1_800_Packouts 2025 Franchise FAQ - FDD Ninja

Question 1

What pre-opening obligations does 1 800 Packouts have before I open my franchise?

Accepted Answer

ide you with any assistance.** #### **Our Pre-Opening Obligations** Before you open the Franchised Business, we or our designee will: - (1) Review and approve or disapprove the terms of the lease or purchase contract for the premises of the Franchised Business. Your proposed location will be approved based upon factors including adequate parking for your vehicle, including any truck or trailer you use and adequate space for the storage of contents which your operations require you to store for customers. It must also be of adequate size to support your operations and must have high-speed internet access for you and any staff member(s) you retain. Outside of these factors, and the location within your Franchise Territory, we do not consider other factors in approving or disapproving your site. We generally do not own the premises or lease the premises to you. The lease for the Facility must allow for the installation of all equipment and other items necessary to operate the Franchised Business. In addition, the lease shall provide, if required by us, that it be assignable to us or our designee at our option, upon termination or expiration of this Agreement, and shall also contain such terms and provisions as are reasonably approved by us. Currently, we do not specify other required lease terms. There is no time limit for the completion of our review of your lease or purchase contract, but we anticipate completing our review within 10 days of your submission. If we do not approve the terms of the lease or purchase contract and you are unable to locate another site with satisfactory lease or purchase terms in enough time to open the Franchised Business within 180 days after the effective date of the Franchise Agreement, we may terminate the Franchise Agreement, in which case you will forfeit your Initial Franchise Fee. (Franchise Agreement – Section 3.A) - (2) Review and approve or disapprove plans and specifications and final construction plans complying with our requirements for design, decoration, furnishings, furniture, layout, equipment, fixtures and signs for a Facility. We do not provide assistance in providing, delivery, or installation of equipment, signs, fixtures, opening inventory, or supplies, but we do provide written specifications for such items. (Franchise Agreement – Section 3.B) - (3) Specify the Management Systems for the Franchised Business. (Franchise Agreement Section 3.D) - (4) Provide System/Procedure Training, including instruction about how you will make your decisions for employees or contractors (although we will not assist you in the hiring or training of your employees). (Franchise Agreement – Section 4.A) - (5) Provide you with advice, guidance and support in connection with the opening and initial operation of the Franchised Business. If you request on-site assistance and we are able to schedule such assistance at a mutually agreeable time, you will be required to pay our reasonable fees for such on-site assistance and will be responsible for the reasonable travel, lodging and per diem expenses incurred by our personnel in providing such on-site assistance. (Franchise Agreement – Section 4.C) - (6) Provide you with access to our Manuals. The table of contents of our Manuals is attached to this disclosure document as Exhibit D. The Manuals currently contain approximately 197 pages. The Manuals may be modified to reflect changes in the specifications, standards, operating procedures and other obligations in operating Franchised Businesses in our sole discretion. You will be required to adopt any modifications into your Franchised Business, including any adjustments to the minimum and/or maximum prices at which you will sell products or services. (Franchise Agreement – Section 4.G) (7) Approve the opening of your Franchised Business, provided that you have met all of our requirements for opening. We estimate that the typical length of time between signing a Franchise Agreement and opening your Franchised Business is approximately 120 days. Factors affecting this length of time include, among others: ability to select a site and negotiate a satisfactory lease; hiring of the requisite employees; Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 32–39)

Question 2

What specific sections of the 1 800 Packouts Franchise Agreement chart in the Disclosure Document are amended by the information provided?

Accepted Answer

any other term of any document executed in connection with theanchise.

4. 6. The following paragraph is added at the end of Item 21 of the Disclosure Document:

The California Department of Business Oversight has required us to submit an undertaking committing to maintaining a balance of at least \$50,000 in business account that we use to meet our pre-opening obligations for the duration of the registration period. We have infused cash into our business account sufficient to meet our pre-opening obligations to franchisees without relying on any additional initial franchise fees.

#### **ADDENDUM REQUIRED BY THE STATE ILLINOIS**

4. 1. The "Summary" sections of [v](#page-52-0) of the Franchise Agreement table of the Disclosure Document is amended to read as follows:

All actions must be brought in the State of Illinois.

- 2. The "Summary" section of [w](#page-52-1) of the Disclosure Document is amended to read as follows: Illinois law governs.
- 3. The following language is added at the end of [17](#page-48-0) of the Disclosure Document:

Section 41 of the Illinois Franchise Disclosure Act provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois void.

4. 4. Illinois law governs the Franchise Agreement.

In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.

Your rights upon Termination and Non-Renewal are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.

### **ADDENDUM REQUIRED BY THE STATE MARYLAND**

1. The "Summary" sections of [c,](#page-48-1) entitled **Requirements for franchisee to renew or extend**, and 17(m), entitled **Conditions for franchisor approval of transfer**, of the Franchise Agreement table of the Disclosure Document are amended by adding the following:

Any general releases you sign as a condition of renewal and/or assignment/transfer will not apqtply to claims arising under the Maryland Franchise Registration and Disclosure Law.

2. The "Summary" section of [v,](#page-52-0) entitled **Choice of Forum**, of the Franchise Agreement table of the Disclosure Document is deleted and replaced with the following:

All actions must be brought in a court of competent jurisdiction in the state in which our principal office is located, which is currently Ball Ground, Georgia, although you may bring an action in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.

3. The "Summary" section of [w,](#page-52-1) entitled **Choice of law**, of the Franchise Agreement table of the Disclosure Document is deleted and replaced with the following:

Georgia law governs, except otherwise required by applicable law for claims arising under the Maryland Franchise Registration and Discure Law.

4. The following language is added at the end of [17](#page-48-0) of the Disclosure Document:

Despite any contradicting provision in the Franchise Agreement, you have 3 years from the date on which we grant you the franchise to bring a claim under the Maryland Franchise Registration and Disclosure Law.

5.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 3

What was the total estimated fair value of assets acquired and liabilities assumed by 1 800 Packouts in the acquisition of Packouts during the year ended December 31, 2022?

Accepted Answer

ize deferred income tax assets and liabilities for the expected future tax consequences of events that have been included in the subsidiary financial statements or tax returns. Under this method, deferred income tax assets and liabilities are determined based on the difference between financial statement and tax bases of assets and liabilities using estimated tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized only if it is more likely than not that the asset will be realized in future years.

#### Subsequent Events

Management has evaluated events and transactions for potential recognition or disclosure through April 5, 2024, which is the day the consolidated financial statements were available to 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 wherein the former owner was granted an ownership interest in the Company, which was included in the total consideration paid for the acquisition. The securities purchase agreements also included two delayed cash payments of \$1,000,000 made in June 2023 and December 2023. These payments were valued at present value of \$1,795,418 as of the acquisition date. This amount was accrued and included in the 2022 issued financials.

On March 11, 2022, the Company entered into a securities purchase agreement to acquire 100% of the equity interests in Mosquito Shield Finance Corporation (Mosquito Shield). The securities purchase agreement included payment of rollover interest of \$2,000,000 wherein the former owner was granted an ownership interest in the Company, which was included in the total consideration paid for the acquisition.

In relation to these acquisitions, the Company elected to early adopt Accounting Standards Update 2021-08, Business Combinations (ASU 2021-08). ASU 2021-08 allows a Company to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 4

What was the total estimated fair value of assets acquired and liabilities assumed by 1 800 Packouts in the acquisition of Mosquito Shield during the year ended December 31, 2022?

Accepted Answer

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 wherein the former owner was granted an ownership interest in the Company, which was included in the total consideration paid for the acquisition. The securities purchase agreements also included two delayed cash payments of \$1,000,000 made in June 2023 and December 2023. These payments were valued at present value of \$1,795,418 as of the acquisition date. This amount was accrued and included in the 2022 issued financials.

On March 11, 2022, the Comp

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 5

What is the total estimated initial investment range for a 1 800 Packouts franchise?

