What subsidiary entity did 1 800 Packouts acquire on March 11, 2022?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
o be issued.
2. Acquisitions of Subsidiary Entities
During the year ended December 31, 2022, the Company entered into the following acquisition agreements:
On January 31, 2022, the Company entered into a securities purchase agreement to acquire 100% of the equity interests in 1-800-Packouts, LLC (Packouts). The securities purchase agreement included payment of rollover interest of $4,230,000 wherei
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, on March 11, 2022, the company acquired 100% of the equity interests in Mosquito Shield Finance Corporation, referred to as Mosquito Shield. The acquisition was formalized through a securities purchase agreement. As part of this agreement, the former owner of Mosquito Shield received $2,000,000 as rollover interest, which was then converted into an ownership interest in 1 800 Packouts. This rollover interest was included in the total consideration paid for the acquisition.
This type of acquisition structure, involving rollover equity, is not uncommon in franchise acquisitions. It allows the seller to participate in the future success of the combined entity. For a prospective 1 800 Packouts franchisee, this information provides insight into the company's growth strategy and its approach to acquiring and integrating other businesses.
The FDD also mentions that 1 800 Packouts elected to early adopt Accounting Standards Update 2021-08, Business Combinations (ASU 2021-08) for these acquisitions. This accounting standard allows the company to recognize and measure contract assets and contract liabilities at carryover value from the predecessor, rather than at fair value. This accounting choice can affect how the acquisitions are reflected in 1 800 Packouts's financial statements.