Does 1 800 Packouts have the right to receive payments from suppliers based on their dealings with franchisees?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) We and our affiliates have the right to receive payments from suppliers on account of their actual or prospective dealings with you and other franchisees and to use all amounts they receive without restriction for any purposes they deem appropriate.
You also understand that, if we or our affiliates sell items to you, we and they may make a reasonable profit on the items.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, 1 800 Packouts and its affiliates retain the right to collect payments from suppliers based on their interactions with franchisees. This includes both current and potential dealings.
1 800 Packouts has the discretion to use these funds without any restrictions, for any purpose they deem appropriate. Additionally, if a franchisee purchases items directly from 1 800 Packouts or its affiliates, 1 800 Packouts and its affiliates may generate a profit from those sales.
This arrangement is common in franchising, where franchisors negotiate deals with suppliers and receive commissions or rebates. This can potentially lower costs for franchisees through bulk purchasing power, but it also creates a revenue stream for the franchisor. Prospective franchisees should consider how this affects the overall cost of goods and services and whether the franchisor's negotiated deals provide genuine value.