Why does the Maryland Securities Commissioner require a financial assurance for 1 800 Packouts?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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.
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- 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.
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- 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.
- 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.
- 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.
- 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.
- 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)
What This Means (2025 FDD)
According to the 2025 FDD, the Maryland Securities Commissioner requires a financial assurance from 1 800 Packouts due to the franchisor's financial condition. This requirement directly affects how 1 800 Packouts collects initial fees and payments from franchisees in Maryland.
Specifically, all initial fees and payments owed by 1 800 Packouts franchisees in Maryland must be deferred. This deferral continues until 1 800 Packouts has fulfilled its pre-opening obligations as outlined in the franchise agreement, and the franchisee's outlet is officially opened.
This condition provides a level of financial protection for franchisees in Maryland. It ensures that franchisees are not required to pay initial fees until 1 800 Packouts has met its obligations to help them get their business up and running. This arrangement mitigates the risk for the franchisee, as they are not investing capital upfront without 1 800 Packouts first demonstrating its commitment to providing the necessary support and resources for the franchise to launch successfully.