If I lease the facility for my 1 800 Packouts franchise, can 1 800 Packouts require me to assign the lease to them?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
You must operate your Franchised Business from a Facility located in Your Territory. You agree that you will not execute a lease or purchase contract for a Facility without our prior written approval. The lease for the Facility must allow for the installation of all equipment and other items necessary to operate the Franchised Business. In addition, the lease shall provide, if required by us, that it be assignable to us or our designee at our option, upon termination or expiration of this Agreement, and shall also contain such terms and provisions as are reasonably approved by us. You acknowledge that our acceptance of the location for the Facility does not constitute any assurance that the Franchised Business will be profitable at the location or more profitable at the location in comparison to other premises. Our acceptance is only an indication that the particular location for the Facility meets our minimum criteria.
B. PROTOTYPE AND CONSTRUCTION PLANS AND SPECIFICATIONS
We will review and may, in our sole discretion, approve plans and specifications reflecting our requirements for design, decoration, furnishings, furniture, layout, equipment, fixtures and signs for a Facility. It will be your responsibility to have the plans and specifications modified to comply with all ordinances, building codes, permit requirements, and lease requirements and restrictions applicable to the site for the Facility. You must submit final construction plans and specifications to us for approval before construction begins at the Facility, and the Franchised Business must be constructed in accordance with those approved plans. Unless we otherwise agree, all plans and specifications including final construction plans and specifications, will be our property (and you will take all steps necessary to ensure such plans and specifications are our property) and shall not be reproduced, including digitally, without our prior written consent. Our review of your plans will be limited to ensuring that they comply with our design specifications, which are not based upon any structural or scientific studies. By approving your plans we in no way represent or warrant the Facility will be structurally sound or fit for any intended purpose or that the plans will comply with applicable laws or regulations or lease requirements. We will not be liable to you for any defects in workmanship or structural integrity of a Facility that is constructed in accordance with plans that we approve.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to the 2025 1 800 Packouts Franchise Disclosure Document, if you lease a facility for your franchise, 1 800 Packouts can require that the lease be assignable to them or their designee at their option upon termination or expiration of the Franchise Agreement. This requirement must be included in the lease agreement. Before signing a lease or purchase contract for a facility, you must obtain 1 800 Packouts' prior written approval.
This means that as a franchisee, you might be required to relinquish your rights to the leased facility if your franchise agreement ends, allowing 1 800 Packouts to continue operations at that location or transfer the lease to another franchisee. This could impact your ability to operate a similar business independently at the same location after the franchise agreement terminates.
Furthermore, 1 800 Packouts also has the option to purchase the assets of your franchise upon termination or expiration of the agreement. If you lease the facility from an unaffiliated lessor, you agree (at their option) to assign the lease to them or enter into a sublease for the remainder of the lease term on the same terms, including renewal options, as the lease. This gives 1 800 Packouts significant control over the location of the franchise business, even after the franchise agreement ends, and it is something prospective franchisees should carefully consider.
It is important to note that 1 800 Packouts' acceptance of a location does not guarantee the profitability of the franchise at that location. Their approval only indicates that the location meets their minimum criteria. Franchisees should conduct their own due diligence to ensure the location is suitable for their business needs.