Are intercompany balances and transactions included in the consolidated financial statements for 1 800 Packouts?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
The consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (US GAAP) and include the accounts of FS PEP Holdco, LLC and its wholly owned subsidiaries: Five Star Connect, Inc.; Gotcha Covered Franchising, LLC; Ringside Development Company; Bio-One IP Group, LLC; Ringside Group, LLC; Mosquito Shield Franchise, LLC; 1-800-Packounts Holdco, LLC; CMY Holdco, LLC; Five Star Bath, Inc; Five Star Franchising, LLC; and its wholly owned subsidiary Five Star Bath, LLC.
FS PEP Holdco, LLC was formed on April 9, 2021, (date of inception) and during 2021 began acquiring operating companies. The consolidated financial statements reflect the operations of FS PEP Holdco, LLC and all of its subsidiaries (collectively the Company). All intercompany balances and transactions have been eliminated in consolidation.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts' 2025 Franchise Disclosure Document, the consolidated financial statements include the accounts of FS PEP Holdco, LLC and its wholly-owned subsidiaries, which includes 1-800-Packounts Holdco, LLC. The document specifies that these consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (US GAAP).
Importantly, the FDD states that all intercompany balances and transactions have been eliminated in consolidation. This means that any financial transactions occurring between 1 800 Packouts and its parent company or other subsidiaries within the FS PEP Holdco, LLC group are not reflected in the final consolidated financial statements. These internal transactions are removed to provide a clearer picture of the overall financial performance of the entire organization to outside observers.
For a prospective franchisee, this is a standard accounting practice. Eliminating intercompany transactions ensures that the financial statements provide a transparent view of the company's performance without artificial inflation or distortion caused by internal financial activities. This allows potential investors and franchisees to make informed decisions based on the true financial health of the consolidated entity.