Does the death of an owner of a 1 800 Packouts franchise and subsequent transfer by will constitute a 'transfer'?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
ised Business may be transferred without our prior written approval. Any transfer without such approval constitutes a breach of this Agreement and is void and of no effect. As used in this Agreement, the term "transfer" includes your or your Owners' voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in: (a) this Agreement; (b) an ownership interest in you; or (c) the Franchised Business.
- (2) An assignment, sale, gift or other disposition includes the following events: (a) transfer of ownership of capital stock, a membership interest, or a partnership interest; (b) merger or consolidation or issuance of additional securities or interests representing an ownership interest in you; (c) any issuance or sale of your stock or any security convertible to your stock; (d) transfer of an interest in you, this Agreement or the Franchised Business in a divorce, insolvency or corporate or partnership dissolution proceeding or otherwise by operation of law; I transfer of an interest in you, this Agreement or the Franchised Business, in the event of your death or the death of one of your Owners of, by will, declaration of or transfer in trust or under the laws of intestate succession; or (f) pledge of this Agreement (to someone other than us) or of an ownership interest in you as security, foreclosure upon the Franchised Business or your transfer, surrender or loss of possession, control or management of the Franchised Business.
C. CONDITIONS FOR APPROVAL OF TRANSFER
If you and your Owners are in full compliance with this Agreement, then subject to the other provisions of this Section 14 (Transfer), we will approve a transfer that meets all the applicable requirements of this Section. The proposed transferee and its Owners must be individuals of good character and otherwise meet our then applicable standards for Franchised Business franchisees. A sale or transfer of ownership, possession or control of the Franchised Business may be made only in conjunction with a transfer of this Agreement. If the transfer is of this Agreement, of the Franchised Business or a controlling interest in you ("controlling interest in you" means 33⅓% or more of your voting shares, ownership interests or other voting rights if you are an Entity owned by three or more persons;
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to the 2025 1 800 Packouts Franchise Disclosure Document, the death of an owner and the subsequent transfer by will is considered a 'transfer.' The FDD specifies that the term 'transfer' includes the transfer of an interest in the franchise, the agreement, or the franchised business in the event of death of the owner or one of the owners, by will, declaration of, transfer in trust, or under the laws of intestate succession. This means that if a 1 800 Packouts franchisee or one of their owners dies, the rights to the franchise do not automatically pass to their heirs or beneficiaries.
Instead, the executor, administrator, conservator, guardian, or other personal representative of the deceased franchisee or operating principal must transfer the agreement or the owner's interest to a third party within a reasonable time, not exceeding six months from the date of death. This transfer is subject to all the standard terms and conditions applicable to transfers outlined in the franchise agreement. Failure to complete the transfer within this six-month period constitutes a breach of the agreement.
This provision ensures that 1 800 Packouts maintains control over who operates its franchises, even in the event of an owner's death. The company wants to make sure that anyone taking over a franchise meets their standards for business experience, financial resources, and overall suitability. The heirs or beneficiaries of the deceased owner must find a qualified buyer and complete the transfer process, including obtaining 1 800 Packouts's approval, within the specified timeframe to avoid breaching the franchise agreement.
Prospective franchisees should understand that their heirs will not automatically inherit the franchise upon their death. Instead, the franchise must be sold or transferred to a qualified third party approved by 1 800 Packouts, which may involve significant administrative and financial burdens during a difficult time. This is a common practice in franchising, as franchisors typically want to maintain control over their brand and ensure that all franchisees meet their standards.