Is a Checkers franchisee's right to acquire a successor franchise dependent on continued compliance with the existing agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
15.01 Your Right To Acquire a Successor Franchise. You will have the right, subject to the conditions contained in the entirety of this Section 15, to acquire a successor franchise for the Franchised Restaurant on the terms and conditions of a then current form of franchise agreement for Restaurants, as further described in Section 15.03 below, provided that upon expiration of the Term: (a) you and your Owners and Affiliates are in compliance with this Agreement and any other agreements with us or any of our Affiliates, and you and your Owners have been in substantial compliance with this Agreement throughout the Term; and (b) you maintain the right to possession of the Premises for the term of the successor franchise agreement and enter into an agreement with us whereby you agree within a specified time period, starting on the signing of a successor franchise agreement, to remodel the Franchised Restaurant, add or replace improvements, fixtures, furnishings, equipment and signs and otherwise modify the Franchised Restaurant to upgrade the Franchised Restaurant to the specifications and standards then applicable for new Restaurants. You will be obligated to pay a renewal fee in the relevant amount described in Section 15.03 below.
15.02 Notices. You must give us written notice of your desire to acquire a successor franchise at least one hundred eighty (180) days prior to the expiration of this Agreement. We will give you notice, not later than sixty (60) days after receipt of your notice, of our decision whether or not you have the right to acquire a successor franchise pursuant to Section 15.01. Notwithstanding any notice of our decision that you have the right to acquire a successor franchise for the Franchised Restaurant, your right will be subject to your continued compliance with all the provisions of this Agreement up to the date of its expiration.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, a franchisee's right to acquire a successor franchise is indeed contingent upon their compliance with the existing franchise agreement. Specifically, to be eligible for a successor franchise, the franchisee, their owners, and affiliates must be in compliance with the current agreement and any other agreements with Checkers or its affiliates. Furthermore, the franchisee and their owners must have demonstrated substantial compliance throughout the entire term of the existing agreement.
This requirement means that a Checkers franchisee cannot have any outstanding defaults or unresolved issues under the franchise agreement at the time of renewal. This includes adherence to operational standards, payment obligations, and any other stipulations outlined in the agreement. Even if a franchisee expresses interest in acquiring a successor franchise and receives initial approval from Checkers, their right to do so remains contingent upon their continued compliance up to the expiration date of the original agreement.
In practical terms, a Checkers franchisee seeking a renewal needs to maintain a strong record of compliance throughout the franchise term. Any breaches or failures to meet the agreement's requirements could jeopardize their opportunity to continue operating the franchise under a new agreement. This conditionality is a fairly standard practice in franchising, as franchisors want to ensure that franchisees seeking to renew have consistently upheld the brand's standards and protected its reputation.
Moreover, the franchisee must maintain the right to possess the premises for the term of the successor franchise agreement. They also need to enter into an agreement with Checkers to remodel the restaurant to meet the specifications and standards applicable to new restaurants. The franchisee will also be obligated to pay a renewal fee, the amount of which is described in another section of the FDD.