Is a 1 800 Packouts franchisee allowed to divert business from their franchise to a Competitive Business?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
You acknowledge that you will receive valuable, specialized training and confidential information regarding the operational, sales, promotional, and marketing methods of the 1-800-PACKOUTS concept. During the Term, you and your Owners will not, without our prior written consent, either directly or indirectly, for themselves, or through, on behalf of, or in conjunction with any other person or Entity (e.g., through an affiliate, spouse, child, or other relative):
- (1) own, manage, engage in, be employed by, advise, make loans to, or have any other interest in (a) any other business offering or providing services or products competitive with or similar to the services or products offered or provided by Franchised Businesses or (b) any business which franchises or licenses others to offer or provide such services or products (collectively, each, a "Competitive Business") at any location anywhere;
- (2) divert or attempt to divert any business or customer or potential business or customer of the Franchised Business to any Competitive Business, by direct or indirect inducement or otherwise;
- (3) perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System;
- (4) use any vendor relationship established through your association with us for any purpose other than to purchase products or equipment for use or retail sale in the Franchised Business; or
- (5) directly or indirectly solicit for employment any person who at any time within the immediate past 12 months has been employed by us, or our affiliates, or by any of our franchisees.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to the 2025 FDD, 1 800 Packouts franchisees are prohibited from diverting business to a Competitive Business during the term of their franchise agreement. Specifically, franchisees cannot directly or indirectly divert or attempt to divert any business, customer, or potential customer of the franchised business to any Competitive Business. This restriction is in place to protect the 1 800 Packouts brand and the interests of other franchisees within the system.
The term "Competitive Business" refers to any business offering services or products that compete with or are similar to those offered by 1 800 Packouts franchised businesses. It also includes any business that franchises or licenses others to offer or provide such competing services or products. This definition is broad, covering various potential conflicts of interest.
This restriction is a standard practice in franchising, designed to ensure that franchisees focus their efforts on growing their 1 800 Packouts business and do not use the knowledge, resources, or customer relationships gained through the franchise to benefit a competing venture. Violation of this covenant could result in legal action by 1 800 Packouts, including injunctive relief and a suit for damages.