Under what conditions can 1 800 Packouts suspend its obligations to me under the Agreement?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
If any events in Section B. (By Franchisor) occur which give us the right to terminate this Agreement, we may, at our sole election and upon delivery of written notice to you, take any or all of the following actions without terminating this Agreement:
(1) temporarily or permanently reduce the size of Your Territory or temporarily or permanently suspend your exclusive rights within Your Territory;
(2) temporarily remove information concerning your Franchised Business from the system website and/or stop your or the Franchised Business' participation in any other programs or benefits offered on or through any of our Digital Marketing efforts;
(3) suspend your right to participate in one or more programs or benefits that the Brand Fund provides;
(4) suspend any other services that we or our affiliate provides to you under this Agreement or any other agreement;
(5) suspend or terminate any temporary or permanent fee reductions to which we might have agreed (whether as a policy, in an amendment to this Agreement, or otherwise);
(6) suspend our performance of, or compliance with, any of our obligations to you under this Agreement or other agreements;
(7) undertake or perform on your behalf any obligation or duty that you are required to, but fail to, perform under this Agreement, in which case you will reimburse us upon demand for all costs and expenses that we reasonably incur in performing any such obligation or duty; and/or
(8) enter the Franchised Business' premises and assume the management of the Franchised Business ourselves or appoint a third party (who may be our affiliate) to manage the Franchised Business.
All funds from the operation of the Franchised Business while we or our appointee assumes its management will be kept in a separate account, and all of the expenses of the Franchised Business will be charged to that account.
We or our appointee may charge you (in addition to the amounts due under this Agreement) a management fee equal to 10% of the Franchised Business' Gross Sales during the period of management, plus any direct out-of-pocket costs and expenses.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to the 2025 1 800 Packouts Franchise Disclosure Document, 1 800 Packouts has the right to suspend its obligations to a franchisee under certain conditions. Specifically, if events occur that would give 1 800 Packouts the right to terminate the Franchise Agreement, they can choose, instead of terminating the agreement, to take other actions. These actions include suspending their obligations to the franchisee.
These alternative actions that 1 800 Packouts can take without terminating the agreement include temporarily or permanently reducing the franchisee's territory size or suspending their exclusive rights within that territory. 1 800 Packouts can also temporarily remove information about the franchised business from the system website, stop participation in marketing programs, suspend participation in Brand Fund benefits, and suspend any other services they provide to the franchisee.
Additionally, 1 800 Packouts can suspend or terminate any temporary or permanent fee reductions they might have agreed to, and they can also undertake obligations on behalf of the franchisee if the franchisee fails to perform them, with the franchisee being responsible for reimbursing 1 800 Packouts for all associated costs. 1 800 Packouts also has the option to enter the franchised business's premises and assume management themselves or appoint a third party to do so, charging a management fee equal to 10% of the franchised business's gross sales plus any out-of-pocket expenses.
This clause provides 1 800 Packouts with significant latitude in managing franchisees who are not meeting their obligations, offering a range of options short of full termination that could significantly impact the franchisee's business operations and profitability. Prospective franchisees should carefully consider these potential actions and their implications.