Under what circumstances does 1 800 Packouts have the option to purchase the assets of my franchise?
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, 1 800 Packouts has the option to purchase a franchisee's assets under specific conditions related to the termination or expiration of the franchise agreement. Specifically, if the franchise agreement is terminated for any reason other than the franchisee choosing to terminate it, or if the agreement expires without a renewal, 1 800 Packouts can choose to purchase the franchise's assets.
To exercise this option, 1 800 Packouts must provide written notice within 15 days of the termination or expiration date. This notice will specify which assets 1 800 Packouts wishes to purchase, and they have the right to exclude any assets from the purchase. These assets typically include inventory, supplies, operating assets, and other items used in the franchise's operation. The franchisee is obligated to provide financial statements and allow inspections to help 1 800 Packouts decide whether to exercise this purchase option.
During the period when 1 800 Packouts is deciding whether to purchase the assets, and continuing through the closing of the purchase, the franchisee must continue operating the business according to the franchise agreement. However, 1 800 Packouts retains the right to assume management of the franchise during this period. This provision ensures the continued operation of the business while the purchase decision is being made and finalized.
If 1 800 Packouts decides to purchase the assets, the price will be the fair market value for use in a competitive business, but excluding any value associated with the 1 800 Packouts brand, goodwill, or intellectual property. The FDD states that the equipment's useful life will be determined to be no more than three years for valuation purposes. The purchase price can be offset by any amounts the franchisee owes to 1 800 Packouts or its affiliates. The closing will occur within 60 days after the purchase price is determined, although 1 800 Packouts can still decide not to complete the purchase after the price is set.