Does Checkers' approval of a transfer of Development Rights release the franchisee and their Owners from claims?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
al to $20,000;
- (h) You and your Owners and Affiliates must, except to the extent limited or prohibited by applicable law, execute a general release, in form and substance satisfactory to
us, of any and all claims against us, our Affiliates and stockholders, officers, directors, employees, agents, successors and assigns;
- (i) you (and your Immediate Family) will not, for two (2) years beginning on the transfer's effective date, engage in any of the activities proscribed in Section 9.02 below; and
- (j) You and your Owners and Affiliates must execute such other documents and do such other things as we reasonably require to protect our rights under this Agreement and any Franchise Agreements.
- 7.03 Effect of Approval. Our approval of a transfer of the Development Rights does not constitute: (a) a representation as to the fairness of the terms of any agreement or arrangement between you or your Owners and the transferee or as to the prospects of success by the transferee; or (b) a release of you and your Owners, a waiver of any claims against you or your Owners or a waiver of our right to demand the transferee's exact compliance with this Agreement. Any approval shall apply only to the specific transfer of the Development Rights being proposed and shall not constitute our approval of, or have any bearing on, any other proposed transfer of the Development Rights.
- 7.04 Special Transfers. Neither Section 7.06 nor Section 7.2(f) apply to any transfer of the Development Rights among any of your then current Owners or to any transfer of the Development Rights to any member of your Immediate Family or the immediate family of a then current Owner of Area Franchisee (if you are a corporation, partnership, limited liability company or other legal entity). On 30 days' notice to us, you (if you are an individual or partnership) may transfer this Agreement, in conjunction with a transfer of all of the Franchise Agreements executed pursuant hereto and all of the assets of the Restaurants operated pursuant thereto, by an agreement in form and substance approved by us, to a business corporation or limited liability company which conducts no business other than the development and operation of Restaurants and of which you own and control all of the equity and voting power of all issued and outstanding capital stock. None of the foregoing assignments shall relieve you or your Owners of your obligations hereunder, and you and your Owners shall remain jointly and severally liable for all obligations hereunder.
- 7.05 Death or Disability.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers' approval of a transfer of Development Rights does not automatically release the franchisee and their owners from all claims. While a general release is typically required, Checkers' approval itself isn't a release or a waiver of claims against the franchisee or their owners. Checkers retains the right to demand exact compliance with the agreement from the transferee.
Specifically, as a condition of approval for a transfer of Development Rights, Checkers requires that the franchisee and their Owners and Affiliates execute a general release of any and all claims against Checkers and its affiliates, stockholders, officers, directors, employees, agents, successors, and assigns. This release must be in a form and substance satisfactory to Checkers, except to the extent limited or prohibited by applicable law.
However, the FDD also notes some important limitations and exceptions to these releases. For example, the release may not apply to the extent prohibited by the Maryland Franchise Registration and Disclosure Law. Similarly, under Minnesota rules, a franchisee cannot waive certain rights, and any general release must exclude claims arising under the Minnesota Franchise Law. These stipulations highlight the importance of franchisees understanding the specific legal protections afforded to them by state laws, which may limit the scope and enforceability of any general release they are required to sign. Prospective franchisees should consult with a legal professional to fully understand the implications of these releases in their specific jurisdiction.