Under what condition can Checkers require a franchisee to execute a lease for the Restaurant Location upon termination or expiration of the Franchise Agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
16.05 Right to Lease Real Estate.
- (a) Upon termination of this Agreement (for any reason, no reason, or upon expiration without renewal), if you or any of your Owners or Affiliates directly or indirectly owns the building and/or land (the "Real Estate") on which the Franchised Restaurant is located, we may, and at our option (in our sole discretion) and in conjunction with our purchase of the Franchised Restaurant pursuant to Section 16.04 hereof, require you to execute and deliver to us or our designee a lease for the Restaurant Location pursuant to the terms of Section 16.05(b).
- (b) If we elect to require you to execute and deliver to us or our designee a lease for the Restaurant Location, we shall deliver written notice to you within ten (10) days after the effective date of termination or expiration of this Agreement of such election. Following such notice, you and we shall negotiate in good faith a lease for the Real Estate containing commercially reasonable terms with a term equal to a minimum of the remaining Term under this Agreement. If you and we have not agreed to a lease within thirty (30) days after your receipt of our election, we shall engage a Real Estate Appraiser to prepare a lease with commercially reasonable terms. The Real Estate Appraiser's determination will be binding, and you must
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers has the option to require a franchisee to execute a lease for the restaurant location under specific circumstances related to property ownership and the termination or expiration of the franchise agreement.
Specifically, if the franchisee or any of their owners or affiliates directly or indirectly owns the building or land where the franchised restaurant is located, Checkers may require the franchisee to execute a lease for the restaurant location. This option is at Checkers' discretion and is typically exercised in conjunction with Checkers' purchase of the franchised restaurant.
If Checkers elects to enforce this lease requirement, they must provide written notice to the franchisee within ten days after the termination or expiration date of the franchise agreement. Following this notice, both parties are expected to negotiate in good faith to establish a lease with commercially reasonable terms, with a minimum term equal to the remaining term under the original agreement. If an agreement cannot be reached within thirty days, a Real Estate Appraiser will be engaged to prepare a lease with commercially reasonable terms, which will be binding on both parties. The costs associated with the Real Estate Appraiser are to be shared equally between Checkers and the franchisee. Upon execution of the lease, the franchisee must promptly vacate the restaurant location and provide assistance to Checkers to facilitate a smooth transition.