What was the total value of 1 800 Packouts' franchise agreements as an intangible asset?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill represents the excess purchase price over fair value of net assets acquired that is not allocable to separately identifiable intangible assets. Other identifiable intangible assets primarily consist of trade names and franchise agreements in place. These assets are amortized using the straight-line method over the estimated useful life of the asset acquired.
Trade names were valued using a relief from royalty discounted cash flows method. Franchise agreements were valued using an excess of earnings discounted cash flows method. The estimated useful lives of trade names is 15 years, franchise agreements is 13 to 15 years, and goodwill is 10 years.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, 1 800 Packouts amortizes its identifiable intangible assets, which include franchise agreements, using the straight-line method over the estimated useful life of the asset. The franchise agreements are valued using an excess of earnings discounted cash flows method. The estimated useful lives of franchise agreements is 13 to 15 years.
However, the specific total value of 1 800 Packouts' franchise agreements as an intangible asset is not disclosed in this section. The excerpt only mentions the method used for valuation and amortization of these assets.
For a prospective franchisee, it is important to understand how the franchisor values and amortizes its intangible assets, as this can affect the company's financial statements and overall financial health. Understanding the valuation method (excess of earnings discounted cash flows) and the amortization period (13-15 years) provides insight into how 1 800 Packouts accounts for these assets. A prospective franchisee should ask 1 800 Packouts for the specific value of franchise agreements as an intangible asset to gain a clearer picture of the company's financial position.