Under what circumstances must Checkers provide a disclosure document for a proposed modification of an existing franchise in California?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 31125 of the California Corporations Code requires us to give you a disclosure document, in a form containing the information that the Commissioner may by rule or order require, before a solicitation of a proposed material modification of an existing franchise.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, California Corporations Code Section 31125 mandates that Checkers provide a disclosure document to a franchisee before soliciting a proposed material modification of an existing franchise. This disclosure document must contain information as required by the Commissioner.
In practical terms, this means that if Checkers wants to change any significant aspect of an existing franchise agreement in California, they must first provide the franchisee with a disclosure document. This ensures the franchisee is fully informed about the proposed changes and can make an educated decision about whether to accept them. The specific contents of the disclosure document will be determined by the California Commissioner.
This requirement aims to protect franchisees from being pressured into accepting modifications without adequate information. It is a standard practice in franchising to provide disclosures for material changes to the franchise agreement, ensuring transparency and fairness in the franchisor-franchisee relationship.