What agreements are Checkers franchisees and their owners required to execute when acquiring a successor franchise?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
15.03 Agreements. If you have the right to acquire a successor franchise in accordance with Section 15.01 and state your desire to exercise that right in accordance with Section 15.02, we and you (and your Owners) will execute the form of franchise agreement (which may contain provisions, including royalty fees, materially different from those contained herein) and all ancillary agreements (including, personal guarantees by your Owners and a remodeling agreement on such terms as we determine to be appropriate) which we then customarily use in granting successor franchises for the operation of Restaurants. The successor franchise agreement will be for a successor franchise term of either ten (10) years or twenty (20) years, as you and we may then agree. You must pay us a successor franchise fee due upon signing the successor franchise agreement, depending on the duration of that future agreement's term, in the amount of: (i) one half (1/2), or fifty percent (50%), of the amount of our then current initial franchise fee due for new Restaurants, if your
successor franchise term is for twenty (20) years; or (ii) one-third (1/3), or thirty-three and one-third percent (33.33%), of the amount of our then current initial franchise fee due for new Restaurants, if your successor franchise term is for ten (10) years. In addition, you and your Owners must execute general releases, in form and substance satisfactory to us or as we then explicitly prescribe, of any and all claims against us, and our Affiliates, owners, officers, directors, employees, agents, successors and assigns. Failure by you (and your Owners) to sign such agreements and releases within thirty (30) days after delivery to you shall be deemed an election by you not to acquire a successor franchise for the Franchised Restaurant. Upon expiration of such successor franchise agreement, you will have a further right on terms and conditions contained in the successor franchise agreement to acquire a future successor franchise as we then prescribe.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, if a franchisee has the right to acquire a successor franchise and wishes to do so, both the franchisee and their owners must execute several agreements. These include the form of franchise agreement that Checkers then customarily uses for granting successor franchises, which may have materially different provisions, including royalty fees, from the original agreement.
In addition to the franchise agreement, franchisees and their owners must also execute all ancillary agreements, including personal guarantees by the owners and a remodeling agreement, with terms determined appropriate by Checkers. Furthermore, franchisees and their owners must execute general releases, in a form and substance satisfactory to Checkers, of any and all claims against Checkers, its affiliates, owners, officers, directors, employees, agents, successors, and assigns.
The document specifies that failure by the franchisee and their owners to sign such agreements and releases within thirty days after delivery will be deemed as an election not to acquire the successor franchise. The successor franchise agreement will be for a term of either ten or twenty years, as agreed upon by Checkers and the franchisee. Upon signing the successor franchise agreement, the franchisee must pay a successor franchise fee, which is either one-half (50%) or one-third (33.33%) of the then-current initial franchise fee for new restaurants, depending on whether the term is twenty or ten years, respectively.
This requirement ensures that Checkers can update the terms of the franchise agreement to reflect current business conditions and legal requirements. The releases protect Checkers from potential future claims related to the prior franchise term. The personal guarantees from the owners ensure their continued commitment to the success of the franchise. The remodeling agreement allows Checkers to ensure that the restaurant is updated to meet current brand standards.