What is required to transfer control of a 1 800 Packouts franchised business?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
the death of one of your Owners of, by will, declaration of or transfer in trust or under the laws of intestate succession; or (f) pledge of this Agreement (to someone other than us) or of an ownership interest in you as security, foreclosure upon the Franchised Business or your transfer, surrender or loss of possession, control or management of the Franchised Business.
C. CONDITIONS FOR APPROVAL OF TRANSFER
If you and your Owners are in full compliance with this Agreement, then subject to the other provisions of this Section 14 (Transfer), we will approve a transfer that meets all the applicable requirements of this Section. The proposed transferee and its Owners must be individuals of good character and otherwise meet our then applicable standards for Franchised Business franchisees. A sale or transfer of ownership, possession or control of the Franchised Business may be made only in conjunction with a transfer of this Agreement. If the transfer is of this Agreement, of the Franchised Business or a controlling interest in you ("controlling interest in you" means 33⅓% or more of your voting shares, ownership interests or other voting rights if you are an Entity owned by three or more persons; otherwise, 50% or more of your voting shares or other voting rights or ownership interests), or is one of a series of transfers which in the aggregate constitute the transfer of this Agreement, the Franchised Business or a controlling interest in you, all of the following conditions must be met prior to or concurrently with the effective date of the transfer:
- (1) the transferee has sufficient business experience, aptitude and financial resources to operate the Franchised Business;
- (2) you have paid all Royalty Fees, Marketing Fees, and amounts owed for purchases from us and all other amounts owed to us or to third-party creditors and have submitted all required reports and statements;
- (3) the transferee has agreed to complete System/Procedure Training to our satisfaction;
- (4) the transferee has agreed to execute our then-current form of franchise agreement for the remaining term of this Agreement;
- (5) you or the transferee pay us a transfer fee equal to 50% of the initial franchise fee then being charged for Franchised Businesses, to defray expenses we incur in connection with the transfer;
- (6) you and your transferring Owners have executed a general release, in a form satisfactory to us, of any and all claims against us and our affiliates and our and their shareholders, officers, directors, employees and agents;
- (7) you and your transferring Owners have executed a non-competition agreement in favor of us and the transferee agrees to be bound, commencing on the effective date of the transfer, by the restrictions contained in Sections C (Confidential Information) and 16.D (Covenant Not to Compete) of this Agreement; and
- (8) you and your transferring Owners have agreed that you and they will not directly or indirectly at any time or in any manner (except with respect to other Franchised Businesses you own and operate) identify themselves or any business as a current or former Franchised Business or as one of our licensees or franchisees or use any Mark, any colorable imitation thereof or other indicia of a Franchised Business in any manner or for any purpose or utilize for any purpose any trade name, trademark or service mark or other commercial symbol that suggests or indicates a connection or association with us.
D. TRANSFER TO A WHOLLY-OWNED CORPORATION, PARTNERSHIP LIMITED LIABILITY COMPANY
Notwithstanding Section C (Conditions for Approval of Transfer), if you are an individual and are in full compliance with this Agreement, you may transfer this Agreement to a corporation, partnership or limited liability company which conducts no business other than the Franchised Business and, if applicable, other Franchised Businesses, in which you maintain management control and of which you own and control 100% of the equity and voting power of all issued and outstanding capital stock or ownership interests. Transfers of ownership interests in such corporation, partnership or limited liability company will be subject to the provisions of Section C. Notwithstanding any such transfer, you agree to remain personally liable under this Agreement as if the transfer to such corporation, partnership or limited liability company had not occurred.
**E.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, the rights and duties within the franchise agreement are specific to the franchisee and their owners. Therefore, transferring the agreement, any ownership stake, or the franchised business itself requires prior written approval from 1 800 Packouts. Transferring without approval is a breach of the agreement and will be considered void. The term "transfer" is broad, including voluntary, involuntary, direct, or indirect assignments, sales, gifts, or other dispositions of interest.
Specifically, a transfer includes events such as transferring capital stock, membership, or partnership interests; mergers, consolidations, or issuance of additional securities; sales of stock or convertible securities; transfers due to divorce, insolvency, or death; and pledging the agreement or ownership interest as security. To gain approval for a transfer, several conditions must be met. Both the franchisee and their owners must be in full compliance with the existing franchise agreement. The proposed transferee and their owners must meet 1 800 Packouts's standards for franchisees, demonstrating good character.
Additional requirements include the transferee having sufficient business experience, aptitude, and financial resources. All outstanding payments to 1 800 Packouts and third-party creditors must be settled, and all required reports submitted. The transferee needs to complete the 1 800 Packouts System/Procedure Training. The transferee must also agree to execute 1 800 Packouts's current franchise agreement form for the remaining term. A transfer fee, equivalent to 50% of the then-current initial franchise fee, must be paid to 1 800 Packouts. Finally, the franchisee and their transferring owners must execute a general release of any and all claims against 1 800 Packouts.