What is the requirement for a Checkers franchisee regarding obtaining approval before initiating any change to the ownership structure?
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.
- 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.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a franchisee must notify Checkers of any proposed or intended change to their ownership structure during the term of the agreement. The franchisee is required to obtain Checkers' approval, adhering to the transfer conditions outlined in Section 13.02 of the agreement, before initiating any such change. If Checkers approves the change, the franchisee must sign an updated Exhibit A, which will replace the previous version, to reflect the new ownership structure.
This requirement ensures that Checkers maintains control over who is involved in the ownership of its franchises. Each person who is or becomes an owner must execute an agreement to be bound jointly and severally by the existing agreement. Unless Checkers waives this requirement, each owner must be an individual acting in their individual capacity.
If the franchisee is a business entity, such as a corporation, partnership, or limited liability company, they must designate an Operating Partner in Exhibit A. This Operating Partner must be approved by Checkers and must own or have the right to control at least 10% of the entity's equity and voting rights. The Operating Partner must also have the authority to make operational decisions for the franchised restaurant and must complete Checkers' training program. The franchisee cannot change the Operating Partner without Checkers' prior written consent.
These stipulations allow Checkers to vet and approve all individuals involved in the ownership and operation of a franchise, ensuring they meet the brand's standards and are committed to the business. This protects the Checkers brand and the integrity of its system.