What is the purpose of restricting the issuance, transfer, or pledge of ownership interest in a Checkers franchise?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ith any other agreements entered into with us or any of our Affiliates; (e) the articles of incorporation, partnership agreement or other organizational documents recite that the issuance, transfer or pledge of any direct or indirect legal or beneficial ownership interest is restricted by the terms of this Agreement; and (f) all
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certificates representing direct or indirect legal or beneficial ownership interests now or hereafter issued must bear a legend in conformity with applicable law reciting or referring to such restrictions.
- 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.
You (or your Operating Partner): (a) shall exert full-time, best efforts to the development and operation of the Franchised Restaurant and all other Restaurants you own; and (b) may not engage in any other business or activity, directly or indirectly, that requires substantial management responsibility or time commitments or otherwise may conflict with your obligations hereunder.
8.04 Management of Business. The Franchised Restaurant at all times must be under the direct, on-premises supervision of you (or your Operating Partner), or an Operator other than you (or your Operating Partner) that you appoint and authorize to conduct day-to-day business activities at the Franchised Restaurant, either of whom must (a) have sufficient experience (in our sole opinion) in the operation of a quick service restaurant; and (b) have successfully 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, the brand places restrictions on the transfer of ownership interests to ensure that the brand maintains control over who becomes a franchisee. By requiring franchisor approval for any transfer of ownership, Checkers can vet potential new owners to ensure they meet the company's standards and are capable of operating a franchise successfully. This protects the brand's reputation and the interests of other franchisees.
The FDD specifies that any certificates representing direct or indirect legal or beneficial ownership interests must bear a legend referring to these restrictions, ensuring that all owners are aware of them. Franchisees must also notify Checkers of any proposed changes to the ownership structure and obtain approval before initiating such changes. Furthermore, each person who becomes an owner must execute an agreement to be bound jointly and severally by the Franchise Agreement.
Checkers also requires an Operating Partner to be designated if the franchisee is a business entity. This Operating Partner must own and control at least 10% of the equity and voting rights, have the authority to make operational decisions, and complete the training program. This ensures that there is a qualified individual actively managing the franchise. These measures help Checkers maintain consistency and quality across all franchise locations.
These restrictions do not apply to transfers among current owners or to immediate family members, under certain conditions. In the event of death or disability, the representative of the deceased or disabled party has a period of nine months to transfer the interest to a Checkers-approved third party. These exceptions provide some flexibility while still allowing Checkers to maintain control over the long-term ownership and operation of its franchises.