Does the Checkers Existing Franchisee Incentive Addendum change any other terms of the Franchise Agreement besides the Initial Franchise Fee?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
--|----|-----|---------|----------|-------------------------------------------------------------------------------------| | | | | | | | | | | RESTAURANTS, INC., a Delaware corporation ("Franchisor," "we," "our," or "us"), and | | | | | | | | | | | ("you" or "your" or "Franchisee"). We and you may each | | | | | be referred to as a "Party," or collectively, the "Parties." | | | | | | |
R E C I T A L S
WHEREAS, Franchisor has implemented an incentive program available to qualified existing franchisees of "Checkers" or "Rally's" restaurants under which the Initial Franchise Fee due under Franchisor's current form of franchise agreement is reduced by $10,000 if the franchisee opens its Restaurant within one (1) year of signing the Franchise Agreement (the "Existing Franchisee Incentive" or "Incentive");
WHEREAS, Franchisee is an existing franchisee under separate franchise agreements with Franchisor for the operation of at least two (2) "Checkers" or "Rally's" restaurants;
| | WHEREAS, Franchisor | | | | and Franchisee are Parties to that certain Franchise Agreement | | | |---------|---------------------|-------------------------------------------------------------------------------------------|----|-----------|----------------------------------------------------------------|---------|----| | | | dated of even date herewith (the "Franchise Agreement") pursuant to which Franchisee will | | | | | | | operate | another | "Checkers" (the "Franchised Restaurant"); | or | "Rally's" | restaurant | located | at | WHEREAS, Franchisee desires to qualify for and receive, the benefits of the Incentive; and
WHEREAS, the Parties now desire to modify the Franchise Agreement according to the terms and conditions set forth in this Addendum.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
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- Relationship to Franchise Agreement; Recitals. This Addendum shall be annexed to and form a part of the Franchise Agreement. All capitalized terms not otherwise defined in this Addendum shall have the meanings set forth in the Franchise Agreement. Except as modified by this Addendum, the Franchise Agreement remains in full force and effect. Any conflict between the provisions hereof and the Franchise Agreement shall be construed in favor of this Addendum. All references in this Addendum to "Sections," "Subsections," and/or "Exhibits" shall mean the applicable Section(s), Subsection(s), and/or Exhibit(s) of the Franchise Agreement, unless specified otherwise below.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkers Franchise Disclosure Document, the Existing Franchisee Incentive Addendum modifies the standard Franchise Agreement, primarily focusing on the initial franchise fee. For existing franchisees who qualify for the incentive, Section 6.01 of the Franchise Agreement is revised to reflect a reduction of $10,000 from the standard initial franchise fee for a new restaurant, provided the restaurant opens within one year of signing the Franchise Agreement.
However, the addendum's impact extends beyond just the initial fee. It stipulates that the Franchise Agreement remains in full effect except as explicitly modified by the addendum. This means that all other terms and conditions of the original agreement still apply unless they directly conflict with the addendum's provisions. The addendum also includes specific qualifications that the franchisee must meet and maintain to be eligible for the reduced fee, such as being a franchisee in good standing and complying with all existing agreements with Checkers.
Furthermore, the addendum includes additional conditions. For instance, if a franchisee requests a transfer before opening the restaurant, they may be required to pay the full standard initial franchise fee that was initially reduced or waived. Similarly, if the franchisee breaches any of the qualification criteria during the term, they may be required to pay back the amount of the fee reduction. This indicates that the incentive is conditional and subject to ongoing compliance with the agreement.
In essence, while the primary focus of the Existing Franchisee Incentive Addendum is the reduction of the initial franchise fee, it also introduces additional obligations and conditions that affect the franchisee's rights and responsibilities under the broader Franchise Agreement. Prospective franchisees should carefully review the entire addendum and the Franchise Agreement to fully understand the implications of accepting the incentive.