If the transferee of a Checkers franchise is a legal entity, what requirements apply to its owners?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
sfer, 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;
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, if the proposed transferee of a franchise is a legal entity, its owners must meet certain requirements for the transfer to be approved. Specifically, the owners must provide Checkers with all requested information on a timely basis. These individuals must be acting in their individual capacities, be of good character and reputation, and possess sufficient business experience, aptitude, and financial resources to successfully operate the franchised restaurant. Ultimately, the owners must meet Checkers's approval.
Furthermore, each owner must execute an agreement to be bound jointly and severally by the Franchise Agreement, using a form and substance prescribed by Checkers. Unless Checkers waives this requirement, each owner must be an individual acting in their individual capacity. If the franchisee is a legal entity, it must designate an Operating Partner who meets specific criteria. This Operating Partner must own or have the right to control at least 10% of the entity's equity and voting rights, have the authority to make operational decisions, and complete Checkers's training program.
These conditions are in place to ensure that any transfer of the Checkers franchise maintains the brand's standards and protects its interests. Checkers aims to ensure that those involved in operating a franchise meet their criteria and obligations. Prospective franchisees should carefully review these requirements and discuss any concerns with Checkers during their due diligence process.