Does 1 800 Packouts have the right to exclude specific assets from the purchase of the Franchised Business?
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.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to the 2025 1 800 Packouts Franchise Disclosure Document, upon termination or expiration of the franchise agreement (unless terminated by the franchisee), 1 800 Packouts has the option to purchase specific assets of the franchised business. This option is exercisable within 15 days of termination or expiration by providing written notice.
1 800 Packouts has the unrestricted right to exclude any assets related to the franchised business from the assets they choose to purchase. These assets are referred to as the "Purchased Assets." This means a franchisee may be left owning assets that are difficult to liquidate or repurpose without the 1 800 Packouts franchise.
If 1 800 Packouts chooses to purchase the assets, the franchisee must provide financial statements and allow inspections to help 1 800 Packouts decide whether to exercise their purchase option. If the franchisee or an affiliate owns the facility, 1 800 Packouts can choose 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.