Checkersrallys 2025 Franchise FAQ - FDD Ninja

Question 1

According to the FDD, what aspects of the Checkersrallys Franchised Restaurant are subject to the franchisor's specifications and standards?

Accepted Answer

**9.04 Specifications and Standards**.You acknowledge that each and every aspect of the interior and exterior appearance, layout, decor, services, equipment and operation of the Franchised Restaurant is important to us and is subject to our specifications and standards. You agree to comply with all mandatory specifications, standards and operating procedures, as modified at any time and from time to time (whether contained in Operations Manual or any other written communication) relating to the appearance, function, cleanliness or operation of a Restaurant, including: (a) type, quality, taste, weight, dimensions, ingredients, uniformity, and manner of preparation, packaging and sale of food products and beverages; (b) sales

procedures and customer service; (c) advertising and promotional programs; (d) appearance and dress of employees; (e) safety, maintenance, appearance, cleanliness, sanitation, standards of service and operation of the Franchised Restaurant; (f) days and hours of operation; (g) bookkeeping, accounting and record keeping systems and forms; and (h) customer service, brand loyalty programs and materials and media, including social media websites, used in these programs.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 2

According to the provided financial data, what is the total amount listed for Checkersrallys for the fiscal years ending 2024 through 'Thereafter'?

Accepted Answer

[Item 21: FINANCIAL STATEMENTS]

| Fiscal year ending | Amount      |
|--------------------|-------------|
| 2024               | $ 93    |
| 2025               | 93          |
| 2026               | 93          |
| 2027               | 95          |
| 2028               | 93          |
| Thereafter         | 882         |
| Total              | $ 1,349 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal year ending | Aı | mount |
|--------------------|----|-------|
| 2024               | $ | 368   |
| 2025               |    | 342   |
| 2026               |    | 314   |
| 2027               |    | 257   |
| 2028               |    | 146   |
| Thereafter         | -  | 252   |
| Total              | $ | 1,679 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount                                          |
|--------------------------------------|-------------------------------------------------|
| 2025 | $ 3,166 |
| 2026 | 3,166 |
| 2027 | 3,166 |
| 2028 | 3,166 |
| 2029 | 3,166 |
| Thereafter | $ 11,042 |
| Total | 26,872 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount |                                |
|--------------------------------------|--------|--------------------------------|
| 2025 | $ | 67 |
| 2026 |  | 144 |
| 2027 |  | 155 |
| 2028 |  | 166 |
| 2029 |  | 144 |
| Thereafter                           |        | 7,174                          |
| Total payments                       |        | 7,850                          |
| Less: current portion                |        | (67)                           |
| Non-current portion                  | $     | 7,783                          |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal year ending           | A  | mount  |
|------------------------------|----|--------|
| 2024                         | $ | 1,879  |
| 2025                         |    | 942    |
| 2026                         |    | 994    |
| 2027                         |    | 10,761 |
| 2028                         |    | 74,118 |
| Thereafter                   |    | 7,290  |
| Total payments               |    | 95,984 |
| Less current portion         |    | 1,879  |
| Less deferred financing cost |    | 447    |
| Non-current portion          | $ | 93,658 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal year ending | A  | mount  |
|--------------------|----|--------|
| 2024               | $ | 3,166  |
| 2025               |    | 3,166  |
| 2026               |    | 3,166  |
| 2027               |    | 3,227  |
| 2028               |    | 3,166  |
| Thereafter         |    | 14,146 |
| Total              | $ | 30,037 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending | Amount      |
|--------------------|-------------|
| 2025               | $ 91    |
| 2026               | 91          |
| 2027               | 92          |
| 2028               | 90          |
| 2029               | 90          |
| Thereafter         | 769         |
| Total              | $ 1,223 |

---

|                                     | Operat | ing leases |
|-------------------------------------|--------|------------|
| Fiscal year ending:                 |        |            |
| 2024                                | $     | 2,064      |
| 2025                                |        | 1,882      |
| 2026                                |        | 1,600      |
| 2027                                |        | 1,212      |
| 2028                                |        | 840        |
| Thereafter                          |        | 1,977      |
| Total future minimum lease receipts | $     | 9,575      |

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 3

Across all listed states, how many Checkersrallys outlets were reacquired from franchisees in 2022?

