What was the value of 1 800 Packouts' franchise agreements as of December 31, 2021?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
l fees collected in advance are deferred until performance obligations are met, and revenue is earned. Deferred amounts are classified as contract liabilities in the accompanying consolidated balance sheet.
Franchise sales resulting from leads furnished by independent franchise brokers are subject to a sales commission. The costs of commissions paid to franchise brokers are capitalized and recognized over the same period as the related revenue.
Amounts recognized as franchise fee revenue for the year ended December 31, 2022 and for the period from inception (April 9, 2021) through December 31, 2021 were $3,823,573 and $655,100, respectively.
Equipment and Product Sales
Revenue from the sale of equipment and products is recognized when title and risk of loss transfers to the buyer, which is generally upon shipment.
Amounts recognized as equipment and product sales revenue for the year ended December 31, 2022 and for the period from inception through December 31, 2021 were $3,830,583 and $585,520, respectively.
Advertising Services
Under the terms of the Franchise Agreements, the Company may establish national branding funds and charge a fee of up to 3% of the franchisees' gross receipts to pay for marketing costs that benefit multiple franchises and are used to promote the brands. Marketing revenues and expenses are recognized in equal amounts as marketing expenses are incurred. Any amounts collected but unspent at the end of the year are accrued for as a liability on the accompanying consolidated balance sheets until the related expense has been incurred.
Amounts recognized as advertising services revenue for the yea
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for 1 800 Packouts indicates several revenue streams related to franchise agreements. For the period from inception (April 9, 2021) through December 31, 2021, 1 800 Packouts recognized $585,520 in equipment and product sales revenue, $467,575 in advertising services revenue, and $621,110 in other revenues. These figures reflect the initial period of operation for 1 800 Packouts and provide insight into the early financial performance related to its franchise agreements.
Equipment and product sales revenue is derived from sales to franchisees. Advertising services revenue comes from fees, up to 3% of gross receipts, that 1 800 Packouts charges franchisees for marketing costs. Other revenues include vendor rebates, consulting service fees, monthly technology access fees, and other miscellaneous fees allowable under the franchise agreements.
These revenue streams are important for prospective franchisees to consider as they evaluate the potential financial obligations and ongoing costs associated with operating a 1 800 Packouts franchise. Understanding how these fees are structured and utilized can help franchisees plan their budgets and assess the value they receive in return.
It is important to note that these figures represent revenue recognized during the specified period and may not reflect the total value of all franchise agreements in place as of December 31, 2021. The total value of franchise agreements would likely include future revenue expected to be generated over the life of those agreements, which is not detailed in this excerpt.