For Checkers franchises, what must franchisees do if there is a proposed change to the ownership structure during the term?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.02 Disclosure of Ownership Interests. You and all of your Owners represent, warrant and agree that Exhibit A is current, complete and accurate as of the Effective Date. You agree to promptly notify us of any proposed or intended change to your ownership structure during the Term, to obtain our approval in accordance with the transfer conditions of Section 13.02 below before initiating any such change, and to sign a then-updated and accurate form of Exhibit A (which will replace its predecessor version of Exhibit A) if we approve the change. Each person who is or becomes an Owner must execute an agreement in form and substance as we then prescribe, undertaking to be bound jointly and severally by this Agreement. Each Owner must be an individual acting in his individual capacity, unless we waive this requirement.
- 8.03 Operating Partner. If you are, or at any time become, a business corporation, partnership, limited liability company or other legal entity, you must designate in Exhibit A as the "Operating Partner" an individual we approve who must: (a) own and control, or have the right to own and control (subject to conditions reasonably acceptable to us) not less than ten percent (10%) of your equity and voting rights; (b) have the authority to make, and bind you and all your Owners to, all operational decisions regarding the Franchised Restaurant; and (c) complete our training program to our satisfaction before engaging in his or her operational duties. You may not change the Operating Partner without our prior written consent.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, if a franchisee intends to change their ownership structure during the term of the agreement, they must promptly notify Checkers of the proposed change. The franchisee must then obtain Checkers's approval, adhering to the transfer conditions outlined in Section 13.02 of the franchise agreement, before initiating any such change. If Checkers approves the change, the franchisee must sign an updated Exhibit A, which will replace the previous version, to reflect the new ownership structure.
Furthermore, Checkers requires that each person who becomes an owner must execute an agreement that binds them jointly and severally to the franchise agreement. Unless Checkers waives this requirement, each owner must be an individual acting in their individual capacity.
If the franchisee is a business entity, such as a corporation, partnership, or LLC, they must designate an approved individual as the "Operating Partner" in Exhibit A. This Operating Partner must meet specific criteria, including owning or having the right to control at least 10% of the entity's equity and voting rights, having the authority to make operational decisions, and completing Checkers's training program. The franchisee cannot change the Operating Partner without Checkers's prior written consent.