Accepted Answer

| Col. 1 State | Col. 2 Year | Col. 3 Outlets at Start of the Year | Col. 4 Outlets Opened | Col. 5 Outlets Reacquired From Franchisee | Col. 6 Outlets Closed | Col. 7 Outlets Sold to Franchisee | Col. 8 Outlets at End of the Year |
|---|---|---|---|---|---|---|---|
| Alabama | 2022 | 7 | 0 | 0 | 0 | 0 | 7 |
|  | 2023 | 7 | 0 | 0 | 0 | 0 | 7 |
|  | 2024 | 7 | 0 | 0 | 1 | 0 | 6 |
| Florida | 2022 | 104 | 0 | 0 | 1 | 0 | 103 |
|  | 2023 | 103 | 2 | 0 | 7 | 0 | 98 |
|  | 2024 | 98 | 0 | 0 | 2 | 0 | 96 |
| Georgia | 2022 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2023 | 10 | 0 | 0 | 0 | 0 | 10 |
|  | 2024 | 10 | 0 | 0 | 0 | 0 | 10 |
| Michigan | 2022 | 8 | 0 | 0 | 0 | 0 | 8 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 77–91)

Question 4

Across all listed states, how many Checkersrallys terminations occurred in 2022?

Accepted Answer

Col. 1 State | Col. 2 Year | Col. 3 Outlets at Start of Year | Col. 4 Outlets Opened | Col. 5 Termina- tions | Col. 6 Non- Renewals | Col. 7 Reacquired by Franchisor | Col. 8 Ceased Opera- tions Other Reasons | Col. 9 Outlets at End of the Year |
|---|---|---|---|---|---|---|---|---|
| Alabama | 2022 | 11 | 2 | 0 | 0 | 0 | 1 | 12 |
|  | 2023 | 12 | 0 | 0 | 0 | 0 | 2 | 10 |
|  | 2024 | 10 | 0 | 0 | 0 | 0 | 0 | 10 |
| Arkansas | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2023 | 2 | 1 | 0 | 0 | 0 | 0 | 3 |
|  | 2024 | 3 | 1 | 0 | 0 | 0 | 0 | 4 |
| California | 2022 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
| Delaware | 2022 | 4 | 0 | 0 | 0 | 0 | 1 | 3 |
|  | 2023 | 3 | 1 | 0 | 0 | 0 | 1 | 3 |
|  | 2024 | 3 | 0 | 0 | 0 | 0 | 0 | 3 |
| Florida | 2022 | 52 | 1 | 0 | 0 | 0 | 5 | 48 |
|  | 2023 | 48 | 5 | 0 | 0 | 0 | 10 | 43 |
|  | 2024 | 43 | 5 | 0 | 0 | 0 | 6 | 42 |
| Col. 1 State | Col. 2 Year | Col. 3 Outlets at Start of Year | Col. 4 Outlets Opened | Col. 5 Termina- tions | Col. 6 Non- Renewals | Col. 7 Reacquired by Franchisor | Col. 8 Ceased Opera- tions Other Reasons | Col. 9 Outlets at End of the Year |
|---|---|---|---|---|---|---|---|---|
| Georgia | 2022 | 79 | 1 | 0 | 0 | 0 | 6 | 74 |
|  | 2023 | 74 | 2 | 0 | 0 | 0 | 7 | 69 |
|  | 2024 | 69 | 1 | 0 | 0 | 0 | 4 | 66 |
| Illinois | 2022 | 22 | 0 | 0 | 0 | 0 | 0 | 22 |
|  | 2023 | 22 | 0 | 0 | 0 | 0 | 1 | 21 |
|  | 2024 | 21 | 0 | 0 | 0 | 0 | 8 | 13 |
| Indiana | 2022 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
| Iowa | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2023 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
