If 1 800 Packouts terminates my franchise agreement, does 1 800 Packouts have the option to purchase my assets?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) Upon termination of this Agreement for any reason (other than your termination in accordance with Section A. (By Franchisee)) or expiration of this Agreement without our and your signing a successor franchise agreement, we have the option, exercisable by giving you written notice within 15 days after the date of termination or expiration (the "Exercise Notice"), to purchase the inventory, supplies, Operating Assets, and other assets used in the operation of the Franchised Business that we designate (the "Purchased Assets"). We have the unrestricted right to exclude any assets we specify relating to the Franchised Business from the Purchased Assets and not acquire them. You agree to provide us the financial statements and other information we reasonably require, and to allow us to inspect the Franchised Business and its assets, to determine whether to exercise our option under this Section B. If you or one of your affiliates owns the Facility, we may elect to include a fee simple interest in the Facility and its premises as part of the Purchased Assets or, at our option, lease the Facility from you or that affiliate for an initial five-year term with one renewal term of five years (at our option) on commercially reasonable terms. You (and your Owners) agree to cause your affiliate to comply with these requirements. If you lease the Facility from an unaffiliated lessor, you agree (at our option) to assign the lease to us or to enter into a sublease for the remainder of the lease term on the same terms (including renewal options) as the lease.
- (2) While we are deciding whether to exercise our option under this Section B. (Our Right to Purchase Assets), and, if we do exercise that option, during the period beginning with our delivery of the Exercise Notice and continuing through the closing of our purchase or our decision not to complete the purchase, you must continue to operate the Franchised Business in accordance with this Agreement. However, we may, at any time during that period, assume the management of the Franchised Business
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, if the franchise agreement is terminated for any reason other than the franchisee terminating it, or upon expiration of the agreement without renewal, 1 800 Packouts has the option to purchase the franchisee's assets. This option is exercisable by providing written notice within 15 days of termination or expiration. The assets subject to purchase include inventory, supplies, operating assets, and other assets used in the franchised business. 1 800 Packouts has the right to specify which assets it will purchase and exclude others.
As a prospective franchisee, this means that upon certain terminations or at the end of the franchise term, 1 800 Packouts could decide to buy your business assets. You are obligated to provide financial statements and allow inspections to facilitate their decision. If you own the facility, 1 800 Packouts may elect to purchase the facility or lease it for an initial five-year term with an option to renew for another five years on commercially reasonable terms. If you lease the facility from a third party, you may be required to assign the lease to 1 800 Packouts or sublease it under the same terms.
During the period when 1 800 Packouts is deciding whether to exercise its purchase option, and if it does exercise that option, through the closing of the purchase, you must continue to operate the franchised business according to the franchise agreement. However, 1 800 Packouts retains the right to assume management of the franchised business during this period. At closing, you must transfer clear title to the purchased assets, free of liens, and transfer all assignable licenses and permits. You and your owners must also sign general releases of claims against 1 800 Packouts.
1 800 Packouts can assign its rights to purchase the assets to another entity, which may be an affiliate. This clause ensures 1 800 Packouts has a mechanism to maintain control and continuity of the business, but it also places obligations on the franchisee to maintain operations and transfer assets and control under certain circumstances.