What was the amount of management fees that 1 800 Packouts paid in 2022 to a company member?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
employees of the Company, which require that certain severance payments are made in the event of termination without cause.
Indemnification Agreements
Under the Company's organizational documents, the Company's officers, employees and directors are indemnified against certain liabilities arising out of the performance of their
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, the company paid management fees to a certain member of the company based on revenues. In 2022, 1 800 Packouts paid $1,613,745 for services rendered. This is compared to $1,344,448 for the period from inception (April 9, 2021) through December 31, 2021.
This indicates that 1 800 Packouts has a related-party transaction where a member of the company receives management fees. As a prospective franchisee, it's important to understand the nature of these services and whether they are provided at a fair market value. This is especially important since the fees are based on revenues, meaning that as a franchisee's revenue grows, so will the management fees paid to this member.
It would be prudent for a potential 1 800 Packouts franchisee to investigate the specifics of this arrangement. Understanding the services provided, the basis for the fee calculation, and the identity of the member receiving the fees is essential for assessing the financial implications and potential conflicts of interest. A prospective franchisee should also compare these fees to industry benchmarks to ensure they are reasonable.