|  | 2024 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| Louisiana | 2022 | 19 | 2 | 0 | 0 | 0 | 0 | 21 |
|  | 2023 | 21 | 2 | 0 | 0 | 0 | 2 | 21 |
|  | 2024 | 21 | 0 | 0 | 0 | 0 | 0 | 21 |
| Maryland | 2022 | 33 | 0 | 0 | 0 | 0 | 0 | 33 |
|  | 2023 | 33 | 1 | 0 | 0 | 0 | 0 | 34 |
|  | 2024 | 34 | 1 | 0 | 0 | 0 | 1 | 34 |
| Michigan | 2022 | 34 | 0 | 0 | 0 | 0 | 0 | 34 |
|  | 2023 | 34 | 0 | 0 | 0 | 0 | 1 | 33 |
|  | 2024 | 33 | 0 | 0 | 0 | 0 | 0 | 33 |
| Minnesota | 2022 | 1 | 0 | 0 | 0 | 0 | 1 | 0 |
|  | 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|  | 2024 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Mississippi | 2022 | 6 | 5 | 0 | 0 | 0 | 0 | 11 |
|  | 2023 | 11 | 1 | 0 | 0 | 0 | 1 | 11 |
|  | 2024 | 11 | 0 | 0 | 0 | 0 | 2 | 9 |
| New Jersey | 2022 | 12 | 0 | 0 | 0 | 0 | 0 | 12 |
| Col. 1 State | Col. 2 Year | Col. 3 Outlets at Start of Year | Col. 4 Outlets Opened | Col. 5 Termina- tions | Col. 6 Non- Renewals | Col. 7 Reacquired by Franchisor | Col. 8 Ceased Opera- tions Other Reasons | Col. 9 Outlets at End of the Year |
|---|---|---|---|---|---|---|---|---|
|  | 2023 | 12 | 0 | 0 | 0 | 0 | 2 | 10 |
|  | 2024 | 10 | 2 | 0 | 0 | 0 | 0 | 12 |
| New York | 2022 | 45 | 2 | 0 | 0 | 0 | 3 | 44 |
|  | 2023 | 44 | 1 | 0 | 0 | 0 | 8 | 37 |
|  | 2024 | 37 | 0 | 0 | 0 | 0 | 2 | 35 |
| North | 2022 | 9 | 1 | 0 | 0 | 0 | 0 | 10 |
| Carolina |  |  |  |  |  |  |  |  |
|  | 2023 | 10 | 2 | 0 | 0 | 0 | 2 | 10 |
|  | 2024 | 10 | 0 | 0 | 0 | 0 | 1 | 9 |
| Pennsylvania | 2022 | 11 | 0 | 0 | 0 | 0 | 1 | 10 |
|  | 2023 | 10 | 1 | 0 | 0 | 0 | 8 | 3 |
|  | 2024 | 3 | 4 | 0 | 0 | 0 | 0 | 7 |
| South | 2022 | 7 | 0 | 0 | 0 | 0 | 0 | 7 |
| Carolina |  |  |  |  |  |  |  |  |
|  | 2023 | 7 | 1 | 0 | 0 | 0 | 1 | 7 |
|  | 2024 | 7 | 2 | 0 | 0 | 0 | 0 | 9 |
| Tennessee | 2022 | 16 | 7 | 0 | 0 | 0 | 0 | 23 |
|  | 2023 | 23 | 0 | 0 | 0 | 0 | 1 | 22 |
|  | 2024 | 22 | 1 | 0 | 0 | 0 | 8 | 15 |
| Texas | 2022 | 34 | 2 | 0 | 0 | 0 | 6 | 30 |
|  | 2023 | 30 | 1 | 0 | 0 | 0 | 6 | 25 |
|  | 2024 | 25 | 1 | 0 | 0 | 0 | 3 | 23 |
| Virginia | 2022 | 6 | 2 | 0 | 0 | 0 | 1 | 7 |
|  | 2023 | 7 | 0 | 0 | 0 | 0 | 0 | 7 |
|  | 2024 | 7 | 0 | 0 | 0 | 0 | 0 | 7 |
| West Virginia | 2022 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
| Wisconsin | 2022 | 4 | 0 | 0 | 0 | 0 | 0 | 4 |
|  | 2023 | 4 | 0 | 0 | 0 | 0 | 0 | 4 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 77–91)

Question 5

For a Checkersrallys franchise, what is the estimated total initial investment, excluding real estate and related costs?

Accepted Answer

ased operations.