Accepted Answer

STIMATED INITIAL INVESTMENT** | Type of Expenditure1 | Amount | | Method of | When due | | To whom payment is to | |---|---|---|---|---|---|---| | | | | payment | | | be made | | Initial Franchise Fee | $62,500 | Lump sum | | When the Franchise Agreement is signed | Us | | | Quick Start Package (“QSP”)2 | $53,500 | As incurred | | Half of the cost is due during onboarding, with the balance due at the time of shipping | You will buy from us our Quick Start Package (“QSP”), and pay us the QSP Fee applicable to your franchise size. | | | Annual Conference Registration Deposit | $1,000 | Lump Sum | | Within 7 days of signing of Franchise Agreement. | Us. | | | Rent, Security Deposit, | $5,500 to $18,000 | As agreed | | Before | Lessor and Utilities | | | and Utility Deposits3 | | | | opening | | | | Leasehold | $3,500 to $15,000 | As agreed | | Before | Contractors and Third | | | Improvements4 | | | | opening | party vendors | | | Equipment5 | $5,000 to $30,000 | As agreed | | Before opening | Third party vendors | | | Signage6 | $3,000 to $8,000 | As agreed | | Before opening | Third party vendors | | | Furniture, Office Equipment, and Software7 | $6,000 to $12,000 | As agreed | | Before opening | Third party vendors | | | Vehicles8 | $3,500 - $70,000 | As agreed | | Before opening | Third party vendors | | | Business Licenses and | $600 to $4,000 | As agreed | | Before | Municipalities and other | | | Permits9 | | | | opening | Government Entities | | | Professional Fees10 | $1,500 to $5,000 | As agreed | | Before opening | Accountants, Lawyers, other Third Parties, including use of approved vendors (see Note 9). | | | Initial Inventory and | $12,000 to $25,000 | As agreed | | Before | Third party vendors | | | Supplies11 | | | | opening | | | | Insurance12 | $15,000 to $25,000 | As agreed | | Before opening | Insurance Agents/Brokers | | | Training Expenses13 | $1,700 to $5,000 | As agreed | payment | Before opening | Airlines, Hotels, Restaurants, etc. | be made | | Marketing14 | $2,000 to $10,000 | As agreed | | Before opening | Third party vendors | | | Additional Funds – First 5 months15 | $93,000 to $170,000 | As agreed | | As incurred | Employees, Suppliers, Utility Companies, and Third party vendors | | | Total Estimated Initial | $269,300 to | | | | | | | Investment16 | $514,000 | | | | | | | Type of Expenditure1 | Amount | Method of payment | When due | To whom payment is to be made | | | | Marketing14 | \$2,000 to \$10,000 | As agreed | Before opening | Third party vendors | | | | Additional Funds – | \$93,000 to | As agreed | As incurred | Employees, Suppliers, | | | | First | | | | | | | | months15 | \$170,000 | | | Utility Companies, and | | | | 5 | | | | Third party vendors | | | | Total Estimated Initial | \$26 Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 23–26)

Question 6

What is the total future aggregate amount of amortization expense to be recognized related to definite-lived intangible assets for 1 800 Packouts as of December 31, 2022?

Accepted Answer

p.

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.

#### 3. Goodwill and Intangible Assets

Goodwill and intangible as

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 7

What is the total number of classroom training hours for a 1 800 Packouts franchise?

Accepted Answer

| Subject                    | Hours of Classroom Training | Hours of Hands-On Job Training | Location                                          |
|----------------------------|-----------------------------------|-----------------------------------------|---------------------------------------------------|
| Orientation to the Company | 1/2 | 1/2 | Our headquarters, or other designated location |
| Company Objectives | 1/2 | 1/2 | Our headquarters, or other designated location |
| New Office Development | 1 | 0 | Our headquarters, or other designated location |
| Services Overview | 1 | 2 | Our headquarters, or other designated location |
| Subject                                           | Hours of Classroom Training | Hours of Hands-On Job Training | Location                                                                                           |
|---------------------------------------------------|-----------------------------------|-----------------------------------------|----------------------------------------------------------------------------------------------------|
| Operations | 2 | 26 | Our headquarters, or other designated locationand a Franchised Business that we designate |
| Support Systems & Computer | 1 | 0 | Our headquarters, or other |
| Systems |  |  | designated location |
| Sales | 2 | 0 | Our headquarters, or other designated location |
| Marketing & Advertising | 2 | 0 | Our headquarters, or other designated location |
| People Management | 1 | 4 | Our headquarters, or other designated location |
| Tours/Vendor Information | 0 | 2 | Our headquarters, or other designated location |
| Certification Testing, Graduation, | 1 | 1 | Our headquarters, or other |
| and Sendoff |  |  | designated location |
| Totals | 12 | 36 |  |

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 32–39)

Question 8

What was the total number of 1 800 Packouts franchise terminations across all states listed in the table during the reporting period?

Accepted Answer

|  |  | Franchises at |  |  |  |  | Ceased | End of |
|---|---|---|---|---|---|---|---|---|
|  |  | the Start of the | Franchises |  | Non- | Reacquired | Operation - | the |
| State | Year | Year | Opened | Terminations | renewals | by Franchisor | other reasons | Year |
| AL | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  |  |  |  |  |  |  |  |  |
| AR | 2022 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 0 | 1 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| AZ |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| CA |  |  |  |  |  |  |  |  |
|  | 2022 | 11 | 0 | 0 | 0 | 0 | 0 | 11 |
|  | 2023 | 11 | 1 | 0 | 0 | 0 | 0 | 12 |
|  | 2024 | 12 | 1 | 1 | 0 | 0 | 0 | 12 |
| DE |  |  |  |  |  |  |  |  |
|  | 2022 | 3 | 0 | 3 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| FL |  |  |  |  |  |  |  |  |
|  | 2022 | 5 | 0 | 0 | 1 | 0 | 0 | 4 |
|  | 2023 | 4 | 1 | 1 | 2 | 0 | 0 | 2 |
|  | 2024 | 2 | 2 | 1 | 0 | 0 | 0 | 3 |
|  |  |  |  |  |  |  |  |  |
| GA | 2022 | 4 | 0 | 0 | 0 | 0 | 0 | 4 |
|  | 2023 | 4 | 1 | 0 | 0 | 0 | 0 | 5 |
|  | 2024 | 5 | 0 | 0 | 0 | 0 | 0 | 5 |
|  |  |  |  |  |  |  |  |  |
|---|---|---|---|---|---|---|---|---|
| IL | 2022 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
| IA |  |  |  |  |  |  |  |  |
|  | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2023 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2024 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| IN |  |  |  |  |  |  |  |  |
|  | 2022 | 1 | 0 | 1 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| KY |  |  |  |  |  |  |  |  |
|  | 2022 | 3 | 0 | 0 | 0 | 0 | 0 | 3 |
|  | 2023 | 3 | 0 | 0 | 0 | 0 | 0 | 3 |
|  | 2024 | 3 | 0 | 0 | 0 | 0 | 0 | 3 |
| ME |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| MD |  |  |  |  |  |  |  |  |
|  | 2022 | 2 | 0 | 1 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
| MA |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| MI |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 20233 | 0 | 2 | 0 | 0 | 0 | 0 | 2 |
|  | 2024 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| MN |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|---|---|---|---|---|---|---|---|---|
|  | 2023 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 1 | 0 | 0 | 0 | 0 |
| MS |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
| MO |  |  |  |  |  |  |  |  |
|  | 2022 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 0 | 1 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| NH |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| NJ |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
| NV |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 1 | 0 | 0 | 0 | 0 |
| NY |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| NC |  |  |  |  |  |  |  |  |
|  | 2022 | 4 | 3 | 2 | 0 | 0 | 0 | 5 |
|  | 2023 | 5 | 0 | 0 | 0 | 0 | 0 | 5 |
|  | 2024 | 5 | 0 | 2 | 0 | 0 | 0 | 3 |
| OH |  |  |  |  |  |  |  |  |
|  | 2022 | 3 | 0 | 0 | 0 | 0 | 0 | 3 |
|  | 2023 | 3 | 0 | 1 | 0 | 0 | 0 | 2 |
|---|---|---|---|---|---|---|---|---|
|  | 2024 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| OK |  |  |  |  |  |  |  |  |
|  | 2022 | 3 | 0 | 0 | 0 | 0 | 0 | 3 |
|  | 2023 | 3 | 0 | 3 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| SC |  |  |  |  |  |  |  |  |
|  | 2022 | 6 | 0 | 0 | 0 | 0 | 0 | 6 |
|  | 2023 | 6 | 0 | 0 | 0 | 0 | 0 | 6 |
|  | 2024 | 6 | 0 | 6 | 0 | 0 | 0 | 0 |
| TN |  |  |  |  |  |  |  |  |
|  | 2022 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 1 | 0 | 0 | 0 | 0 | 2 |
|  |  |  |  |  |  |  |  |  |
| TX | 2022 | 4 | 0 | 0 | 0 | 0 | 0 | 4 |
|  | 2023 | 4 | 1 | 0 | 0 | 0 | 0 | 5 |
|  | 2024 | 5 | 1 | 0 | 0 | 0 | 1 | 5 |
| UT |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 2 | 0 | 0 | 0 | 0 | 2 |
|  | 2024 | 2 | 0 | 1 | 0 | 0 | 0 | 1 |
|  |  |  |  |  |  |  |  |  |
| VA | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2023 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2024 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| DC |  |  |  |  |  |  |  |  |
|  | 2022 | 1 | 0 | 1 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| WI |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|---|---|---|---|---|---|---|---|---|
| Totals |  |  |  |  |  |  |  |  |
|  | 2022 | 58 | 4 | 8 | 1 | 0 | 0 | 53 |
|  | 2023 | 53 | 11 | 7 | 2 | 0 | 0 | 55 |
|  | 2024 | 55 | 7 | 13 | 0 | 0 | 0 | 48 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–65)

Question 9

What is the total number of hours of hands-on job training provided for a 1 800 Packouts franchise?

