As of what date was the other franchisor no longer under common ownership with 1 800 Packouts?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
On January 31, 2022, the Company entered into a securities purchase agreement to acquire 100% of the equity interests in 1-800-Packouts, LLC (Packouts). The securities purchase agreement included payment of rollover interest of $4,230,000 wherein the former owner was granted an ownership interest in the Company, which was included in the total consideration paid for the acquisition. The securities purchase agreements also included two delayed cash payments of $1,000,000 made in June 2023 and December 2023. These payments were valued at present value of $1,795,418 as of the acquisition date. This amount was accrued and included in the 2022 issued financials.
In relation to these acquisitions, the Company elected to early adopt Accounting Standards Update 2021-08, Business Combinations (ASU 2021-08). ASU 2021-08 allows a Company to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers. Accordingly, the contract assets and contract liabilities were recognized at carryover value from the predecessor, rather than at fair value.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to the 2025 FDD, 1 800 Packouts, LLC was acquired on January 31, 2022. Prior to this date, 1 800 Packouts was under different ownership. The securities purchase agreement included rollover interest of $4,230,000 for the former owner, granting them an ownership interest in the Company. The agreement also stipulated two delayed cash payments of $1,000,000 each, to be made in June 2023 and December 2023, which were valued at a present value of $1,795,418 as of the acquisition date. These amounts were accrued and included in the 2022 issued financials.
This acquisition means that as of January 31, 2022, 1 800 Packouts became a subsidiary entity of the Company, with the former owner receiving both cash and an ownership stake in the acquiring company. For a prospective franchisee, this indicates a change in the overall corporate structure and potentially in the strategic direction of the franchise system. It's important to understand how these changes might affect the franchise operations, support systems, and long-term goals of 1 800 Packouts.
It is also important to note that the company elected to early adopt Accounting Standards Update 2021-08, Business Combinations (ASU 2021-08). ASU 2021-08 allows a Company to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers. Accordingly, the contract assets and contract liabilities were recognized at carryover value from the predecessor, rather than at fair value.