Under what circumstances is 1 800 Packouts not in violation of the paragraph regarding company-owned locations in a franchisee's territory?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisor further agrees that for so long as Franchisee remains in good standing under the Franchise Agreement and is not in default, Franchisor will not open a company-owned location in the Territory.
The Franchisor shall not be in violation of this paragraph 4 in the event that rights or licenses in existence prior to the date of this Addendum exist permitting a franchisee of Franchisor to conduct activities that Franchisor would otherwise have obligations to curtail pursuant to paragraph 4, save that Franchisor agrees not to renew such rights or licenses at the time that they expire by their terms or are otherwise terminated.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to the 2025 FDD, 1 800 Packouts will generally not open a company-owned location within a franchisee's territory as long as the franchisee remains in good standing and is not in default of their agreement. However, 1 800 Packouts is not in violation of this policy if pre-existing rights or licenses, established before the current franchise agreement addendum, permit another franchisee to conduct activities within the territory. This exception applies only to rights and licenses already in place.
This means that if 1 800 Packouts had previously granted rights to another franchisee to operate in an area before the current franchisee's agreement, they are not obligated to curtail those pre-existing rights during their term. However, 1 800 Packouts agrees not to renew such rights or licenses once they expire or are otherwise terminated. This clause protects the franchisee's territory from new company-owned locations or new franchises but acknowledges existing agreements.
For a prospective franchisee, this clause highlights the importance of understanding the history of the territory they are considering. It would be prudent to investigate whether any such pre-existing agreements exist that could impact their exclusive rights. While 1 800 Packouts commits to not renewing these agreements, their initial impact could still be a factor in the franchisee's business operations.