of HQI, and an immediate family member own Jackson Insurance. Mr. Jackson, our Chief Executive Officer Mr. Hermanns, and irrevocable trusts set up by each of them, collectively own a majority of Bass, a large managing general agent. Bass purchased approximately $5.3 million of 6.0% notes receivable at book value in March 2021. For additional information related to this transaction, see Note 13 - Notes Receivable. Jackson Insurance and Bass broker HQI's property, casualty, general liability, and cybersecurity insurance. Jackson Insurance also brokers certain insurance policies on behalf of some of our franchisees, including the Worlds Franchisees (defined below). Premiums, taxes, and fees invoiced by Jackson Insurance and Bass to HQI and Legacy HQ for these insurance policies during the years ended December 31, 2021 and December 31, 2020 were approximately $729,000 and $726,000, respectively. Jackson Insurance and Bass do not retain the majority of the premiums invoiced to HQI and Legacy HQ, but they do retain a commission of approximately 9% - 15% of premiums. Insurance Technologies, Inc. ("Insurance Technologies") Mr. Jackson, Mr. Hermanns, and irrevocable trusts set up by each of them, collectively own a majority of Insurance Technologies, an IT development and security firm. On October 24, 2019, HQI entered into an agreement with Insurance Technologies to add certain cybersecurity protections to our existing information technology systems and to assist in developing future information technology systems within our HQ Webconnect software. In addition, Insurance Technologies assisted with the IT diligence and integration process with respect to the Snelling and Link acquisitions. During the years ended December 31, 2021 and December 31, 2020, Insurance Technologies invoiced HQI approximately $217,000 and $188,000 for services provided pursuant to this agreement, respectively. We terminated this relationship in July 2021 when we added a full-time Chief Information Officer. The Worlds Franchisees Mr. Hermanns and Mr. Jackson have direct or indirect ownership interests in certain of our franchisees (the “Worlds Franchisees”). There were 23 Worlds Franchisees at December 31, 2021 that operated 60 of our 217 offices. There were 21 Worlds Franchisees that operated 49 of our 139 offices at December 31, 2020. Balances regarding the Worlds Franchisees are summarized below:
|  | December 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Due to franchisee |  | $ | 534,514 |  |  | $ | 435,072 |
Risk management incentive program liability |  |  | 703,379 |  |  |  | 499,199 |
Transactions regarding the Worlds Franchisees are summarized below:
|  | Year ended |
|  | December 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Franchisee royalties |  | $ | 5,855,279 |  |  | $ | 4,897,445 |

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