What compliance is required of a Checkers franchisee and their owners/affiliates to transfer the franchise?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
corporation, partnership, limited liability company or other legal entity, your Owners. Accordingly, neither you nor any of your Owners may transfer the Franchise without our approval and without complying with all of the provisions of Section 13. Any transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect.
- 13.02 Conditions for Approval. If we have not exercised our right of first refusal under Section 13.06, we will not unreasonably withhold our approval of a transfer of the Franchise that meets all of the reasonable restrictions, requirements and conditions we impose on the transfer, the transferor(s) and/or the transferee(s), including the following:
- (a) you have completed development of the Franchised Restaurant and are operating the Franchised Restaurant in accordance with this Agreement;
- (b) you and your Owners and Affiliates are in compliance with the provisions of this Agreement and all other agreements with us or any of our Affiliates;
- (c) the proposed transferee, or its Owners (if the proposed transferee is a legal entity), must provide us on a timely basis all information we request, must be individuals acting in their individual capacities who are of good character and reputation, who must have sufficient business experience, aptitude and financial resources to operate the Franchised Restaurant, and who must otherwise meet our approval;
- (d) the proposed transferee may not be an entity, or be affiliated with an entity, that is required to comply with reporting and information requirements of the Securities Exchange Act of 1934, as amended;
- (e) the transferee (or its operating partner) and its operators must have completed our initial training program to our satisfaction;
- (f) the transferee (and its owners) must agree to be bound by all of the provisions of this Agreement for the remainder of its term or, at our option, execute our then current standard form of franchise agreement and related documents used in the state in which the Franchised Restaurant is located (which
may provide for different royalties, advertising contributions and expenditures, duration and other rights and obligations than those provided in this Agreement and which we may require to be guaranteed by you and your Owners);
- (g) if you executed this Agreement pursuant to a development agreement, then the transferee must acquire, in a concurrent transaction, all of your rights, and the rights of your Owners and Affiliates, under such development agreement (or any successor development agreement) and all franchise agreements for Restaurants that you or your Owners or Affiliates executed pursuant to such development agreement (or any predecessor or successor development agreement);
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchisees and their owners/affiliates must meet several conditions to transfer a franchise. The transfer requires Checkers' approval, which will not be unreasonably withheld if the franchisee meets all specified requirements.
These requirements include operating the restaurant according to the franchise agreement, being in compliance with all agreements with Checkers and its affiliates, and ensuring the proposed transferee provides all requested information. The transferee must be of good character, have sufficient business experience and financial resources, and meet Checkers' approval. The transferee (or its operating partner) must complete Checkers' initial training program. The transferee and its owners must agree to be bound by the franchise agreement for the remainder of its term or execute Checkers' current standard franchise agreement.
Additionally, the franchisee, owners, and affiliates must execute a general release of claims against Checkers and its affiliates. Checkers must not disapprove of the transfer's material terms, including price and payment terms, if they could adversely affect the transferee's operation. If the seller finances any part of the sale, these obligations must be subordinate to the transferee's obligations to Checkers. For two years after the transfer, the franchisee and their immediate family cannot engage in activities proscribed in Section 16.03 of the franchise agreement. Finally, the franchisee, owners, and affiliates must execute any other documents and actions reasonably required by Checkers to protect its rights.