What is the requirement for a Checkers franchisee regarding notifying the franchisor of any proposed change to the ownership structure during the Term?
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.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchisees must promptly inform Checkers of any planned changes to their ownership structure during the term of the franchise agreement. This notification must occur before the franchisee initiates any such change. The franchisee is also required to obtain Checkers' approval, adhering to the transfer conditions outlined in Section 13.02 of the agreement. If Checkers approves the change, the franchisee must sign an updated Exhibit A, which will then replace the previous version.
Furthermore, all individuals who are or become owners must sign an agreement, in a form and substance prescribed by Checkers, to be jointly and severally bound by the franchise agreement. Unless Checkers waives this requirement, each owner must be an individual acting in their individual capacity.
This requirement ensures that Checkers maintains control over who its franchisees and their owners are, safeguarding the brand's reputation and consistency. It also allows Checkers to assess the suitability of any new owners and ensure they are committed to the franchise agreement. For a prospective franchisee, this means being prepared to provide timely notice and comprehensive information regarding any ownership changes and ensuring all new owners meet Checkers' standards and sign the required agreements.