Under what conditions can an individual 1 800 Packouts franchisee transfer their agreement to a wholly-owned corporation, partnership, or limited liability company?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, an individual franchisee can transfer their franchise agreement to a wholly-owned corporation, partnership, or limited liability company under specific conditions. The franchisee must be in full compliance with the existing franchise agreement. The entity receiving the franchise (corporation, partnership, or LLC) must conduct no business other than the franchised 1 800 Packouts business, and potentially other 1 800 Packouts franchises.
Furthermore, the original franchisee must maintain management control of the new entity and own and control 100% of the equity and voting power. This ensures that the franchisee remains in charge of the day-to-day operations and decision-making, even after the transfer. Even with the transfer to a corporation, partnership, or LLC, the original franchisee agrees to remain personally liable under the Franchise Agreement as if the transfer had not occurred.
This means that even though the business is now operating under a different legal structure, the franchisee is still responsible for upholding all the obligations and responsibilities outlined in the original agreement. This personal liability clause is common in franchising to ensure the franchisee remains committed to the success and proper operation of the business, even after incorporating or forming a partnership or LLC.