Under what conditions does Checkers require approval for transfers, as detailed in the franchise agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
st in you; all of your officers, directors and managers; and, all persons possessing equivalent positions in any business entity which directly or indirectly owns and/or controls you. You shall procure all such Nondisclosure and
Non-Competition Agreements no later than ten (10) days following the Effective Date (or, if any individual or entity attains any status identified above after the Effective Date, within ten (10) days after such individual or entity's attains such status) and shall furnish to us copies of all executed Nondisclosure and Non-Competition Agreements within ten (10) days following their execution.
7. AREA FRANCHISEE'S RIGHT TO TRANSFER.
- 7.01 Franchisor's Approval. Your rights and duties under this Agreement are personal to you and if you are a business corporation, partnership, limited liability company or any other legal entity, your Owners. Accordingly, neither you nor any of your Owners may Transfer the Development Rights without our prior approval and without complying with the terms and conditions of Section 7. Any transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect.
- 7.02 Conditions for Approval. If we have not exercised our right of first refusal under Section 7.06, we will not unreasonably withhold our approval of a Transfer of the Development Rights that meets all of the reasonable restrictions, requirements and conditions we impose on the transfer, the transferor(s) and/or the transferee(s), including the following:
- (a) You and your Owners and Affiliates must be in compliance with the provisions of this Agreement and all Franchise Agreements executed pursuant hereto;
- (b) at the time of the proposed Transfer, you have opened and continue to operate at least one (1) Restaurant;
- (c) the proposed transferee and its owners (if the proposed transferee is a corporation, partnership, limited liability company or other legal entity) must provide us on a timely basis all information we request, and must be individuals acting in their individual capacities who are of good character and reputation, who must have sufficient business and development experience, aptitude and financial resources to develop Restaurants pursuant to this Agreement, and who must otherwise meet our approval;
- (d) the proposed transferee may not be an entity, or be affiliated with an entity, that is required to comply with the reporting and information requirements of the Securit
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchisees must obtain approval from Checkers to transfer their development rights. This requirement is detailed in Section 7.01 of the franchise agreement, which states that the franchisee's rights and duties are personal and cannot be transferred without prior approval from Checkers. Any transfer conducted without this approval is considered a breach of the agreement and is void.
Section 7.02 outlines the conditions under which Checkers will grant approval for a transfer. Checkers will not unreasonably withhold approval if the transfer meets all reasonable restrictions, requirements, and conditions imposed on the transfer, the transferor, and the transferee. These conditions include the franchisee and their owners being in compliance with the franchise agreement, and the franchisee must have opened and be operating at least one restaurant at the time of the proposed transfer.
Additional conditions for approval involve the proposed transferee. The transferee and their owners must provide all requested information in a timely manner and must be individuals of good character and reputation with sufficient business and development experience, aptitude, and financial resources. The transferee cannot be an entity, or affiliated with an entity, that is required to comply with the reporting and information requirements of the Securities Exchange Act of 1934. The transferee and its owners must agree to be bound by all provisions of the franchise agreement for the remainder of its term and must acquire all of the transferor's rights under all franchise agreements for Restaurants executed by the transferor. A transfer fee of $20,000 must be paid to Checkers, and the transferor must execute a general release of claims against Checkers.
These stipulations ensure that any transfer of franchise rights maintains the integrity and standards of the Checkers brand. Prospective franchisees should carefully review these conditions to understand the requirements for transferring their franchise in the future and to be aware of the associated costs and obligations.