What was the amortization of goodwill and intangible assets for 1 800 Packouts in 2022?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
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Trade names were valued using a relief from royalty discounted cash flows method. Franchise agreements were valued using an excess of earnings discounted cash flows method. The estimated useful lives of tra
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, the amortization expense resulting from goodwill and intangible assets was $10,568,470 for the year ended December 31, 2022. In comparison, the amortization expense was $2,543,033 for the period from the company's inception through December 31, 2021.
For a prospective franchisee, amortization represents the expense recognized over time for the use of intangible assets like goodwill and trade names that 1 800 Packouts has acquired. Goodwill typically arises when a company acquires another business for a price higher than the fair value of its net assets. This expense does not involve a direct cash outlay but affects the company's reported net income.
The FDD states that the company has made certain measurement period adjustments to the valuation of purchase consideration for the 2021 acquisitions of Gotcha Covered and Bio One resulting in an approximately $1,500,000 increase and a $25,000 decrease to goodwill, respectively. These measurement period adjustments have been made in 2022.
Understanding the nature and amount of these intangible assets and their amortization schedule can help a franchisee assess the financial health and accounting practices of 1 800 Packouts. It's important to note that amortization expenses can impact profitability, and significant changes from year to year may warrant further investigation to understand the underlying causes.