When must a Checkers franchisee pay the Initial Fee Reduction if they breach the criteria in Section 2?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
4. Additional Condition(s).
- a.
If, before you open the Franchised Restaurant, you request and we approve a transfer in accordance with Section 13, then as a pre-closing condition of the transfer (in addition to any transfer fee payable) you must pay us the amount of the Initial Fee Reduction prior to the transfer.
- b.
If you breach, fail to satisfy, or are later found to have violated or failed to satisfy, any of the criteria listed in Section 2 above in this Addendum, at any point during the Term, then in addition to any other remedies available under the Franchise Agreement or at applicable law, you must pay us (no later than thirty (30) days after our written notice to you) the amount of the Initial Fee Reduction plus the value of any royalty fee reduction, discount, and any other benefit afforded to you hereunder (as measured, if necessary, against the standard fee amount or level specified for new franchisees of Restaurants on the Effective Date of the Franchise Agreement).
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a franchisee must pay the Initial Fee Reduction if they breach the criteria in Section 2 of the addendum. Specifically, if at any point during the term of the agreement, the franchisee breaches, fails to satisfy, or is found to have violated or failed to satisfy any of the criteria listed in Section 2, they are obligated to pay Checkers the amount of the Initial Fee Reduction.
This payment is due no later than thirty (30) days after Checkers provides written notice to the franchisee. This requirement is in addition to any other remedies Checkers may pursue under the Franchise Agreement or applicable law, including termination of the agreement.
This clause ensures that Checkers can recoup the benefit afforded to the franchisee if the franchisee fails to meet the conditions upon which the reduction was granted. Prospective franchisees should carefully review Section 2 of the addendum to understand the criteria they must meet to avoid triggering this repayment obligation. Franchisees should also be aware that failure to meet the criteria in Section 2, including opening the franchised restaurant within one year of signing the Franchise Agreement, will result in owing the initial fee reduction.