How is the Agreed Value determined for a Checkers franchise in the event of an expiration (without renewal) of the franchise agreement if the franchisee and franchisor cannot agree?

According to Checkers' 2025 Franchise Disclosure Document, the determination of the Agreed Value for purchased assets upon the expiration (without renewal) of a franchise agreement is initially determined through consultation between the franchisee and Checkers (or its assignee). This involves assessing the value of all personal property used in the franchised restaurant that the franchisee owns, including inventory of non-perishable items, materials, supplies, furniture, equipment, and signs, but excluding cash, short-term investments, and items not meeting Checkers' specifications.

However, if the franchisee and Checkers (or its assignee) cannot reach an agreement on the Agreed Value within fifteen days after the Appraisal Notice, a specific method is used to determine the value. In the event of an expiration (without renewal) of the franchise agreement, the Agreed Value will be the "Fair Market Value." This Fair Market Value is defined as the amount that an arm's length purchaser would be willing to pay for the Purchased Assets, assuming they would be used for operating a restaurant under a valid franchise agreement reflecting the then-current (or most recent) standard terms upon which Checkers offers franchises. This value is further reduced by the cost of any required remodeling.

This valuation method ensures that the franchisee receives a fair price for their assets based on their potential use in a continuing Checkers franchise. The deduction for required remodeling acknowledges that the assets may need to be updated to meet current brand standards, which is a common practice in franchise agreements to maintain consistency and brand image. This process protects both the franchisee and Checkers by providing a structured approach to asset valuation in the event of non-renewal and disagreement.