Accepted Answer

| Subject                    | Hours of Classroom Training | Hours of Hands-On Job Training | Location                                          |
|----------------------------|-----------------------------------|-----------------------------------------|---------------------------------------------------|
| Orientation to the Company | 1/2 | 1/2 | Our headquarters, or other designated location |
| Company Objectives | 1/2 | 1/2 | Our headquarters, or other designated location |
| New Office Development | 1 | 0 | Our headquarters, or other designated location |
| Services Overview | 1 | 2 | Our headquarters, or other designated location |
| Subject                                           | Hours of Classroom Training | Hours of Hands-On Job Training | Location                                                                                           |
|---------------------------------------------------|-----------------------------------|-----------------------------------------|----------------------------------------------------------------------------------------------------|
| Operations | 2 | 26 | Our headquarters, or other designated locationand a Franchised Business that we designate |
| Support Systems & Computer | 1 | 0 | Our headquarters, or other |
| Systems |  |  | designated location |
| Sales | 2 | 0 | Our headquarters, or other designated location |
| Marketing & Advertising | 2 | 0 | Our headquarters, or other designated location |
| People Management | 1 | 4 | Our headquarters, or other designated location |
| Tours/Vendor Information | 0 | 2 | Our headquarters, or other designated location |
| Certification Testing, Graduation, | 1 | 1 | Our headquarters, or other |
| and Sendoff |  |  | designated location |
| Totals | 12 | 36 |  |

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 32–39)

Question 10

How does 1 800 Packouts' 'Accounts receivable, net of an allowance for credit losses' compare to industry averages?

Accepted Answer

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            | \$ 1,455,349    |
| Restricted cash                                                             |     | -                    | 840,143            |
| Accounts receivable, net of an allowance for credit losses                  |     |                      |                    |
| of \$74,296 and \$105,953, respectively                                     |     | 6,102,611            | 3,565,178          |
| Other |  | 820,000 | - |
| current |  |  |  |
| receivable |  |  |  |
| Current |  | 1,797,429 | 1,382,859 |
| portion |  |  |  |
| of |  |  |  |
| contract |  |  |  |
| assets |  |  |  |
| Prepaid and other current assets                                            |     | 1,803,912            | 1,537,556          |
| Total current assets                                                        |     | 14,214,643           | 8,781,085          |
| Goodwill, net                                                               |     | 52,556,496           | 66,184,756         |
| Intangible assets, net                                                      |     | 45,678,810           | 50,358,496         |
| Contract assets, net of current portion                                     |     | 13,317,603           | 10,981,453         |
| Operating lease right-of-use assets                                         |     | 1,603,081            | 1,272,436          |
| Other assets                                                                |     | 2,206,748            | 828,551            |
| Total assets                                                                | \$  | 129,577,381          | \$ 138,406,777  |
| Liabilities and Members' Equity                                             |     |                      |                    |
| Current liabilities:

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 11

How does the allowance for credit losses for 1 800 Packouts compare across the reported periods?

Accepted Answer

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, th

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 12

What is the difference between total current assets and total assets for 1 800 Packouts?

Accepted Answer

assets         1,460,144         792,682           Total current assets         8,554,234         8,807,937           Goodwill, net         56,518,636         63,918,327           Intangible assets, net         50,358,496         54,137,918           Contract assets, net of current portion         10,981,453         9,616,933           Operating lease right-of-use assets         1,246,432         1,153,787           Other assets         706,855         703,934           Total assets         \$ 128,366,106         \$ 138,338,836           Liabilities and Members' Equity         \$ 655,035         \$ 602,708           Accounts payable         \$ 655,035         \$ 602,708           Accounts payable         \$ 655,035         \$ 602,708           Accoured expenses         1,997,785         2,643,685           Current portion of contract liabilities         2,371,381         1,960,914           Current portion of poperating lease liabilities         229,780         154,246           Current portion of long-term de

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 13

How does 1 800 Packouts' 'Goodwill, net' compare to its total assets?

Accepted Answer

|                                                                             | (1) | 2024                 | 2023               |
|-----------------------------------------------------------------------------|-----|----------------------|--------------------|
| Assets                                                                      |     |                      |                    |
| Goodwill, net                                                               |     | 52,556,496           | 66,184,756         |
| Total assets                                                                | $  | 129,577,381          | $ 138,406,777  |

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 14

How does 1 800 Packouts' total assets compare to its liabilities and members' equity?

Accepted Answer

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            | \$ 1,455,349    |
| Restricted cash                                                             |     | -                    | 840,143            |
| Accounts receivable, net of an allowance for credit losses                  |     |                      |                    |
| of \$74,296 and \$105,953, respectively                                     |     | 6,102,611            | 3,565,178          |
| Other |  | 820,000 | - |
| current |  |  |  |
| receivable |  |  |  |
| Current |  | 1,797,429 | 1,382,859 |
| portion |  |  |  |
| of |  |  |  |
| contract |  |  |  |
| assets |  |  |  |
| Prepaid and other current assets                                            |     | 1,803,912            | 1,537,556          |
| Total current assets                                                        |     | 14,214,643           | 8,781,085          |
| Goodwill, net                                                               |     | 52,556,496           | 66,184,756         |
| Intangible assets, net                                                      |     | 45,678,810           | 50,358,496         |
| Contract assets, net of current portion                                     |     | 13,317,603           | 10,981,453         |
| Operating lease right-of-use assets                                         |     | 1,603,081            | 1,272,436          |
| Other assets                                                                |     | 2,206,748            | 828,551            |
| Total assets                                                                | \$  | 129,577,381          | \$ 138,406,777  |
| Liabilities and Members' Equity                                             |     |                      |                    |
| Current liabilities:                                                        |     |                      |                    |
|                                                                             |     |                      |                    |
| Accounts payable                                                            | \$  | 1,515,669            | \$ 713,523      |
| Accrued expenses                                                            |     | 2,383,578            | 2,656,030          |
| Current |  | 3,227,336 | 2,517,756 |
| portion |  |  |  |
| of |  |  |  |
| contract |  |  |  |
| liabilities |  |  |  |
| Current portion of operating lease liabilities |  | 360,394 | 256,163 |
| Revolving credit facility |  | 1,100,000 | - |
| Current portion of long-term debt, net of debt issuance costs               |     | 206,519              | 851,000            |
| Total current liabilities                                                   |     | 8,793,496            | 6,994,472          |
| Contract |  | 20,994,540 | 17,393,479 |
| liabilities, |  |  |  |
| net |  |  |  |
| of |  |  |  |
| current |  |  |  |
| portion |  |  |  |
| Operating lease liabilities, net of current portion                         |     | 1,321,919            | 1,070,182          |
| Long-term debt, net of current portion and debt issuance costs              |     | 46,197,321           | 46,148,366         |
|                                                                             |     |                      |

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 15

What is the trend in accounts receivable, net of an allowance for credit losses, for 1 800 Packouts over the reported periods?

Accepted Answer

|                                                                             | (1) | 2024                 | 2023               |
|-----------------------------------------------------------------------------|-----|----------------------|--------------------|
|                                                                             |     |                      |                    |
| Assets                                                                      |     |                      |                    |
| Current assets:                                                             |     |                      |                    |
| Cash                                                                        | $  | 3,690,691            | $ 1,455,349    |
| Restricted cash                                                             |     | -                    | 840,143            |
| Accounts receivable, net of an allowance for credit losses                  |     |                      |
| of $74,296 and $105,953, respectively                                     |     | 6,102,611            | 3,565,178          |

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 16

What is the trend in cash for 1 800 Packouts over the reported periods?

Accepted Answer

terest expense                          |    | (3,821,499)                              |                | (647,029)                                                   |
| Earnings from unconsolidated subsidiary   |    | -                                        |                | 77,537                                                      |
| Gain on sale of unconsolidated subsidiary |    | 1,025,637                                |                | -                                                           |
| Other income (expense)                    | _  | (51,463)                                 |                | (112,956)                                                   |
| Total other expense, net                  | _  | (2,847,325)                              |                | (682,448)                                                   |
| Loss before income taxes                  |    | (11,719,346)                             |                | (6,523,717)                                                 |
| Income tax benefit                        | _  | 1,280,676                                |                | 374,421                                                     |
| Net loss                                  | \$ | (10,438,670)                             | s              | (6,149,296)                                                 |

| Balance as of April 9, 2021 (inception) | \$ |              |
|-----------------------------------------|----|--------------|
| Contributions                           |    | 47,557,681   |
| Net loss                                |    | (6,149,296)  |
| Balance as of December 31, 2021         |    | 41,408,385   |
| Contributions                           |    | 35,555,980   |
| Distributions                           |    | (250,000)    |
| Net loss                                | _  | (10,438,670) |
| Balance as of December 31, 2022         | Ś  | 66,275,695   |

