What was the outcome of the lawsuits between 1 800 Packouts of Ohio, LLC and 1 800 Packouts Holdco, LLC?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
1-800-Packouts of Ohio, LLC v. 1-800-Packouts Holdco, LLC, No. CV-2019-CV-00389 (Court of Common Pleas Portage County, Ohio, filed May 15, 2019); 1-800-Packouts Holdco, LLC v. 1-800-Packouts of Ohio, LLC, and Jack Schwartz, No. 19CVE1452 (The Superior Court Of Cherokee County State Of Georgia, filed July 30, 2019).
Our franchisee, 1-800-Packouts of Ohio, LLC, filed a lawsuit against us seeking a declaratory judgment that we had breached our duties under the Akron Area Franchise Agreement and that the franchisee could review the annual unaudited statements of the Brand Fund. On July 30, 2019, we filed a lawsuit against the franchisee and Jack Schwartz alleging that they had breached the Akron Area Franchise Agreement, Cleveland Area Franchise Agreement, Akron Area Guaranty and Assumption Agreement, and Cleveland Area Guaranty and Assumption Agreement by, among other things, failing to pay all amounts due and failing to provide all necessary reports. In May 2020, we settled all claims and both lawsuits were dismissed with prejudice.
Source: Item 3 — LITIGATION (FDD page 14)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, two lawsuits were filed between 1-800-Packouts of Ohio, LLC, a franchisee, and 1-800-Packouts Holdco, LLC, the franchisor. The franchisee initiated a lawsuit on May 15, 2019, seeking a declaratory judgment alleging the franchisor breached its duties under the Akron Area Franchise Agreement, specifically regarding the review of the Brand Fund's annual unaudited statements. Subsequently, on July 30, 2019, 1 800 Packouts Holdco, LLC filed a lawsuit against the franchisee and Jack Schwartz, claiming breaches of the Akron Area Franchise Agreement, Cleveland Area Franchise Agreement, Akron Area Guaranty and Assumption Agreement, and Cleveland Area Guaranty and Assumption Agreement. The franchisor alleged the franchisee failed to pay due amounts and provide necessary reports.
The document indicates that both lawsuits were settled in May 2020. As a result of the settlement, all claims were dismissed with prejudice. This means that the claims were dismissed permanently, and neither party can bring the same claims in court again.
For a prospective franchisee, this information highlights the importance of understanding the franchise agreement and fulfilling its obligations, such as making payments and providing required reports. It also shows that disputes can arise between 1 800 Packouts and its franchisees, but these can be resolved through settlement. Reviewing Item 3 in the FDD provides valuable insight into the franchisor's litigation history and approach to resolving conflicts.