How did Benjamin Franklin Plumbing's parent company account for the Junkluggers acquisition?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
purchase price over the aggregate fair values was recorded as goodwill.
The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows:
Assets acquired Current assets $ 443 Operating lease right-of-use assets 125 Goodwill 10,746 Intangible assets and other assets (1) 11,860 Assets acquired 23,174 Deferred tax liability (2,343) Operating lease liabilities (125) Deferred revenue (2,652) Other liabilities assumed (139) Purchase Price $ 17,915
(1) Identifiable intangible assets acquired include trademarks, franchise relationships and non-competition agreements which will be amortized on a straight-line basis over their preliminary useful lives of 25 years, 15 years and 5 years, respectively.
Junkluggers
On December 14, 2022, the Company entered into a purchase and sale agreement to acquire 100% of the outstanding equity interests of Junkluggers Franchising, LLC, Junkluggers, LLC and LugLife, LLC for a purchase price of $79,202. Junkluggers is an eco-friendly junk removal franchise company that focuses on utilizing sustainable practices to divert waste from landfills. Junkluggers was acquired to allow for the expansion of the Company's presence within its home services franchising platform. The acquisition was primarily funded with rollover equity of $16,000 and cash held by the Company. Goodwill largely consists of strategic and synergistic opportunities resulting from combining Junkluggers with the Company's existing businesses. The goodwill resulting from this acquisition is tax deductible.
As a result of the transaction, the Company incurred and expensed transaction costs of $2,084, which are included in transaction c
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 FDD, Benjamin Franklin Plumbing's parent company, Authority Brands Inc., acquired Junkluggers on December 14, 2022, for $79,202. The acquisition was made to expand Authority Brands' presence in the home services franchising platform. The purchase was funded through $16,000 in rollover equity and cash held by the company. The parent company accounted for the acquisition of Junkluggers as a business combination following ASC 805 standards. Transaction costs of $2,084 were incurred and expensed. Goodwill was recorded, primarily consisting of strategic and synergistic opportunities, and is tax deductible.
Authority Brands allocated the purchase price to the identifiable assets and liabilities of Junkluggers based on their estimated fair values at the time of acquisition. The excess of the purchase price over the aggregate fair values was recorded as goodwill. During the year ended December 31, 2023, there were no material changes to the purchase price allocation for the Junkluggers Acquisition.
For a prospective Benjamin Franklin Plumbing franchisee, this information provides insight into the parent company's acquisition strategy and how it integrates new franchise systems. Understanding the financial implications and accounting methods used in these acquisitions can help franchisees assess the financial stability and growth potential of Authority Brands. The allocation of purchase price to identifiable assets and the recognition of goodwill are standard accounting practices in business combinations, offering transparency into how the acquisition impacts the parent company's financial statements.