What constitutes an unauthorized transfer of Development Rights that could lead to termination of the Checkers agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.02 Termination Upon Notice.
In addition to our right to terminate pursuant to other provisions of this Agreement or under applicable law, we may terminate this Agreement, effective upon delivery of notice of termination to you:
- (b) if you or any of your Owners or Affiliates make an unauthorized transfer of the Development Rights;
"Transfer the Development Rights" – or similar words – The direct or indirect sale, assignment, transfer, exchange, conversion, license, sublicense, lease, sublease, mortgage, pledge, collateral assignment, grant of a security, collateral or conditional interest or other encumbrance in or on, or other disposition, whether voluntary, involuntary, by operation of law or otherwise, of this Agreement, any interest in or right under this Agreement, any form of legal or beneficial ownership interest in you or any of your Owners, or any form of ownership interest or right to participate in or receive the benefit of the assets, revenues, income or profits of your business operated hereunder, or any one or more other acts or events not covered by the foregoing that we reasonably determine to be a form of direct or indirect transfer, including: (1) any transfer, redemption or issuance of a legal or beneficial ownership interest in the capital stock of, a membership interest in, or a partnership interest in, you or of any interest convertible into or exchangeable for capital stock of, or a membership interest or partnership interest in, you or your Owners; (2) any merger or consolidation between you and another entity, whether or not you are the surviving entity, or any conversion of you from one form of legal entity into another form of legal entity, or any sale, exchange, encumbrance or other disposition of your assets; (3) any transfer in connection with or as a result of a divorce, dissolution of marriage or similar proceeding or a property settlement or legal separation agreement in the context of a divorce, dissolution or marriage or similar proceeding, an insolvency, bankruptcy or assignment for benefit of creditors, a judgment, a corporate, limited liability company or partnership dissolution or otherwise by operation of law; or (4) any transfer by gift, declaration of trust, transfer in trust, revocation of trust, trustee succession, trust termination, discretionary or mandatory trust distribution, occurrence of any event (e.g., death of a person) that affects or ripens the rights of contingent beneficiaries, exercise of a power of appointment, exercise of a withdrawal right, adjudication of you or any Owner as legally disabled, or upon or after your death or the death of any of your Owners by will, disclaimer or the laws of intestate succession or otherwise.
Your rights and duties under this Agreement are personal to you and if you are a business corporation, partnership, limited liability company or any other legal entity, your Owners.
Accordingly, neither you nor any of your Owners may Transfer the Development Rights without our prior approval and without complying with the terms and conditions of Section 7.
Any transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchisees and their owners cannot transfer development rights without prior approval from Checkers. If a franchisee or their owners or affiliates make an unauthorized transfer of the Development Rights, Checkers has the right to terminate the agreement, effective immediately upon delivering a notice of termination.
The FDD defines "Transfer the Development Rights" as any direct or indirect sale, assignment, transfer, exchange, conversion, license, sublicense, lease, sublease, mortgage, pledge, collateral assignment, grant of a security, collateral or conditional interest or other encumbrance in or on, or other disposition, whether voluntary, involuntary, by operation of law or otherwise, of the Development Agreement. This also includes any interest in or right under the agreement, any form of legal or beneficial ownership interest in the franchisee or their owners, or any form of ownership interest or right to participate in or receive the benefit of the assets, revenues, income or profits of the franchisee's business.
Specifically, the definition includes but is not limited to: any transfer, redemption or issuance of a legal or beneficial ownership interest in the capital stock of, a membership interest in, or a partnership interest in, the franchisee or of any interest convertible into or exchangeable for capital stock of, or a membership interest or partnership interest in, the franchisee or their Owners; any merger or consolidation between the franchisee and another entity, whether or not the franchisee is the surviving entity, or any conversion of the franchisee from one form of legal entity into another form of legal entity, or any sale, exchange, encumbrance or other disposition of the franchisee's assets; any transfer in connection with or as a result of a divorce, dissolution of marriage or similar proceeding or a property settlement or legal separation agreement in the context of a divorce, dissolution or marriage or similar proceeding, an insolvency, bankruptcy or assignment for benefit of creditors, a judgment, a corporate, limited liability company or partnership dissolution or otherwise by operation of law; or any transfer by gift, declaration of trust, transfer in trust, revocation of trust, trustee succession, trust termination, discretionary or mandatory trust distribution, occurrence of any event (e.g., death of a person) that affects or ripens the rights of contingent beneficiaries, exercise of a power of appointment, exercise of a withdrawal right, adjudication of the franchisee or any Owner as legally disabled, or upon or after the franchisee's death or the death of any of their Owners by will, disclaimer or the laws of intestate succession or otherwise.
Any transfer without Checkers' approval or without complying with the terms and conditions outlined in Section 7 of the agreement constitutes a breach of the agreement and is considered void and of no force or effect. This means that franchisees must seek approval from Checkers before making any changes to the ownership or control of their franchise, or risk termination of their agreement.