What happens if a Checkers franchisee fails to comply with the conditions for transfer approval?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, if a franchisee attempts to transfer their franchise without the required approval or compliance with Section 13 of the franchise agreement, such a transfer constitutes a breach of the agreement. Consequently, the transfer is considered void and has no legal effect.
Section 13.02 outlines several conditions for transfer approval. These include the franchisee operating the restaurant in compliance with the agreement, the franchisee and their affiliates being in compliance with all agreements with Checkers, and the proposed transferee meeting Checkers's approval criteria. The transferee must provide all requested information, demonstrate good character, possess sufficient business experience and financial resources, and complete the initial training program to Checkers's satisfaction.
This provision protects Checkers by ensuring that any transfer of the franchise meets their standards and maintains the integrity of the brand. It prevents franchisees from circumventing the approval process and transferring the franchise to unqualified individuals or entities. Franchisees should be aware of these conditions and ensure full compliance before attempting to transfer their franchise to avoid potential legal issues and the invalidation of the transfer.