|                                                                                |    | For the year ded December 31, 2022 | (in | r the period from April 9, 2021 ception) through cember 31, 2021 |
|--------------------------------------------------------------------------------|----|------------------------------------------|-----|---------------------------------------------------------------------------|
| Cash flows from operating activities: |  |  |  |  |
| Net loss | \$ | (10,438,670) | \$ | (6,149,296) |
| Adjustments to reconcile net loss to net cash used in |  |  |  |  |
| operating activities: |  |  |  |  |
| Amortization of goodwill and intangible assets |  | 10,568,470 |  | 2,543,033 |
| Depreciation of fixed assets |  | 29,104 |  | 5,840 |
| Amortization of deferred financing costs |  | 213,726 |  | 38,998 |
| Amortization of operating lease right-of-use asset |  | 108,253 |  | - |
| Gain on sale of unconsolidated subsidiary  Loss on disposal of fixed assets |  | (1,025,637) 43,615 |  | - |
| Provision for bad debt |  | 43,615 25,950 |  | 32,710 |
| Decrease (increase) in: |  | 23,330 |  | 32,710 |
| Accounts receivable |  | (777,114) |  | 34,410 |
| Contract assets |  | (2,540,535) |  | (169,463) |
| Other assets |  | (535,234) |  | (216,538) |
| Increase (decrease) in: |  | 2 012 105 |  | 472.450 |
| Accounts payable and accrued expenses Contract liabilities |  | 2,012,196 3,647,786 |  | 472,458 768.118 |
| Operating lease liabilities |  | (76,533) |  | 700,110 |
| Deferred taxes |  | (1,269,181) |  | (409, 393) |
| Net cash used in operating activities | _ | (13,804) |  | (3,049,123) |
| • | _ | (13,604) |  | (3,049,123) |
| Cash flows from investing activities: |  | (000 774) |  | (5.040) |
| Purchase of property and equipment |  | (238,771) |  | (5,840) |
| Contingent consideration paid |  |  |  |  |
| Proceeds from sale of unconsolidated subsidiary |  | (1,200,000) 1,623,174 |  |  |
| Net cash paid for acquisitions |  | (46,109,861) |  | (62,103,632) |
| Net cash used in investing activities | Ξ | (45,925,458) |  | (

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 17

What is the trend in the current portion of contract assets for 1 800 Packouts over the reported periods?

Accepted Answer

expressing an opinion on the
effectiveness of the Company's internal 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.

Tanner LLC

April 30, 2023

|                                                                |    | As of December 3: |    |            |
|----------------------------------------------------------------|----|-------------------|----|------------|
|                                                                |    | 2022              |    | 2021       |
| Assets                                                         |    |                   |    |            |
| Current assets:                                                |    |                   |    |            |
| Cash                                                           | \$ | 3,760,121         | \$ | 1,614,389  |
| Restricted cash                                                |    | 543,616           |    | 439,024    |
| Accounts receivable, net of an allowance for doubtful accounts |    |                   |    |            |
| of \$58,660 and \$32,710, respectively                         |    | 2,360,599         |    | 907,535    |
| Current portion of contract assets                             |    | 1,350,919         |    | 169,463    |
| Prepaid and other current assets                               |    | 792,682           |    | 33,886     |
| Total current assets                                           |    | 8,807,937         |    | 3,164,297  |
| Goodwill, net                                                  |    | 63,918,327        |    | 39,262,725 |
| Intangible assets, net                                         |    | 54,137,918        |    | 33,635,333 |
| Investment in unconsolidated subsidiary                        |    | -                 |    | 597,537    |
| Contract assets, net of current portion                        |    | 9,616,933         |    | 379,746    |
| Operating lease right-of-use asset                             |    | 1,153,787         |    | -          |
| Other assets                                                   | _  | 703,934           |    | 293,037    |
| Total assets                                                   | \$ | 138,338,836       | \$ | 77,332,675 |
| Liabilities and Members' Equity                                |    |                   |    |            |
| Current liabilities:                                           |    |                   |    |            |
| Accounts payable                                               |    | 602,708           | \$ | 333,610    |
|

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 18

What is the trend in goodwill, net, for 1 800 Packouts over the reported periods?

Accepted Answer

expressing an opinion on the
effectiveness of the Company's internal 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.

Tanner LLC

April 30, 2023

|                                                                |    | As of December 3: |    |            |
|----------------------------------------------------------------|----|-------------------|----|------------|
|                                                                |    | 2022              |    | 2021       |
| Assets                                                         |    |                   |    |            |
| Current assets:                                                |    |                   |    |            |
| Cash                                                           | \$ | 3,760,121         | \$ | 1,614,389  |
| Restricted cash                                                |    | 543,616           |    | 439,024    |
| Accounts receivable, net of an allowance for doubtful accounts |    |                   |    |            |
| of \$58,660 and \$32,710, respectively                         |    | 2,360,599         |    | 907,535    |
| Current portion of contract assets                             |    | 1,350,919         |    | 169,463    |
| Prepaid and other current assets                               |    | 79

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 19

What is the trend in intangible assets, net, for 1 800 Packouts over the reported periods?

Accepted Answer

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            | \$ 1,455,349    |
| Restricted cash                                                             |     | -                    | 840,143            |
| Accounts receivable, net of an allowance for credit losses                  |     |                      |                    |
| of \$74,296 and \$105,953, respectively                                     |     | 6,102,611            | 3,565,178          |
| Other |  | 820,000 | - |
| current |  |  |  |
| receivable |  |  |  |
| Current |  | 1,797,429 | 1,382,859 |
| portion |  |  |  |
| of |  |  |  |
| contract |  |  |  |
| assets |  |  |  |
| Prepaid and other current assets                                            |     | 1,803,912            | 1,537,556          |
| Total current assets                                                        |     | 14,214,643           | 8,781,085          |
| Goodwill, net                                                               |     | 52,556,496           | 66,184,756         |
| Intangible assets, net

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 20

What is the trend in prepaid and other current assets for 1 800 Packouts over the reported periods?

Accepted Answer

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            | \$ 1,455,349    |
| Restricted cash                                                             |     | -                    | 840,143            |
| Accounts receivable, net of an allowance for credit losses                  |     |                      |                    |
| of \$74,296 and \$105,953, respectively                                     |     | 6,102,611            | 3,565,178          |
| Other |  | 820,000 | - |
| current |  |  |  |
| receivable |  |  |  |
| Current |  | 1,797,429 | 1,382,859 |
| portion |  |  |  |
| of |  |  |  |
| contract |  |  |  |
| assets |  |  |  |
| Prepaid and other current assets                                            |     | 1,803,912            | 1,537,556          |
| Total current assets                                                        |     | 14,214,643           | 8,781,085          |
| Goodwill, net                                                               |     | 52,556,496           | 66,184,756         |
| Intangible assets, net                                                      |     | 45,678,810           | 50,358,496         |
| Contract assets, net of current portion                                     |     | 13,317,603           | 10,981,453         |
| Operating lease right-of-use assets                                         |     | 1,603,081            | 1,272,436          |
| Other assets                                                                |     | 2,206,748            | 828,551            |
| Total assets                                                                | \$  | 129,577,381          | \$ 138,406,777  |
| Liabilities and Members' Equity                                             |     |                      |                    |
| Current liabilities:                                                        |     |                      |                    |
|                                                                             |     |                      |                    |
| Accounts payable                                                            | \$  | 1,515,669            | \$ 713,523      |
| Accrued expenses                                                            |     | 2,383,578            | 2,656,030          |
| Current |  | 3,227,336 | 2,517,756 |
| portion |  |  |  |
| of |  |  |  |
| contract |  |  |  |
| liabilities |  |  |  |
| Current portion of operating lease liabilities |  | 360,394 | 256,163 |
| Revolving credit facility |  | 1,100,000 | - |
| Current portion of long-term debt, net of debt issuance costs               |     | 206,519              | 851,000            |
| Total current liabilities                                                   |     | 8,793,496            | 6,994,472          |
| Contract |  | 20,994,540 | 17,393,479 |
| liabilities, |  |  |  |
| net |  |  |  |
| of |  |  |  |
| current |  |  |  |
| portion |  |  |  |
| Operating lease liabilities, net of current portion                         |     | 1,321,919            | 1,070,182          |
| Long-term debt, net of current portion and debt issuance costs              |     | 46,197,321           | 46,148,366         |
|                                                                             |     |                      |                    |

Deferred income tax liabilities 4,942,067 5,507,405

| Total liabilities                              | 82,249,343        | 77,113,904        |
|------------------------------------------------|-------------------|-------------------|
| Commitments and contingencies (Notes 4, 5 & 6) |                   |                   |
| Members' equity                                | 47,328,038        | 61,292,873        |
| Total liabilities and members' equity          | \$ 129,577,381 | \$ 138,406,777 |

*For the Years Ended December 31,*

|                                                                                              | 2024                     | 2023                     |
|----------------------------------------------------------------------------------------------|--------------------------|--------------------------|
| Revenues | \$ 47,493,372 \$ | 38,119,222 |
| Cost of revenues | 14,071,864 | 10,711,574 |
| Gross profit | 33,421,508 | 27,407,648 |
| Operating expenses: Selling, general, and administrative Depreciation and amortization | 28,732,110 11,953,138 | 24,077,839 12,782,735 |
| Total operating expenses | 40,685,248 | 36,860,574 |
| Loss from operations | (7,263,740) | (9,452,926) |
| Other income (expense): Interest expense Other income (expense) | (5,462,474) 43,809 | (5,530,375) (218,954) |
| Total other expense, net | (5,418,665) | (5,749,329) |
| Loss before income taxes | (12,682,405) | (15,202,255) |
| Income tax benefit (provision) | 432,399 | (765,698) |
| Net | \$ (12,250,006) | (15,967,953) |
| loss | \$ |  |
*For the years ended December 31, 2024 and 2023*

|                                              | (1) | Members' Equity |              |  |
|----------------------------------------------|-----|-----------------|--------------|--|
| Balance as of January 1, 2023                |     | \$              | 77,059,237

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 21

What is the trend in total current assets for 1 800 Packouts over the reported periods?

