How does 1 800 Packouts' 'Goodwill, net' compare to its total assets?

According to 1 800 Packouts' 2025 Franchise Disclosure Document, as of December 31, 2024, the company's 'Goodwill, net' was $52,556,496, while its total assets amounted to $129,577,381. This means that goodwill represents a significant portion of 1 800 Packouts' total assets, approximately 40.5%. In the previous year, 2023, goodwill was $66,184,756 and total assets were $138,406,777. Thus, goodwill represented approximately 47.8% of total assets in 2023.

Goodwill typically arises from acquisitions, representing the excess of the purchase price over the fair value of identifiable net assets acquired. A high goodwill balance relative to total assets suggests that 1 800 Packouts has grown through acquisitions. The decrease in goodwill from 2023 to 2024 could be due to amortization, impairment, or other accounting adjustments.

For a prospective franchisee, a substantial portion of assets being tied to goodwill indicates the importance of the acquired brand and customer relationships. However, it also carries the risk that if the acquired businesses do not perform as expected, 1 800 Packouts may have to write down the value of goodwill, which could impact the company's financial health. It would be prudent for a potential franchisee to inquire about the performance and integration of acquired entities and the assumptions underlying the goodwill valuation.