What happens if a 1 800 Packouts franchisee allows an invoice to remain unpaid?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
es freight/shipping costs.
ITEM 6 OTHER FEES
| Type of Fee1 | Amount | Due Date | Remarks |
|---|---|---|---|
| National/Regional Opportunity Protection ("NROP") Fee | $500 to $2,000 per month based on the population in your Territory. See Note 2. | Payable on the 7th day of each month beginning on the payment cycle following your opening (or after 180 days of signing the agreement). | If the population of your Territory changes, we will provide you with 30 days' notice before requiring you to pay a revised NROP Fee. |
| Royalty Fee | 7% of Gross Sales3 | Due on the 15th of the month following receipt of payment from client. | If you allow an invoice to remain unpaid, the Accounts Receivable amount associated with that invoice shall have Royalty Fees and Marketing Fees owed upon your receipt of payment or after 180 days, whichever comes first. |
Source: Item 6 — OTHER FEES (FDD pages 17–22)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, if a franchisee allows a client invoice to remain unpaid, the Accounts Receivable amount associated with that invoice will still incur Royalty Fees and Marketing Fees. These fees become due either upon the franchisee's receipt of payment for the invoice or after 180 days, whichever occurs first.
This policy means that 1 800 Packouts franchisees are responsible for paying Royalty Fees, which are 7% of Gross Sales, and Marketing Fees, which are 3% of Gross Sales, even if they haven't actually collected payment from their clients. This could create a cash flow challenge for franchisees if they have a significant amount of outstanding invoices.
Franchisees need to be diligent in their collection efforts to avoid paying fees on uncollected revenue. This also incentivizes franchisees to carefully vet clients and manage their accounts receivable effectively. The 180-day clause acts as a backstop, preventing indefinite deferral of fee obligations, but franchisees should aim to collect payment well before this deadline to maintain healthy finances.