What was the net value of 1 800 Packouts' intangible assets in 2024?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
opinion on the effectiveness of the Company'sinternal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
April 23, 2025
| (1) | 2024 | 2023 | |
|---|---|---|---|
| Assets | |||
| Current assets: | |||
| Cash | $ | 3,690,691 |
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts' 2025 Franchise Disclosure Document, the net value of their intangible assets as of December 31, 2024, was $45,678,810. This figure represents the value of assets like trade names and franchise agreements, minus accumulated amortization. For comparison, the net value of intangible assets as of December 31, 2023, was $50,358,496.
Intangible assets are non-physical assets that have value because they represent rights or privileges. For 1 800 Packouts, these primarily consist of their trade name and franchise agreements. The value of these assets is determined using methods like the relief from royalty discounted cash flows method for trade names and the excess of earnings discounted cash flows method for franchise agreements. The estimated useful lives of these intangible assets are 15 years for trade names and 13 to 15 years for franchise agreements.
The decrease in net intangible assets from 2023 to 2024 indicates that the amortization expense recognized during 2024 exceeded the value of any newly acquired intangible assets. Amortization is the systematic allocation of the cost of an intangible asset over its useful life. This is a standard accounting practice that reflects the gradual decline in the value of these assets as they are used to generate revenue.
For a prospective 1 800 Packouts franchisee, understanding the value and amortization of intangible assets provides insight into the financial management and valuation of the franchise system. It's important to note that while these assets contribute to the overall value of the company, they are subject to amortization and may not retain their initial value over time. Reviewing these figures over several years can reveal trends in how 1 800 Packouts manages and leverages its intangible assets.