If Checkers exercises its option to purchase the franchised restaurant, is the franchisee allowed to sell or remove any personal property from the premises after the Appraisal Notice?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Upon termination or expiration (without renewal) of this Agreement, we have the right, exercisable by giving notice thereof ("Appraisal Notice") within ten (10) days after the date of such termination or expiration, to require that a determination be made of the "Agreed Value" (as defined below) of all the personal property used in the Franchised Restaurant which you own, including inventory of non-perishable products, materials, supplies, furniture, equipment, signs, but excluding any cash and short-term investments and any items not meeting our specifications for Restaurants (the "Purchased Assets"). At any time following our providing you an Appraisal Notice, we shall have the unrestricted right to assign this option to purchase separate and apart from the remainder of this Agreement, including, without limitation, to another third-party franchisee. Upon such notice, you may not sell or remove any of the personal property of the Franchised Restaurant from the Premises and must give us (or our assignee), our (or our assignee's) designated agents and the "Appraiser" (as defined below) full access to the Franchised Restaurant and all of your books and records at any time during customary business hours in order to conduct inventories and determine the purchase price for the Purchased Assets.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, if Checkers provides an Appraisal Notice to a franchisee, the franchisee is restricted from selling or removing any personal property from the franchised restaurant's premises. This restriction is in place to ensure that the assets to be purchased by Checkers remain intact and available for appraisal. The personal property includes inventory of non-perishable products, materials, supplies, furniture, equipment, and signs, but excludes cash, short-term investments, and items not meeting Checkers's specifications.
This provision protects Checkers's interests by preventing a franchisee from stripping the restaurant of its assets once the intent to purchase has been declared. It ensures that the valuation of the Purchased Assets can be accurately determined. The franchisee must also provide Checkers, its agents, and the appraiser full access to the restaurant and all relevant books and records to conduct inventories and determine the purchase price.
For a prospective Checkers franchisee, this means that upon termination or expiration of the franchise agreement, they must maintain the integrity of the restaurant's assets if Checkers expresses interest in purchasing them. Failure to comply with this provision could lead to legal complications or a reduction in the final purchase price offered by Checkers. It is essential for franchisees to understand these obligations to avoid disputes during the termination or expiration process.