What is 1 800 Packouts' requirement for transferring ownership or interest in the franchise?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
ithout limitation, travel expenses and reasonable accounting and attorneys' fees). The foregoing remedies shall be in addition to any other remedies we may have.
14. TRANSFER
A. TRANSFER BY FRANCHISOR
This Agreement is fully transferable by us and will inure to the benefit of any transferee or other legal successor to our interest in it.
B. TRANSFER BY FRANCHISEE
- (1) You understand and acknowledge that the rights and duties created by this Agreement are personal to you and your Owners and that we have granted the License to you in reliance upon our perceptions of your or your Owners' individual or collective character, skill, aptitude, attitude, business ability and financial capacity. Accordingly, neither this Agreement (nor any interest herein) nor any ownership or other interest in you or the Franchised Business may be transferred without our prior written approval. Any transfer without such approval constitutes a breach of this Agreement and is void and of no effect. As used in this Agreement, the term "transfer" includes your or your Owners' voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in: (a) this Agreement; (b) an ownership interest in you; or (c) the Franchised Business.
- (2) An assignment, sale, gift or other disposition includes the following events: (a) transfer of ownership of capital stock, a membership interest, or a partnership interest; (b) merger or consolidation or issuance of additional securities or interests representing an ownership interest in you; (c) any issuance or sale of your stock or any security convertible to your stock; (d) transfer of an interest in you, this Agreement or the Franchised Business in a divorce, insolvency or corporate or partnership dissolution proceeding or otherwise by operation of law; I transfer of an interest in you, this Agreement or the Franchised Business, in the event of your death or 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.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to the 2025 FDD, 1 800 Packouts requires prior written approval from them for any transfer of the franchise agreement, any interest in the agreement, or any ownership or other interest in the franchisee or the franchised business. A transfer without this approval is considered a breach of the agreement and is void. The term "transfer" includes both voluntary and involuntary assignments, sales, gifts, or other dispositions of interest.
Specifically, the FDD details that transfers include events such as the transfer of stock ownership, membership interest, or partnership interest; mergers or consolidations; issuance of additional securities; transfers in divorce, insolvency, or dissolution proceedings; transfers due to death or inheritance; and pledges of the agreement or ownership interest as security. If the franchisee and their owners are in full compliance with the agreement, 1 800 Packouts will approve a transfer that meets all applicable requirements. The proposed transferee and their owners must meet the then-current standards for franchisees and be of good character.
Furthermore, a sale or transfer of ownership can only occur alongside a transfer of the franchise agreement. If the transfer involves the agreement itself, the franchised business, or a controlling interest (33 1/3% or more if the franchisee is an entity owned by three or more persons, or 50% or more otherwise), certain conditions must be met before the transfer's effective date.
Notably, if the franchisee is an individual in full compliance with the agreement, they can transfer the agreement to a wholly-owned corporation, partnership, or LLC that only conducts the franchised business, provided the franchisee maintains management control and 100% ownership. However, the franchisee remains personally liable under the agreement even after such a transfer. In the event of death or permanent disability, the representative of the franchisee must transfer the agreement within six months, subject to all transfer conditions; failure to do so constitutes a breach.