Can 1 800 Packouts decide not to complete the purchase of assets after the purchase price is determined?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
(4) If we elect to exercise our purchase option, we will pay the purchase price at the closing, which will take place within 60 days after the purchase price is determined, although we may decide after the purchase price is determined not to complete the purchase.
We may set off against the purchase price, and reduce the purchase price by, any and all amounts you owe us or our affiliates.
We are entitled to all customary representations, warranties and indemnities in our asset purchase, including representations and warranties as to ownership and condition of, and title to, assets, liens and encumbrances on assets, validity of contracts and agreements, and liabilities affecting the assets, contingent or otherwise, and indemnities for all actions, events and conditions that existed or occurred in connection with the Franchised Business or your business prior to the closing of our purchase.
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 has the option to not complete the purchase of a franchisee's assets even after the purchase price has been determined. The FDD states that after the fair market value of the assets is determined, 1 800 Packouts can choose not to proceed with the purchase. The closing will occur within 60 days after the purchase price is determined.
This clause provides 1 800 Packouts with significant flexibility in its dealings with franchisees upon termination or expiration of the franchise agreement. It means that even after investing time and resources into appraising the assets, 1 800 Packouts can still walk away from the deal. This could leave the franchisee in a difficult position, potentially needing to find alternative buyers for the assets on short notice.
Furthermore, 1 800 Packouts can reduce the purchase price by any amounts the franchisee owes to 1 800 Packouts or its affiliates. 1 800 Packouts is also entitled to customary representations, warranties, and indemnities in the asset purchase, which include assurances regarding ownership, condition, title to assets, and the validity of contracts. This also includes indemnities for actions, events, and conditions connected to the franchise business before the purchase closing.
Prospective franchisees should carefully consider this clause and its implications. It is important to understand the circumstances under which 1 800 Packouts might choose not to complete a purchase and to assess the potential financial impact on their business. It would be prudent to seek legal counsel to fully understand the risks and to negotiate terms that provide greater protection for the franchisee's investment in the event of termination or expiration.