How is the successor franchise fee determined for a Checkers franchise with a 20-year term?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
whether or not you have the right to acquire a successor franchise pursuant to Section 15.01. Notwithstanding any notice of our decision that you have the right to acquire a successor franchise for the Franchised Restaurant, your right will be subject to your continued compliance with all the provisions of this Agreement up to the date of its expiration.
15.03 Agreements. If you have the right to acquire a successor franchise in accordance with Section 15.01 and state your desire to exercise that right in accordance with Section 15.02, we and you (and your Owners) will execute the form of franchise agreement (which may contain provisions, including royalty fees, materially different from those contained herein) and all ancillary agreements (including, personal guarantees by your Owners and a remodeling agreement on such terms as we determine to be appropriate) which we then customarily use in granting successor franchises for the operation of Restaurants. The successor franchise agreement will be for a successor franchise term of either ten (10) years or twenty (20) years, as you and we may then agree. You must pay us a successor franchise fee due upon signing the successor franchise agreement, depending on the duration of that future agreement's term, in the amount of: (i) one half (1/2), or fifty percent (50%), of the amount of our then current initial franchise fee due for new Restaurants, if your
successor franchise term is for twenty (20) years; or (ii) one-third (1/3), or thirty-three and one-third percent (33.33%), of the amount of our then current initial franchise fee due for new Restaurants, if your successor franchise term is for ten (10) years. In addition, you and your Owners must execute general releases, in form and substance satisfactory to us or as we then explicitly prescribe, of any and all claims against us, and our Affiliates, owners, officers, directors, employees, agents, successors and assigns. Failure by you (and your Owners) to sign such agreements and releases within thirty (30) days after delivery to you shall be deemed an election by you not to acquire a successor franchise for the Franchised Restaurant.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the successor franchise fee for a 20-year term is calculated as one-half (1/2), or fifty percent (50%), of the amount of Checkers' then-current initial franchise fee for new restaurants. This fee is due upon signing the successor franchise agreement.
For a prospective franchisee, this means that if they choose to renew their franchise agreement for another 20 years, they will need to pay a renewal fee equivalent to 50% of whatever the current initial franchise fee is at that time for new Checkers restaurants. For example, if the initial franchise fee for a new restaurant is $30,000 at the time of renewal, the successor franchise fee for a 20-year term would be $15,000.
It's important to note that the successor franchise agreement may contain terms, including royalty fees, that are materially different from the original agreement. Additionally, franchisees and their owners must execute general releases of claims against Checkers and its affiliates. Failure to sign the successor agreements and releases within 30 days of delivery will be deemed an election not to acquire a successor franchise.