What are Checkers' rights regarding first refusal in the event of a transfer of the franchise?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.06 Franchisor's Right of First Refusal.
If you or any of your Owners desires to transfer the Development Rights for legal consideration, you or such Owner(s) must obtain a bona fide, executed written offer and earnest money deposit in the amount of at least 5% of the offering price from a responsible and fully disclosed purchaser and must deliver immediately to us a complete and accurate copy of such offer.
If the offeror proposes to buy any other property or rights from you or any of your Owners or Affiliates (other than rights under development and franchise agreements for Restaurants) as part of the bona fide offer, the proposal for such property or rights must be set forth in a separate, contemporaneous offer that is fully disclosed to us, and the price and terms of purchase offered to you or your Owners for
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers has the right of first refusal if a franchisee or any of their owners wants to transfer the Development Rights for legal consideration. To initiate this process, the franchisee or owner must obtain a bona fide, executed written offer along with an earnest money deposit of at least 5% of the offering price from a responsible and fully disclosed purchaser. A complete and accurate copy of this offer must then be delivered immediately to Checkers.
If the offer includes the purchase of any other property or rights from the franchisee or their owners or affiliates (excluding rights under development and franchise agreements for Restaurants), this proposal must be presented in a separate, contemporaneous offer that is fully disclosed to Checkers. The price and terms for the transfer of the Development Rights must reflect the actual price offered for those rights alone and not include any value from other property or rights.
This right of first refusal allows Checkers to maintain control over who enters their franchise system and ensures that any potential new franchisee meets their standards. It also allows Checkers to potentially expand their own holdings by purchasing the Development Rights themselves if they deem it beneficial. For a prospective franchisee, this means that selling their franchise is not solely their decision, and Checkers has the option to step in and purchase the franchise themselves under the same terms offered by a third-party buyer.