Accepted Answer

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            | \$ 1,455,349    |
| Restricted cash                                                             |     | -                    | 840,143            |
| Accounts receivable, net of an allowance for credit losses                  |     |                      |                    |
| of \$74,296 and \$105,953, respectively                                     |     | 6,102,611            | 3,565,178          |
| Other |  | 820,000 | - |
| current |  |  |  |
| receivable |  |  |  |
| Current |  | 1,797,429 | 1,382,859 |
| portion |  |  |  |
| of |  |  |  |
| contract |  |  |  |
| assets |  |  |  |
| Prepaid and other current assets                                            |     | 1,803,912            | 1,537,556          |
| Total current assets                                                        |     | 14,214,643           | 8,781,085          |
| Goodwill, net                                                               |     | 52,556,496           | 66,184,756         |
| Intangible assets, net                                                      |     | 45,678,810           | 50,358,496         |
| Contract assets, net of current portion                                     |     | 13,317,603           | 10,981,453         |
| Operating lease right-of-use assets                                         |     | 1,603,081            | 1,272,436          |
| Other assets                                                                |     | 2,206,748            | 828,551            |
| Total assets                                                                | \$  | 129,577,381          | \$ 138,406,777  |
| Liabilities and Members' Equity                                             |     |                      |                    |
| Current liabilities:                                                        |     |                      |                    |
|                                                                             |     |                      |                    |
| Accounts payable                                                            | \$  | 1,515,669            | \$ 713,523      |
| Accrued expenses                                                            |     | 2,383,578            | 2,656,030          |
| Current |  | 3,227,336 | 2,517,756 |
| portion |  |  |  |
| of |  |  |  |
| contract |  |  |  |
| liabilities |  |  |  |
| Current portion of operating lease liabilities |  | 360,394 | 256,163 |
| Revolving credit facility |  | 1,100,000 | - |
| Current portion of long-term debt, net of debt issuance costs               |     | 206,519              | 851,000            |
| Total current liabilities                                                   |     | 8,793,496            | 6,994,472          |
| Contract |  | 20,994,540 | 17,393,479 |
| liabilities, |  |  |  |
| net |  |  |  |
| of |  |  |  |
| current |  |  |  |
| portion |  |  |  |
| Operating lease liabilities, net of current portion                         |     | 1,321,919            | 1,070,182          |
| Long-term debt, net of current portion and debt issuance costs              |     | 46,197,321           | 46,148,366         |
|                                                                             |     |                      |                    |

Deferred income tax liabilities 4,942,067 5,507,405

| Total liabilities                              | 82,249,343        | 77,113,904        |
|------------------------------------------------|-------------------|-------------------|
| Commitments and contingencies (Notes 4, 5 & 6) |                   |                   |
| Members' equity                                | 47,328,038        | 61,292,873        |
| Total liabilities and members' equity          | \$ 129,577,381 | \$ 138,406,777 |

*For the Years Ended December 31,*

|                                                                                              | 2024                     | 2023                     |
|----------------------------------------------------------------------------------------------|--------------------------|--------------------------|
| Revenues | \$ 47,493,372 \$ | 38,119,222 |
| Cost of revenues | 14,071,864 | 10,711,574 |
| Gross profit | 33,421,508 | 27,407,648 |
| Operating expenses: Selling, general, and administrative Depreciation and amortization | 28,732,110 11,953,138 | 24,077,839 12,782,735 |
| Total operating expenses | 40,685,248 | 36,860,574 |
| Loss from operations | (7,263,740) | (9,452,926) |
| Other income (expense): Interest expense Other income (expense) | (5,462,474) 43,809 | (5,530,375) (218,954) |
| Total other expense, net | (5,418,665) | (5,749,329) |
| Loss before income taxes | (12,682,405) | (15,202,255) |
| Income tax benefit (provision) | 432,399 | (765,698) |
| Net | \$ (12,250,006) | (15,967,953) |
| loss | \$ |  |
*For the years ended December 31, 2024 and 2023*

|

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 22

For a 1 800 Packouts franchise in Maryland, when must the franchisor complete its pre-opening obligations to trigger the initial fee payment?

Accepted Answer

| 2025 | $274,481 |  |
|---|---|---|
| 2026 | 219,179 |  |
### **RIDER TO THE 1-800-Packouts Holdco, LLC FRANCHISE AGREEMENT FOR USE IN MARYLAND**

**This Rider** (the "Rider") is made and entered into as of the Agreement Date as stated in the Franchise Agreement (defined below), between you, \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, as Franchisee, and us, 1-800-Packouts Holdco, LLC, a Georgia limited liability company, as Franchisor.

- 1. **Background**. We and you are parties to that certain Franchise Agreement effective as of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (the "Franchise Agreement") that has been signed concurrently with the signing of this Rider. This Rider is annexed to and forms part of the Franchise Agreement. This Rider is being signed because (a) you are a resident of the State of Maryland, and/or (b) the Franchised Business that you will operate under the Franchise Agreement will be located in Maryland.
- 2. **Releases**. The following language is added to the end of Sections 2.D(4) and 14.C(6) of the Franchise Agreement:

Any general release signed as a condition to transfer or renewal will not apply to claims arising under the Maryland Franchise Registration and Disclosure Law.

3. **Consent to Jurisdiction**. The following language is added to the end of Section 17.A of the Franchise Agreement:

However, you may bring an action in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.

4. **Governing Law**. The following language is added to the end of Section 17.B of the Franchise Agreement:

However, Maryland law will apply to claims arising under the Maryland Franchise Registration and Disclosure Law.

5. **Limitation of Claims**. The following language is added to the end of Section 17.G of the Franchise Agreement:

Nothing in this Agreement shall act to reduce the three (3) year statute of limitations afforded to you for bringing a claim under the Maryland Franchise Registration and Disclosure Law.

6. **Acknowledgements**. The following language is appended to the Franchise Agreement:

No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including, fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed with the franchise.

In connection with such appended language, the Franchise Agreement Acknowledgement sections contained at Sections 20.1 and 20.2 are hereby deleted.

| 7. Fee Deferral. Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement and the outlet is opened. |

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 23

What happens if 1 800 Packouts does not provide written approval for advertising or marketing materials within 14 days of receiving them from the franchisee?

Accepted Answer

- (2) You must obtain our advance written approval prior to using or producing any advertising or marketing materials using any of the Marks, in whole or in part. You agree to conduct all advertising in a dignified manner and to conform to the standards and requirements we specify in the Manuals. We will have the final decision on all creative development of advertising and promotional messages. If our written approval is not received within 14 days from the date we received the material, the material is deemed disapproved. We reserve the right to require you to discontinue the use of any advertising or marketing materials.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 24

If I am an area developer for 1 800 Packouts in Maryland, when are my development fees and initial payments due?

Accepted Answer

- 7. The Franchise Disclosure Document and Franchise Agreement are amended as pertaining to initial fees and payments, as follows:
  - A. The Franchise Agreement is amended as follows: The initial franchise fee and payments owed by franchisee shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under any applicable development agreement opens.
  - B. The Franchise Disclosure Document is amended at Item 5 to state: Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all area development fees and initial payments by area developers shall be deferred until the first franchise under the area development agreement opens.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 25

Can 1 800 Packouts require a franchisee to stop using specific advertising or marketing materials?

Accepted Answer

- (2) You must obtain our advance written approval prior to using or producing any advertising or marketing materials using any of the Marks, in whole or in part. You agree to conduct all advertising in a dignified manner and to conform to the standards and requirements we specify in the Manuals. We will have the final decision on all creative development of advertising and promotional messages. If our written approval is not received within 14 days from the date we received the material, the material is deemed disapproved. We reserve the right to require you to discontinue the use of any advertising or marketing materials.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 26

Under what circumstances does 1 800 Packouts have an obligation to approve or not unreasonably withhold approval of a franchisee's actions or requests?

