I agree with the RUN! statement.
The STANDARD is that you own the rights to what was produced and paid for. Just like you own your own house after you pay for the contractor to build it. He doesn't give you a lifetime license to live in your house.
HOWEVER, this also means that the designer can use the materials in a portfolio unless you specify otherwise.
What I believe they are trying to do is prevent YOU from turning around and using the graphics etc that they created for purposes other than what was the original intent ie the website. So you will not be able to sell a graphic for instance to another person for use on another site.
The other angle they are going at is that you can not sell the website without going through them first. I'm betting that the lifetime license is null and void in this case and whoever buys the site would have to pay a HUGE fee to get the "rights" to it. Or you pay a huge penalty.
IF they are insisting it be hosted on THEIR server and they are providing the domain name, this is a clear warning that they may be up to no good. What is happening out here in the cold cruel world is exactly what you are saying. BUT if your site is a smash hit, the company comes in and takes it away from you. After all, it is THEIRS. All of it. You pay them to build it. Then you do all the work of promoting it and getting it successful and suddenly it belongs to them and you have no legal recourse.
DO NOT DO THIS.
Go to Godaddy.com and purchase your domain names. Host it there too if you want. THEN get a design team that will provide you with the files. Don't let them have access to your account either. They could change your password and demand money for giving it back to you.
Let them send you the files after demoing them on their server. Then you upload them. Unless you can give them seperate FTP account that is.
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