Under the Checkers franchise agreement, what constitutes a 'material breach' that leads to immediate termination?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
curities would be required to be registered pursuant to the Securities Act of 1933, as amended, or such securities would be owned by more than 35 persons; or (2) after such issuance or sale, you or such Affiliate would be required to comply with the reporting and information requirements of the Securities Exchange Act of 1934, as amended.
14. TERMINATION OF AGREEMENT.
14.01 Immediate Termination. You are in material breach of this Agreement, and this Agreement will automatically terminate without notice, at our discretion, if you become insolvent by reason of your inability to pay your debts as they mature; if you are adjudicated bankrupt or insolvent; if you file a petition in bankruptcy, reorganization or similar proceedings under the bankruptcy laws of the United States or have such a petition filed against you which is not discharged within thirty (30) days; if a receiver or other custodian, permanent or temporary, is appointed for your business, assets, property; if you request the appointment of a receiver or make a general assignment for the benefit of creditors; if final judgment against you in the amount of Twenty-Five Thousand Dollars ($25,000) or more remains unsatisfied of record for thirty (30) days or longer; if your bank accounts, property or accounts receivable are attached; if execution is levied against your business or property; if suit is filed to foreclose any lien or mortgage against any of your assets and such suit is not dismissed
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, there are several conditions under which the franchise agreement can be immediately terminated due to a material breach. These conditions primarily relate to the franchisee's financial stability and legal compliance.
Specifically, Checkers can terminate the agreement without notice if the franchisee becomes insolvent, is adjudicated bankrupt, files for bankruptcy or similar proceedings that are not discharged within 30 days, or has a receiver appointed for their business. Similarly, Checkers can immediately terminate the agreement if the franchisee requests the appointment of a receiver, makes a general assignment for the benefit of creditors, has a final judgment of $25,000 or more that remains unsatisfied for 30 days, or has their bank accounts or property attached.
Further grounds for immediate termination include the filing of a suit to foreclose any lien or mortgage against the franchisee's assets that is not dismissed within 30 days, voluntary dissolution or liquidation, or having assets blocked under laws related to terrorist activities. These terms highlight the critical importance of maintaining financial solvency and adhering to legal and regulatory requirements to avoid immediate termination of the Checkers franchise agreement.