Who pays the sales and transfer taxes when 1 800 Packouts purchases assets?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
At the closing, you agree to deliver instruments transferring to us: (a) good and merchantable title to the Purchased Assets, free and clear of all liens and encumbrances (other than liens and security interests acceptable to us), with all sales and transfer taxes paid by you; and (b) all of the Franchised Business' licenses and permits which may be assigned or transferred.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts' 2025 Franchise Disclosure Document, the franchisee is responsible for paying all sales and transfer taxes when 1 800 Packouts purchases the franchisee's assets. Specifically, the franchisee must deliver instruments transferring good title to the purchased assets, free of liens, with all sales and transfer taxes already paid by the franchisee.
This means that if 1 800 Packouts exercises its right to purchase a franchisee's assets, the franchisee will incur the cost of sales and transfer taxes associated with that transaction. This could represent a significant expense for the franchisee, especially if the asset value is high or the applicable tax rates are substantial.
It is important for prospective franchisees to understand this obligation and factor it into their financial planning. They should consult with a tax advisor to understand the potential sales and transfer tax implications in their specific jurisdiction. Franchisees should also clarify with 1 800 Packouts what constitutes "Purchased Assets" to fully understand the scope of this obligation.