Accepted Answer

Except where this Agreement expressly obligates us reasonably to approve or not unreasonably to withhold our approval of any of your actions or requests, we have the absolute right to refuse any request you make or to withhold our approval of any of your actions that require our approval.

SIGNAGE Tenant has the right to install the customary and usual display signs of Packouts on the building façade as detailed in the signage criteria of the Lease, subject to Landlord's approval which shall not be unreasonably withheld, and subject to applicable government ordinances and restrictive covenants

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 27

According to Rhode Island law, is a provision in the 1 800 Packouts Franchise Agreement requiring the application of laws of another state valid?

Accepted Answer

Section 19- 28.1-14 of the Rhode Island Franchise Investment Act provides that "A provision in a Franchise Agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this Act."

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 28

According to Rhode Island law, is a provision in the 1 800 Packouts Franchise Agreement restricting jurisdiction or venue to a forum outside of Rhode Island valid?

Accepted Answer

Section 19- 28.1-14 of the Rhode Island Franchise Investment Act provides that "A provision in a Franchise Agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this Act."

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 29

According to the Rider, under what condition can a 1 800 Packouts franchisee bring an action in Rhode Island?

Accepted Answer

However, to the extent required by applicable law, you may bring an action in Rhode Island for claims arising under the Rhode Island Franchise Investment Act.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 30

According to the Rider, under what condition will Rhode Island law apply to claims related to the 1 800 Packouts franchise?

Accepted Answer

However, to the extent required by applicable law, you may bring an action in Rhode Island for claims arising under the Rhode Island Franchise Investment Act.

3. **Governing Law**. The following language is added to the end of Section 17.B of the Franchise Agreement:

Notwithstanding the foregoing, to the extent required by applicable law, Rhode Island law will apply to claims arising under the Rhode Island Franchise Investment Act. Section 19- 28.1-14 of the Rhode Island Franchise Investment Act provides that "A provision in a Franchise Agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this Act."

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 31

What actions might 1 800 Packouts take if a franchisee fails to meet the Minimum Sales Quota in any Agreement Year?

Accepted Answer

siness; and
- (e) We and our affiliates have the right to operate, or grant others the right to operate, businesses or outlets in Your Territory offering dissimilar products or services under trademarks or service marks other than the Marks.

#### **E. MINIMUM SALES QUOTA**

After you have completed your second year of operations under your Franchise Agreement, each Agreement Year will be reviewed, retrospectively (i.e., at your third anniversary of operations, the performance occurring during the entire second Agreement Year will be reviewed), and your Franchised Business must achieve a minimum amount of Gross Sales equal to \$1 per person in Your Territory (the "**Minimum Sales Quota**"). Each "**Agreement Year**" shall begin on the anniversary of the Agreement Date and end the day before the anniversary of the Agreement Date. The initial population of Your Territory is specified in Appendix A. If our population data provider provides us with revised population data, we will provide you with notice of the revised population of Your Territory, which will be used to determine the Minimum Sales Quota for the next Agreement Year. If you fail to achieve the Minimum Sales Quota in any Agreement Year, we may (i) enter into

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 32

What does the addendum for Virginia state regarding the enforceability of default or termination grounds in the 1 800 Packouts Franchise Agreement?

Accepted Answer

(1) In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, the "Summary" section of [h](#page-49-0) entitled **"Cause" defined – non-curable defaults**, is amended by adding the following:

Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 33

Does the 1 800 Packouts agreement allow for exceptions to the non-compete clause after the association ends?

Accepted Answer

- **5.

Noncompete After Association Ends.** For two years after your association with us ends for any reason, you may not, without our prior written consent:

- (a) directly or indirectly own, manage, engage in, be employed by, advise, make loans to, or have any other interest in any Competitive Business located within or serving customers that are located within (i) the territory specified on Exhibit A or any territory of another Franchised Business, (ii) a 50-mile radius from the borders of the territory specified on Exhibit A, or (iii) a 50-mile radius from any 1-800- PACKOUTS storage facility operated by Franchisor or its affiliates; or

- (b) solicit for employment any person who at any time within the immediate past 12 months has been employed by us, Franchisor or its affiliates, or by any of Franchisor's franchisees.

- **6.

Remedies**.

If you breach or threaten to breach this Agreement, you agree that we will be entitled to injunctive relief (without posting bond) as well as a suit for damages.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 34

Does the 1 800 Packouts agreement allow for injunctive relief if a breach is only threatened?

Accepted Answer

- **6.

Remedies**.

If you breach or threaten to breach this Agreement, you agree that we will be entitled to injunctive relief (without posting bond) as well as a suit for damages.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 35

Does the 1 800 Packouts agreement specify if the non-compete applies if the franchisee resigns?

Accepted Answer

3. **Covenant Not to Compete**. The following is added to the end of Section 16.E of the Franchise Agreement:

Covenants not to compete such as those mentioned above generally are considered unenforceable in North Dakota. However, we will seek to enforce them to the extent enforceable.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 36

In 1 800 Packouts arbitration, what happens if the arbitrator deems it in the best interest of justice to award fees to a party?

Accepted Answer

- e. In addition to any other remedy, the arbitrator will award the "**Prevailing Party**" their costs, fees, reasonable attorney's fees, expert witness fees, and the like that Party expended in preparation for and the prosecution of the case at arbitration. The Prevailing Party will be the Party that has obtained the greatest "**net judgment**" in terms of money or money equivalent. If money or money equivalent has not been awarded, then the Prevailing Party will be that Party that has prevailed on a majority of the material issues decided. The "**net judgment**" is determined by subtracting the smallest award of money or money equivalent from the largest award. If there is a mixed decision involving an award of money or money equivalent and equitable relief, or if the arbitrator deems it to be in the best interest of justice, the arbitrator using their reasonable judgment, will award the above fees to the Party that it deems has prevailed over the other Party. This award applies to all matters decided by the arbitrator, including matters concerning misrepresentation or fraud.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 37

In 1 800 Packouts arbitration, if there is a mixed decision involving money and equitable relief, who decides which party prevails?

Accepted Answer

- e. In addition to any other remedy, the arbitrator will award the "**Prevailing Party**" their costs, fees, reasonable attorney's fees, expert witness fees, and the like that Party expended in preparation for and the prosecution of the case at arbitration. The Prevailing Party will be the Party that has obtained the greatest "**net judgment**" in terms of money or money equivalent. If money or money equivalent has not been awarded, then the Prevailing Party will be that Party that has prevailed on a majority of the material issues decided. The "**net judgment**" is determined by subtracting the smallest award of money or money equivalent from the largest award. If there is a mixed decision involving an award of money or money equivalent and equitable relief, or if the arbitrator deems it to be in the best interest of justice, the arbitrator using their reasonable judgment, will award the above fees to the Party that it deems has prevailed over the other Party. This award applies to all matters decided by the arbitrator, including matters concerning misrepresentation or fraud.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 38

For 1 800 Packouts area developers, what condition must be met before development fees and initial payments are no longer deferred?

Accepted Answer

The Franchise Agreement is amended as follows: The initial franchise fee and payments owed by franchisee shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under any applicable development agreement opens.
  - B. The Franchise Disclosure Document is amended at Item 5 to state: Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all area development fees and initial payments by area developers shall be deferred until the first franchise under the area development agreement opens.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 39

What is the auditor's responsibility if conditions or events raise substantial doubt about 1 800 Packouts' ability to continue as a going concern?

Accepted Answer

In performing an audit in accordance with generally accepted auditing standards, we:

- 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.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 40

Is the choice of forum for 1 800 Packouts franchise disputes subject to applicable state law?

Accepted Answer

|    | Provision                                                   | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                                                                               |
|----|-------------------------------------------------------------|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  |  | employed during the past 12 months by us, our affiliates, or our franchisees. |
| s. | Modification of the 18B agreement | 18.B | No modifications unless written agreement signed by both parties. |
| t. | Integration/merger 19B clause | 18.A | Only the terms of the Franchise Agreement are binding (subject to state law). Any representations or promises made outside of the disclosure document and Franchise Agreement may not be enforceable. |
| u. | Dispute resolution by 20B arbitration or mediation | Not applicable | Not applicable |
| v. | v. Choice of forum 21B | 17.A | All actions must be brought in federal or state courts located in Utah County, Utah (or the most proximate thereto) or federal or state courts with jurisdiction over the county in which our principal office is located at the time any litigation commences (subject to applicable state law). |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 49–53)

Question 41

Is the choice of law for the 1 800 Packouts Franchise Agreement subject to applicable state law?

