What was the estimated fair value of the trade name acquired by 1 800 Packouts from Packouts?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
chase agreement included payment of rollover interest of $2,000,000 wherein the former owner was granted an ownership interest in the Company, which was included in the total consideration paid for the acquisition.
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 contrac
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, the estimated fair value of the trade name acquired from Packouts was $4,380,000 as of December 31, 2022. This valuation was part of a larger acquisition where 1 800 Packouts acquired 100% of the equity interests in 1-800-Packouts, LLC (Packouts) on January 31, 2022. The trade name was one of several assets listed in the summary of estimated fair values.
The valuation of the trade name was determined using a relief from royalty discounted cash flows method. This method is a common approach to valuing intangible assets like trade names, as it estimates the present value of the future cost savings a company realizes by owning the trade name rather than licensing it from a third party. The estimated useful life of the trade name is 15 years, which means that 1 800 Packouts anticipates benefiting from this asset over that period.
For a prospective franchisee, this information provides insight into the financial considerations and valuation methods used by 1 800 Packouts in its business acquisitions. Understanding how the franchisor values its assets, including the trade name, can help franchisees assess the overall financial health and strategic direction of the company. Additionally, knowing the estimated useful life of the trade name can offer a perspective on the long-term value and stability of the 1 800 Packouts brand.