What compliance requirements must a Checkers franchisee and their owners meet to be eligible to transfer their franchise?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
if we determine an understatement of Net Sales for the period of any audit to be greater
than 2%, you must reimburse us for the cost of such audit or inspection, including the charges of any attorneys and independent accountants and the travel expenses, room and board and compensation of our employees.
13. FRANCHISEE'S RIGHT TO TRANSFER.
- 13.01 Franchisor's Approval. The rights and duties created by this Agreement are personal to you or, if you are a business 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, a franchisee's ability to transfer their franchise is contingent upon meeting specific conditions and obtaining Checkers' approval. The rights and duties within the franchise agreement are considered personal to the franchisee and their owners, meaning any transfer requires franchisor consent. Transferring a Checkers franchise without approval constitutes a breach of the agreement and is considered void.
To gain approval for a transfer, the franchisee must have completed the development of the franchised restaurant and be operating it in accordance with the franchise agreement. Furthermore, both the franchisee and their owners and affiliates must be in full compliance with all provisions of the franchise agreement and any other agreements they have with Checkers or its affiliates. The proposed transferee must also meet certain criteria, including providing all requested information in a timely manner and demonstrating good character, sufficient business experience, aptitude, and financial resources to operate the restaurant.
Additional stipulations include that the proposed transferee cannot be an entity required to comply with the reporting requirements of the Securities Exchange Act of 1934. The transferee (or its operating partner) and its operators must also complete Checkers' initial training program to the franchisor's satisfaction. The transferee and their owners must agree to be bound by all provisions of the existing franchise agreement for the remainder of its term or, at Checkers' option, execute the then-current standard franchise agreement.
Moreover, the franchisee, their owners, and affiliates must execute a general release of claims against Checkers and related parties, unless limited or prohibited by law. Checkers must not disapprove of the transfer's material terms and conditions, and if the seller finances any part of the sale, those obligations must be subordinate to the transferee's obligations to Checkers. Finally, the franchisee and their immediate family must agree not to engage in activities proscribed in Section 16.03 for two years following the transfer, and they must execute any other documents reasonably required by Checkers to protect its rights.