Accepted Answer

|    | Provision                                                   | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                                                                               |
|----|-------------------------------------------------------------|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  |  | employed during the past 12 months by us, our affiliates, or our franchisees. |
| s. | Modification of the 18B agreement | 18.B | No modifications unless written agreement signed by both parties. |
| t. | Integration/merger 19B clause | 18.A | Only the terms of the Franchise Agreement are binding (subject to state law). Any representations or promises made outside of the disclosure document and Franchise Agreement may not be enforceable. |
| u. | Dispute resolution by 20B arbitration or mediation | Not applicable | Not applicable |
| v. | v. Choice of forum 21B | 17.A | All actions must be brought in federal or state courts located in Utah County, Utah (or the most proximate thereto) or federal or state courts with jurisdiction over the county in which our principal office is located at the time any litigation commences (subject to applicable state law). |
| w. | Choice of law 22B | 17.B | Utah law governs (subject to applicable state law). |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 49–53)

Question 42

What is the condition for 1 800 Packouts to direct Call Center leads to itself?

Accepted Answer

**Protected Call Center Referrals**. You will receive Call Center leads received by the Franchisor for your assigned zip codes. If you are not compliant with your Franchise Agreement, the Franchisor may direct these leads to another franchisee or to itself.

Source: Item 12 — TERRITORY (FDD pages 40–43)

Question 43

What is the condition for 1 800 Packouts Holdco, LLC to assign the Franchise Agreement according to the Rider?

Accepted Answer

However, no assignment will be made except to an assignee who, in our good faith judgment, is willing and financially able to assume our obligations under this Agreement.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 44

What condition must be met for Illinois law to apply under the Rider to the 1 800 Packouts Franchise Agreement?

Accepted Answer

Nothing in this Agreement shall constitute a condition, stipulation, or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of the Illinois Franchise Disclosure Act of 1987 or any other Illinois law (as long as the jurisdictional requirements of that Illinois law are met).

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 45

What is the condition regarding transfer fees for a 1 800 Packouts franchise in Washington?

Accepted Answer

Transfer fees are collectable to the extent that they reflect our reasonable estimate or actual costs in effecting a transfer.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 46

What conditions must a 1 800 Packouts franchisee meet to be eligible to renew their license?

Accepted Answer

omer to you. ### **2. TERM** #### **A. INITIAL TERM** The initial term of the License (the "**Initial Term**") shall begin on the Agreement Date and expire on the 10th anniversary of the Agreement Date. #### **B. RENEWAL OF FRANCHISE** You may, at your option, renew the License for an additional 10-year term (the "**Renewal Term**," and collectively, with the Initial Term, the "**Term**"), provided that: - (1) You have given us written notice of an election to renew not less than 60 days months nor more than 6 months prior to the end of the initial term and any renewal term of this Agreement; - (2) You are not at such time in material breach of any of your obligations under this Agreement or any other agreement with us; - (3) You have substantially complied on a timely basis with all of the conditions and requirements of this Agreement and any other agreements with us or our affiliates throughout the terms of such agreements; and - (4) Subject to applicable law, you and your Owners execute a general release, in a form prescribed by us, of any claims against us and our affiliates, and our and their officers, directors, agents and employees. Each renewal will be effectuated by execution of our then-current form of franchise agreement, and all other agreements, instruments and documents then customarily used by us in gra Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 47

What conditions must be met to renew a 1 800 Packouts franchise agreement?

Accepted Answer

omer to you. ### **2. TERM** #### **A. INITIAL TERM** The initial term of the License (the "**Initial Term**") shall begin on the Agreement Date and expire on the 10th anniversary of the Agreement Date. #### **B. RENEWAL OF FRANCHISE** You may, at your option, renew the License for an additional 10-year term (the "**Renewal Term**," and collectively, with the Initial Term, the "**Term**"), provided that: - (1) You have given us written notice of an election to renew not less than 60 days months nor more than 6 months prior to the end of the initial term and any renewal term of this Agreement; - (2) You are not at such time in material breach of any of your obligations under this Agreement or any other agreement with us; - (3) You have substantially complied on a timely basis with all of the conditions and requirements of this Agreement and any other agreements with us or our affiliates throughout the terms of such agreements; and - (4) Subject to applicable law, you and your Owners execute a general release, in a form prescribed by us, of any claims against us and our affiliates, and our and their officers, directors, agents and employees. Each renewal will be effectuated by execution of our then-current form of franchise agreement, and all other agreements, instruments and documents then customarily used by us in gra Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 48

What are the consequences if a 1 800 Packouts franchisee fails to meet the construction plans and specifications?

Accepted Answer

that the plans will comply with applicable laws or regulations or lease requirements. We will not be liable to you for any defects in workmanship or structural integrity of a Facility that is constructed in accordance with plans that we approve.

#### **C. DEVELOPMENT OF THE FRANCHISED BUSINESS**

You agree at your own expense to do the following within a reasonable time after you have obtained possession of the Facility, but in any event by such period as may be provided in any lease we have approved: (1) secure all financing required to fully develop the Franchised Business; (2) obtain all required building, utility, sign, health, sanitation, and any other required permits and licenses; (3) construct the Facility according to the construction plans and specifications we have approved; (4) decorate the Facility in compliance with plans and specifications we have approved; (5) purchase and install all required equipment, furniture, furnishings, and signs; (6) purchase and brand the vehicles in compliance with our specifications; and (7) purchase an opening inventory of all required products, supplies and materials.

#### **D.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 49

What is the dependency for a 1 800 Packouts franchisee to conduct activities in an Unowned Territory?

Accepted Answer

(2) In a territory that has not been assigned to us, our affiliates, or other franchisees (an "**Unowned Territory**"), until we provide you with notice that such Unowned Territory has been purchased by another franchisee or reserved for operation by us or an affiliate:
  - (a) you may market to anyone located in such Unowned Territory, including Referral Sources and customers; and
    - (b) you may provide services to customers located in such Unowned Territory.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 50

What is the dependency for 1 800 Packouts franchisees in Maryland to pay initial fees?

Accepted Answer

| 7. Fee Deferral. Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement and the outlet is opened. |
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Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 51

When are the development fees and initial payments by area developers deferred for a 1 800 Packouts franchise in Maryland?

Accepted Answer

The Franchise Disclosure Document and Franchise Agreement are amended as pertaining to initial fees and payments, as follows:
  - A. The Franchise Agreement is amended as follows: The initial franchise fee and payments owed by franchisee shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under any applicable development agreement opens.
  - B. The Franchise Disclosure Document is amended at Item 5 to state: Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all area development fees and initial payments by area developers shall be deferred until the first franchise under the area development agreement opens.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 52

How does the development of the franchised business impact the monthly NROP fee for a 1 800 Packouts franchise?

Accepted Answer

| Month of Agreement | Monthly NROP Fee |
|---|---|
| Month 0 through Month 12 | $0 |
| Months 13-14 | $500/month |
| Months 15-16 | $1,000/month |
| Months 17-18 | $1,500/month |
| Months 19 and thereafter | $2,000/month |

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 53

To what extent does North Dakota law apply to the 1 800 Packouts Franchise Agreement, according to the Rider?

Accepted Answer

Section 17.G of the Franchise Agreement:

To the extent required by Article 33 of the General Business Law of the State of New York, all rights and any causes of action arising in your favor from the provisions of Article 33 of the General Business Law of the State of New York and the regulations issued thereunder shall remain in force; it being the intent of this provision that the non-waiver provisions of GBL Sections 687.4 and 687.5 be satisfied.

**IN WITNESS WHEREOF**, the parties have executed and delivered this Rider effective on the Agreement Date.

| Federal | 453,482 | (292,567) |
|---|---|---|
| State | 111,856 | (131,688) |
| Total deferred | 565,338 | (424,255) |
| Total benefit (provision) for income taxes | $432,399 | $(765,698) |
### **RIDER TO THE 1-800-Packouts Holdco, LLC FRANCHISE AGREEMENT FOR USE IN NORTH DAKOTA**

**This Rider** (the "Rider") is made and entered into as of the Agreement Date as stated in the Franchise Agreement (defined below), between you, \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, as Franchisee, and us, 1-800-Packouts Holdco, LLC, a Georgia limited liability company, as Franchisor.

- 1. **Background**. We and you are parties to that certain Franchise Agreement effective as of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (the "Franchise Agreement") that has been signed concurrently with the signing of this Rider. This Rider is annexed to and forms part of the Franchise Agreement. This Rider is being signed because (a) you are a resident of North Dakota and the Franchised Business that you will operate under the Franchise Agreement will be located in North Dakota; and/or (b) any of the offering or sales activity relating to the Franchise Agreement occurred in North Dakota.
- 2. **Releases**. The following is added to the end of Sections 2.D(4) and 14.C(6) of the Franchise Agreement:

Any general release shall not apply to the extent prohibited by law with respect to claims arising under the North Dakota Franchise Investment Law.

3. **Covenant Not to Compete**. The following is added to the end of Section 16.E of the Franchise Agreement:

Covenants not to compete such as those mentioned above generally are considered unenforceable in North Dakota. However, we will seek to enforce them to the extent enforceable.

4. **Consent To Jurisdiction**. The following language is added to the end of Section 17.A of the Franchise Agreement:

However, that to the extent required by applicable law, you may bring an action in North Dakota.

5. **Governing Law**. The following language is added to the end of Section 17.B of the Franchise Agreement:

Notwithstanding the foregoing, to the extent required by the North Dakota Franchise Investment Law, North Dakota law will apply to this Agreement.

