Under what conditions is a transfer of Checkers Development Rights considered a breach of the Development Agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a transfer of development rights without prior approval from Checkers and without complying with the terms and conditions outlined in Section 7 of the agreement constitutes a breach of the Development Agreement. This means that a Checkers franchisee cannot sell, assign, or otherwise transfer their rights to develop restaurants in their designated area without first getting the green light from Checkers.
Checkers' approval is contingent upon meeting specific conditions. These conditions include the franchisee and their owners being in full compliance with the Development Agreement and all related Franchise Agreements. Additionally, the franchisee must have already opened and be operating at least one Checkers restaurant at the time of the proposed transfer. The proposed transferee must also meet Checkers' standards, providing all requested information and demonstrating sufficient business experience, aptitude, and financial resources to successfully develop Checkers restaurants.
Furthermore, the transferee must not be affiliated with any entity that is required to comply with the reporting requirements of the Securities Exchange Act of 1934. The transferee and its owners must agree to be bound by all provisions of the Development Agreement for the remainder of its term. The transferee must also acquire all rights under all franchise agreements for Restaurants executed by the franchisee. A transfer fee of $20,000 must be paid to Checkers. Finally, the franchisee and their owners must execute a general release of claims against Checkers.
These stipulations ensure that Checkers maintains control over who is developing their brand and that any new developer meets their standards for success. For a prospective franchisee, this means that exiting the agreement early or transferring rights is not a simple process and requires careful adherence to Checkers' requirements. Failure to comply with these conditions will render the transfer void and constitute a breach of the agreement, potentially leading to further legal and financial repercussions.