What is the impact of changes in customer behavior on 1 800 Packouts' accounts receivable?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
uired assets and liabilities assumed. The excess of the purchase price over the fair value of the net assets givesrise to goodwill.
The following table sets forth the allocation of the purchase consideration to the assets acquired and liabilities assumed:
| Total consideration Rollover equity Cash acquired | $ 4,100,000 (3,000,000) (108,054) |
|---|---|
| Net cash paid | $ 991,946 |
| Cash | $ 108,054 |
| Accounts receivable | 50,956 |
| Prepaids and other assets | 634,944 |
| Operating lease right-of-use asset | 219,457 |
| Goodwill | 3,354,824 |
| Operating lease liability | (219,457) |
| Other | (48,778) |
| liabilities | |
| assumed | |
| Total purchase price | $ 4,100,000 |
j. Legal Settlement
During 2024,theCompany entered into a settlementagreementfor claimsmade underthe indemnity clause ofthe purchase agreement for the 2022 acquisition agreement of 1-800 Packouts, LLC (Packouts). The
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, there is no information provided that discusses the impact of changes in customer behavior on 1 800 Packouts' accounts receivable. The document does detail a legal settlement that affected the company's receivables. In 2024, the company received a $10,000,000 settlement related to breaches of franchise-related representations and warranties from the previous owner of 1-800 Packouts, LLC (Packouts), which they acquired in 2022.
The settlement terms involved the company repurchasing the former owner's membership interest for $4,230,000, reducing the legal settlement receivable. The remaining amount was to be paid in installments. By the end of 2024, 1 800 Packouts had received $4,950,000 in cash payments, with the remaining $820,000 due in September 2025.
Since the settlement was linked to the acquisition of Packouts, the company treated the settlement amount as a reduction in the purchase price and the acquired assets. However, the FDD does not address how broader shifts in customer preferences or demand might influence the collectability of accounts receivable generated from regular business operations.
A prospective franchisee should ask 1 800 Packouts about the typical payment terms offered to customers, the percentage of revenue collected through insurance claims versus direct customer payments, and any historical data on bad debt or write-offs. Understanding these factors will help a franchisee assess the potential risk and volatility of their accounts receivable.