- 6. **Waiver of Punitive Damages**. Section 17.C of the Franchise Agreement is hereby deleted.
- 7. **Waiver of Jury Trial**. Section 17.D of the Franchise Agreement is hereby deleted.
- 8. **Limitations of Claims**. The following language is added to the end of Section 17.G of the Franchise Agreement:

The time limitations set forth in this Section might be modified by the North Dakota Franchise Investment Law.

**IN WITNESS WHEREOF**, the parties have executed and delivered this Rider effective on the Agreement Date.

|  | 2024 | 2023 |
|---|---|---|
| Deferred income tax assets (liabilities): |  |  |
| Intangible assets | $(5,284,048) | $(5,747,861) |
| Deferred costs | (153,662) | (16,114) |
| Fixed assets | (36,969) | (44,540) |
| Deferred revenue | 249,196 | 140,945 |
| NOL carryforwards | 287,562 | 166,613 |
| Other | (4,146) | (6,448) |
|  | $(4,942,067) | $(5,507,405) |
### **RIDER TO THE 1-800-Packouts Holdco, LLC FRANCHISE AGREEMENT FOR USE IN RHODE ISLAND**

**This Rider** (the "Rider") is made and entered into as of the Agreement Date as stated in the Franchise Agreement (defined below), between you, \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, as Franchisee, and us, 1-800-Packouts Holdco, LLC, a Georgia limited liability company, as Franchisor.

- 1. **Background**. We and you are parties to that certain Franchise Agreement effective as of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (the "Franchise Agreement") that has been signed concurrently with the signing of this Rider. This Rider is annexed to and forms part of the Franchise Agreement. This Rider is being signed because (a) you are a resident of Rhode Island and the Franchised Business that you will operate under the Franchise Agreement will be located in Rhode Island; and/or (b) any of the offering or sales activity relating to the Franchise Agreement occurred in Rhode Island.
- 2. **Consent to Jurisdiction**.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 54

What factors could cause a significant change in 1 800 Packouts' 'Accounts receivable, net of an allowance for credit losses'?

Accepted Answer

that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

#### Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts which, at times, exceed federally insured limits. To date, the Company has not experienced a loss or lack of access to its invested cash and cash equivalents; however, no assurance can be provided that access to the Company's invested cash will not be impacted by adverse conditions in the financial markets.

#### Restricted Cash

Restricted cash balances relate to cash franchisees contribute to the Company's national branding funds. Cash contributed by franchisees to the national bra

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 55

What factors influence the monthly NROP fee for a 1 800 Packouts franchise, according to the agreement?

Accepted Answer

| Month of Agreement | Monthly NROP Fee |
|---|---|
| Month 0 through Month 12 | $0 |
| Months 13-14 | $500/month |
| Months 15-16 | $1,000/month |
| Months 17-18 | $1,500/month |
| Months 19 and thereafter | $2,000/month |

The initial population of Your Territory is specified in Appendix A. If our population data provider provides us with updated data for Your Territory, we will notify you of any change in your NROP Fee at least 30 days before you must begin paying the revised Population Fee. You agree that the maximum initial population permitted in any Territory is 1,500,000 people. In order to determine current population we use territory mapping software. In the event the population in the Territory exceeds 1,250,000 people during each of two consecutive years, you shall be required to purchase an Add-on Territory or an additional franchise(s) to maintain the 1,500,000 person population limit. Should the population exceed 1,250,000 people during the term of your agreement the population fee will increase at the same rate of $500 per each 250,000 people detailed in the table above (i.e., 1,000,001 to 1,250,000 would be $2,500 per month). Your NROP Fee is owed regardless if whether you enroll in all, some, or none of the NROP programs.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 56

Does the 1 800 Packouts franchise agreement allow for any deferral of the NROP fee under specific circumstances?

Accepted Answer

| Month of Agreement | Monthly NROP Fee |
|---|---|
| Month 0 through Month 12 | $0 |
| Months 13-14 | $500/month |
| Months 15-16 | $1,000/month |
| Months 17-18 | $1,500/month |
| Months 19 and thereafter | $2,000/month |

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 57

Does the 1 800 Packouts franchise agreement allow for any exceptions to the NROP fee schedule?

Accepted Answer

| Month of Agreement | Monthly NROP Fee |
|---|---|
| Month 0 through Month 12 | $0 |
| Months 13-14 | $500/month |
| Months 15-16 | $1,000/month |
| Months 17-18 | $1,500/month |
| Months 19 and thereafter | $2,000/month |

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 58

Does the 1 800 Packouts franchise agreement allow for negotiation of the NROP fee schedule under any circumstances?

Accepted Answer

Your NROP Fee is owed regardless if whether you enroll in all, some, or none of the NROP programs.

If we reasonably determine any fee based upon your Gross Sales is not permissible under applicable law, then we and you will negotiate an alternative basis for payment and, if we and you cannot agree, we or you may terminate this Agreement, but all of your post-termination obligations under Section [16](#page-103-0) (Obligations Upon Termination or Expiration of the Agreement) shall apply upon any such termination.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 59

Does the 1 800 Packouts franchise agreement include any provisions for auditing the use of the NROP fee?

Accepted Answer

To determine whether you are complying with this Agreement, we will have the right at any time during business hours, and upon reasonable notice to you, to (a) inspect your offices or any other facility or vehicles used by you and (b) inspect and audit, or cause to be inspected and audited, the Franchised Business and accounting records, sales and income tax returns, and other records of the Franchised Business and any Mitigation Business in which you have any interest or involvement in whatsoever. You must cooperate with our representatives and any independent accountants hired by us to conduct any such inspection or audit. If the audit or any other inspection should reveal that any payments to us have been underpaid, then you shall immediately pay to us the amount of the underpayment plus interest from the date such amount was due until paid at the rate of 18% per annum or the maximum rate permitted by law, whichever is less. If the inspection discloses an underpayment of 3% or more of the amount due for any period covered by the audit, you shall, in addition reimburse us for any and all costs and expenses connected with the inspection (including, without limitation, travel expenses and reasonable accounting and attorneys' fees). The foregoing remedies shall be in addition to any other remedies we may have.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 60

Does the 1 800 Packouts franchise agreement outline the consequences of failing to meet the NROP fee obligations?

Accepted Answer

If you are not compliant with your Franchise Agreement, program requirements (as established by such TPAs, or Regional/National account parties), or fail to perform program work adequately, the Franchisor may direct TPA or Regional/National referrals to another franchisee or itself.

- 3. **Protected Call Center Referrals**.

You will receive Call Center leads received by the Franchisor for your assigned zip codes.

If you are not compliant with your Franchise Agreement, the Franchisor may direct these leads to another franchisee or to itself.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 61

Does the 1 800 Packouts franchise agreement outline any specific conditions under which the NROP fee might be waived or altered?

Accepted Answer

| Month of Agreement | Monthly NROP Fee |
|---|---|
| Month 0 through Month 12 | $0 |
| Months 13-14 | $500/month |
| Months 15-16 | $1,000/month |
| Months 17-18 | $1,500/month |
| Months 19 and thereafter | $2,000/month |

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 62

Does the 1 800 Packouts franchise agreement prohibit the franchisee from using the NROP fee for any specific purpose?

Accepted Answer

Your NROP Fee is owed regardless if whether you enroll in all, some, or none of the NROP programs.

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 63

Does the 1 800 Packouts franchise agreement provide any exceptions to the NROP fee schedule based on franchisee performance?

Accepted Answer

Your NROP Fee is owed regardless if whether you enroll in all, some, or none of the NROP programs.

If you are not compliant with your Franchise Agreement, program requirements (as established by such TPAs, or Regional/National account parties), or fail to perform program work adequately, the Franchisor may direct TPA or Regional/National referrals to another franchisee or itself.

| Month of Agreement | Monthly NROP Fee |
|---|---|
| Month 0 through Month 12 | $0 |
| Months 13-14 | $500/month |
| Months 15-16 | $1,000/month |
| Months 17-18 | $1,500/month |
| Months 19 and thereafter | $2,000/month |

Source: Item 23 — RECEIPT (FDD pages 67–238)

Question 64

Does the 1 800 Packouts franchise agreement require that the execution of the release not violate any existing contracts or court orders?

Accepted Answer

Franchisee, Transferee, and Guarantors represent and warrant that: **(i)** the Releasors are the sole owners of all Claims and rights released in Section 1 and that the Releasors have not assigned or transferred, or purported to assign or transfer, to any person or entity, any Claim released under Section 1; **(ii)** each Releasor has full and complete power and authority to execute this Release, and that the execution of this Release shall not violate the terms of any contract or agreement between them or any court order; and **(iii)** this Release has been voluntarily and knowingly executed after each of them has had the opportunity to consult with counsel of their own choice.

Source: Item 23 — RECEIPT (FDD pages 67–238)

1_800_Packouts 2025 FDD FAQ