What is the deadline for Checkers to provide an Appraisal Notice after the termination or expiration of the Checkers franchise agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Upon termination or expiration (without renewal) of this Agreement, we have the right, exercisable by giving notice thereof ("Appraisal Notice") within ten (10) days after the date of such termination or expiration, to require that a determination be made of the "Agreed Value" (as defined below) of all the personal property used in the Franchised Restaurant which you own, including inventory of non-perishable products, materials, supplies, furniture, equipment, signs, but excluding any cash and short-term investments and any items not meeting our specifications for Restaurants (the "Purchased Assets"). At any time following our providing you an Appraisal Notice, we shall have the unrestricted right to assign this option to purchase separate and apart from the remainder of this Agreement, including, without limitation, to another third-party franchisee. Upon such notice, you may not sell or remove any of the personal property of the Franchised Restaurant from the Premises and must give us (or our assignee), our (or our assignee's) designated agents and the "Appraiser" (as defined below) full access to the Franchised Restaurant and all of your books and records at any time during customary business hours in order to conduct inventories and determine the purchase price for the Purchased Assets.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, Checkers has the option to purchase the franchisee's restaurant assets upon termination or expiration of the franchise agreement. To exercise this option, Checkers must provide an Appraisal Notice within ten days after the termination or expiration date. This notice initiates the process of determining the Agreed Value of the personal property used in the franchised restaurant.
This Appraisal Notice is crucial because it triggers the valuation process for the Purchased Assets, which include items like inventory, furniture, equipment, and signs. After the notice is given, the franchisee is restricted from selling or removing any of these assets from the premises. The franchisee must also provide Checkers and the designated appraiser with full access to the restaurant and its records to conduct inventories and determine the purchase price.
The Agreed Value of the Purchased Assets will be determined through consultation between the franchisee and Checkers. If they cannot agree on a value within fifteen days after the Appraisal Notice, the method for determining the value depends on whether the agreement expired without renewal or was terminated. In the case of expiration without renewal, the Agreed Value will be the Fair Market Value, considering what an arm's length purchaser would pay for the assets for operating a Checkers restaurant under a current franchise agreement, less any required remodeling costs. If the agreement was terminated, the Agreed Value will be the lesser of the Appraised Asset Value and the Net Book Value.
For a prospective Checkers franchisee, understanding this clause is essential, as it outlines the procedures and timelines for the potential sale of restaurant assets back to Checkers upon the end of the franchise term. Franchisees should be aware of the implications of the Appraisal Notice, including the restrictions on asset disposal and the valuation methods used to determine the purchase price. It is also important to note Checkers's right to assign this purchase option to a third party.