What is the initial franchise fee component of the Buyout Fee for 1 800 Packouts?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
except as set forth in Section -8 (our assumption of management)) following our exercise of any of these rights. If we exercise any of our rights under Section C., we may thereafter terminate this Agreement without providing you any additional corrective or cure period, unless the default giving rise to our right to terminate this Agreement has been cured to our reasonable satisfaction.
E. BUYOUT
If you and we mutually agree to terminate this Agreement, and you are not at such time in material breach of any of your obligations under this Agreement or any other agreement with us, you pay us all amounts owed prior to termination, you pay us the Buyout Fee described in this Section E and 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, we will waive the restriction in Section -1(a) prohibiting you and your Owners from directly or indirectly having any involvement in any Competitive Business after the termination of this Agreement. The "Buyout Fee" shall be equal to an initial franchise fee of Sixty Thousand Dollars ($60,000) plus an additional fee of Two-Thousand Five Hundred Dollars ($2,500) per month for each month remaining on the term of your franchise agreement. If the buyout option in this Section E is exercised, you and your Owners still will
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, the Buyout Fee includes a component equivalent to the initial franchise fee. Specifically, if a franchisee and 1 800 Packouts mutually agree to terminate the Franchise Agreement, and the franchisee is not in material breach of the agreement, the franchisee must pay all outstanding amounts and a Buyout Fee.
The Buyout Fee is calculated as the sum of $60,000, which is equivalent to the initial franchise fee, plus an additional fee of $2,500 for each month remaining on the term of the franchise agreement. This fee structure provides 1 800 Packouts with compensation for the early termination of the agreement and the loss of future royalty payments.
However, the buyout option is not applicable if the Franchise Agreement is transferred to a new franchisee or if 1 800 Packouts terminates the agreement for cause. Additionally, even with the buyout, the franchisee and their owners are restricted from soliciting employees of 1 800 Packouts, its affiliates, or other franchisees for two years after termination.