What was the outcome of the settlement between 1 800 Packouts and 1 800 Packouts of Ohio, LLC?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
ty 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.
ITEM 4 BANKRUPTCY
No bankruptcy information is required to be disclosed in this Item.
ITEM 5 INITIAL FEES
If you are starting a new Franchised Business, you must pay a lump sum initial franchise fee of $62,500 (the "Initial Franchise Fee") at the time that you sign the Franchise Agreement. The Initial Franchise Fee is non-refundable and must be paid in a lump sum.
We provide our initial training program ("System/Procedure Training") to up to four trainees without charge. If you would like more than four trainees to attend Orientation Training, you must pay us $2,500 per additional trainee, which is non-refundable.
Source: Item 3 — LITIGATION (FDD page 14)
What This Means (2025 FDD)
According to the 2025 FDD, 1 800 Packouts was involved in litigation with its franchisee, 1-800-Packouts of Ohio, LLC. The franchisee initiated a lawsuit against 1 800 Packouts, alleging a breach of duties related to the Akron Area Franchise Agreement and seeking the right to review the Brand Fund's annual unaudited statements. Subsequently, 1 800 Packouts filed a counter-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, citing failures to pay due amounts and provide necessary reports.
The legal dispute between 1 800 Packouts and 1-800-Packouts of Ohio, LLC, along with Jack Schwartz, was resolved through a settlement agreement in May 2020. As a result of the settlement, both lawsuits were dismissed with prejudice. This means that neither party can bring the same claims in court again.
Additionally, the 2025 FDD notes that the settlement agreement contained confidentiality and non-disparagement provisions. These provisions restrict the former franchisee and its principal, Jack Schwartz, from publicly discussing their experiences as a franchisee within the 1 800 Packouts franchise system. This type of clause is not uncommon in franchise settlements to protect the brand's reputation. Aside from this settlement agreement, during the last 3 fiscal years, no other current or former franchisees have signed confidentiality clauses restricting them from discussing with you their experiences as a franchisee in our franchise system. This indicates that prospective franchisees are generally free to communicate with current and former franchisees about their experiences.