If 1 800 Packouts performs an obligation on my behalf, how will I be charged?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
If any events in Section B. (By Franchisor) occur which give us the right to terminate this Agreement, we may, at our sole election and upon delivery of written notice to you, take any or all of the following actions without terminating this Agreement:
(7) undertake or perform on your behalf any obligation or duty that you are required to, but fail to, perform under this Agreement, in which case you will reimburse us upon demand for all costs and expenses that we reasonably incur in performing any such obligation or duty; and/or
(8) enter the Franchised Business' premises and assume the management of the Franchised Business ourselves or appoint a third party (who may be our affiliate) to manage the Franchised Business.
All funds from the operation of the Franchised Business while we or our appointee assumes its management will be kept in a separate account, and all of the expenses of the Franchised Business will be charged to that account.
We or our appointee may charge you (in addition to the amounts due under this Agreement) a management fee equal to 10% of the Franchised Business' Gross Sales during the period of management, plus any direct out-of-pocket costs and expenses.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to the 2025 1 800 Packouts Franchise Disclosure Document, if 1 800 Packouts undertakes or performs any obligation or duty that a franchisee is required to perform but fails to, the franchisee will reimburse 1 800 Packouts upon demand. The reimbursement will cover all costs and expenses that 1 800 Packouts reasonably incurs in performing such obligation or duty.
Additionally, if 1 800 Packouts elects to manage the Franchised Business' premises, or appoints a third party to do so, due to events giving them the right to terminate the agreement, all funds from the operation will be kept in a separate account, and all expenses of the business will be charged to that account.
In such a management scenario, 1 800 Packouts or their appointee may charge the franchisee a management fee. This fee is equal to 10% of the Franchised Business' Gross Sales during the period of management, in addition to any direct out-of-pocket costs and expenses. This is in addition to the amounts already due under the Franchise Agreement.