Can a Checkers franchisee transfer their franchise rights without Checkers' approval?
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);
- (h) the transferee agrees (if the transfer is of this Agreement) to upgrade, remodel, expand and/or remodel the Franchised Restaurant in accordance with our current prescribed plans, specifications and design model for Restaurants (including, without limitation, any modifications or adjustments we authorize and timely introduce for similarly-situated Restaurants, or otherwise incorporate into the System for all franchisees) and to add or replace fixtures, furniture, equipment, signs and supplies in accordance with our then current requirements and specifications for Restaurants within the time period we specify following the effective date of the transfer (we will advise the transferee before the effective date of the transfer of the specific actions that it must take and the time period within which such actions must be taken);
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, a franchisee cannot transfer their franchise rights without the franchisor's approval. Specifically, Item 13.01 states that because the rights and duties within the agreement are personal to the franchisee (or their Owners if the franchisee is a business entity), neither the franchisee nor their Owners may transfer the franchise without Checkers' approval. Furthermore, any transfer attempted without this approval or without complying with all provisions in Section 13 is considered a breach of the agreement and is void.
However, Checkers will not unreasonably withhold approval of a transfer if the franchisee meets all reasonable restrictions, requirements, and conditions imposed on the transfer, the transferor(s), and/or the transferee(s). These conditions include operating the restaurant according to the agreement, compliance with all agreements with Checkers, and the proposed transferee meeting Checkers' standards for business experience, character, and financial resources. The transferee must also complete the initial training program and agree to be bound by the franchise agreement terms.
There are exceptions to some of these transfer requirements. For example, Sections 13.06 and 13.02(a), (c), (f), or (h) do not apply to transfers among current Owners. Similarly, Sections 13.06 and 13.02(h) or (j) do not apply to transfers to immediate family members of the franchisee or current Owners. Additionally, a franchisee (if an individual or partnership) can transfer the agreement to a corporation or LLC they control, provided they give 30 days' notice and the agreement is approved by Checkers. However, these assignments do not relieve the original franchisee of their obligations under the agreement.
Before Checkers approves a proposed transferee to begin business activities, the franchisee must ensure Checkers receives a transfer fee. This fee is $20,000, but if the transferee is a current Checkers franchisee, the fee is reduced to $10,000. If the transfer involves multiple restaurants transferred on the same day, the fee is $20,000 (or $10,000 for a current franchisee) for the first restaurant, plus $5,000 for each additional restaurant. Any approval applies only to the specific transfer being proposed and does not apply to any other transfer of the franchise.