What happens if Checkers approves a change to the ownership structure?
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' 2025 Franchise Disclosure Document, if a franchisee proposes a change to their ownership structure during the term of the agreement, they must first notify Checkers and obtain approval, adhering to the transfer conditions outlined in Section 13.02. If Checkers approves the change, the franchisee must then sign an updated Exhibit A, which will replace the previous version. This exhibit serves to keep Checkers informed about the current and accurate ownership details of the franchise.
Furthermore, Checkers requires that each person who becomes an Owner must execute an agreement, in a form and substance prescribed by Checkers, to be bound jointly and severally by the existing Franchise Agreement. Unless Checkers waives this requirement, each Owner must be an individual acting in their individual capacity. This ensures that all individuals with ownership interests are legally responsible for upholding the terms of the franchise agreement.
If the franchisee is a business entity such as a corporation, partnership, or limited liability company, they must designate an Operating Partner in Exhibit A. This Operating Partner must be approved by Checkers and must own and control at least 10% of the entity's equity and voting rights, or have the right to do so subject to conditions acceptable to Checkers. The Operating Partner must have the authority to make operational decisions and bind the entity and its owners to those decisions. Additionally, the Operating Partner must complete Checkers' training program to their satisfaction before engaging in operational duties. The franchisee cannot change the Operating Partner without Checkers' prior written consent.
These stipulations ensure that Checkers maintains control over who is involved in the ownership and operation of its franchises, safeguarding the brand's standards and reputation. By requiring approval for ownership changes, mandating agreements from new owners, and setting specific criteria for Operating Partners, Checkers aims to ensure that all parties involved are committed to the franchise system and capable of upholding its standards.