What are the Checkers franchisee's rights to acquire a successor franchise?
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.
15.03 Agreements. If you have the right to acquire a successor franchise in accordance with Section 15.01 and state your desire to exercise that right in accordance with Section 15.02, we and you (and your Owners) will execute the form of franchise agreement (which may contain provisions, including royalty fees, materially different from those contained herein) and all ancillary agreements (including, personal guarantees by your Owners and a remodeling agreement on such terms as we determine to be appropriate) which we then customarily use in granting successor franchises for the operation of Restaurants. The successor franchise agreement will be for a successor franchise term of either ten (10) years or twenty (20) years, as you and we may then agree. You must pay us a successor franchise fee due upon signing the successor franchise agreement, depending on the duration of that future agreement's term, in the amount of: (i) one half (1/2), or fifty percent (50%), of the amount of our then current initial franchise fee due for new Restaurants, if your
successor franchise term is for twenty (20) years; or (ii) one-third (1/3), or thirty-three and one-third percent (33.33%), of the amount of our then current initial franchise fee due for new Restaurants, if your successor franchise term is for ten (10) years. In addition, you and your Owners must execute general releases, in form and substance satisfactory to us or as we then explicitly prescribe, of any and all claims against us, and our Affiliates, owners, officers, directors, employees, agents, successors and assigns. Failure by you (and your Owners) to sign such agreements and releases within thirty (30) days after delivery to you shall be deemed an election by you not to acquire a successor franchise for the Franchised Restaurant. Upon expiration of such successor franchise agreement, you will have a further right on terms and conditions contained in the successor franchise agreement to acquire a future successor franchise as we then prescribe.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a franchisee has the right to acquire a successor franchise for their restaurant, provided they meet certain conditions. To be eligible, the franchisee, their owners, and affiliates must be in compliance with the current franchise agreement and any other agreements with Checkers or its affiliates. They also need to have been in substantial compliance throughout the term of the agreement. Additionally, the franchisee must maintain the right to possess the premises for the term of the successor franchise agreement. They must also agree to remodel the restaurant to meet the specifications and standards applicable to new restaurants within a specified time period after signing the successor agreement. The franchisee will also be obligated to pay a renewal fee.
To exercise this right, the franchisee must provide written notice to Checkers of their desire to acquire a successor franchise at least 180 days before the expiration of the current agreement. Checkers will then notify the franchisee of their decision regarding the successor franchise rights within 60 days of receiving the franchisee's notice. However, even if Checkers initially approves the successor franchise, the franchisee's right is contingent on their continued compliance with all provisions of the existing agreement up to its expiration date.
If the franchisee is eligible and wishes to proceed, they, along with their owners, will need to execute Checkers' then-current form of franchise agreement and any related ancillary agreements, including personal guarantees from the owners and a remodeling agreement. The terms of the successor franchise agreement, including royalty fees, may differ materially from the original agreement. The successor franchise term will be either ten or twenty years, as agreed upon by both parties. The franchisee must also pay a successor franchise fee upon signing the new agreement, which is either one-half (50%) or one-third (33.33%) of the then-current initial franchise fee for new restaurants, depending on whether the term is twenty or ten years, respectively. Furthermore, the franchisee and their owners must sign general releases of all claims against Checkers and its affiliates. Failure to sign the agreements and releases within 30 days of delivery will be considered an election not to acquire a successor franchise.