#### 1. MODULAR DESIGN DRIVE-THRU RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement. | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | NPF Inc. |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building Costs (See Note 2) | $354,653- $1,292,640 | Dependent upon bank financing | As agreed | Suppliers, Lending Institutions |
| Restaurant Equipment & Technology (See Note 2) | $42,153 - $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (see Note 3) | $17,200 - $225,625 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $11,914 - | As | On ordering | Suppliers |
| Menuboards | $97,690 | incurred |  |  |
| Inventory (See Note | $4,000 - $12,000 | As | When delivered | Suppliers |
| 4) |  | incurred |  |  |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $514,920 - $2,132,493 |  |  |  |#### 2. CONVERSION RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | National Production Fund |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building (See Note 2) | $322,062- $739,445 | Dependent upon bank financing | As agreed | Contractors, Suppliers, Lending Institutions |
| Restaurant Equipment & Technology | $193,260- $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (See Note 3) | $50,000- $89,710 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $29,050- | As incurred | On ordering | Us or Other |
| Menuboards | $134,081 |  |  | Supplier |
| Inventory (See Note | $4,000 - | As incurred | When delivered | Suppliers |
| 4) | $12,000 |  |  |  |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $683,372 - $1,479,774 |  |  |  |#### 3. SITE BUILT RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | National Production Fund |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building (See Note 2) | $785,150- $1,112,973 | Dependent upon bank financing | As agreed | Contractors, Suppliers, Lending Institutions |
| Restaurant Equipment & Technology | $122,976- $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (See Note 3) | $28,500- $150,000 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $39,031- | As incurred | On ordering | Us or Other |
| Menuboards | $97,690 |  |  | Supplier |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| Inventory (See Note | $4,000 - | As incurred | When delivered | Suppliers |
| 4) | $12,000 |  |  |  |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $1,064,657 - $1,877,201 |  |  |  |# 4. ENDCAP RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement. | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | National Production Fund |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building Costs (See Note 2) | $85,000 - $700,000 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Restaurant Equipment & Technology (See Note 2) | $199,763 - $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (See Note 3) | $0 - $42,250 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| Signage including | $9,607 - | As incurred | On ordering | Us or Other |
| Menuboards | $61,750 |  |  | Supplier |
| Inventory (See Note | $4,000 - | As incurred | When delivered | Suppliers |
| 4) | $12,000 |  |  |  |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $383,370 - $1,320,538 |  |  |  |#### 5. IN-LINE RESTAURANT IN HIGH DENSITY MARKET

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement. | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | National Production Fund |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building Costs (See Note 2) | $395,000 - $477,250 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Restaurant Equipment & Technology (See Note 2) | $75,500 - $352,000 | As incurred | On ordering | Suppliers |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| Soft Costs (See Note 3) | 27,500 – 33,000 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $14,725 - | As incurred | On ordering | Us or Other |
| Menuboards | $17,729 |  |  | Supplier |
| Inventory (See Note | $4,000 - | As incurred | When delivered | Suppliers |
| 4) | $12,000 |  |  |  |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $601,725 – $1,066,979 |  |  |  |## 6. GAS/CONVENIENCE, NON-TRADITIONAL, OR WALMART RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $15,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | National Production Fund |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| Restaurant Building Costs (See Note 2) | $2,630 - $149,000 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Restaurant Equipment & Technology (See Note 2) | $25,000 - $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (See Note 3) | $8,000 - $30,000 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $4,000 - | As incurred | On ordering | Us or Other |
| Menuboards | $30,000 |  |  | Supplier |
| Inventory (See Note | $4,000 - | As incurred | When delivered | Suppliers |
| 4) | $12,000 |  |  |  |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $123,630 - $725,538 |  |  |  |NOTE 1 See description of the initial franchise fee in Item 5 of this franchise disclosure document.

NOTE 2 *Chart 1: Modular Design Drive-Thru Restaurant*. The "Restaurant Building" line item reflects our estimate of the cost of constructing a modular drive-thru restaurant which is manufactured and shipped to the Premises, with an estimated size of approximately 1,008 square feet for the building on a site of approximately 19,080 to 30,000 square feet. The "Restaurant Building" estimate includes the cost of the building, building shipping and building assembly.

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 30–39)

Question 6

Does the text provide an aggregated summary of financial data for Checkersrallys?

Accepted Answer

tment |  | - |  | - |  | 181 |  | 181 |  |
| Net income |  | - |  | - |  | 21,260 |  | 21,260 |  |
| Balances at December 30, 2024 | \$ | - | \$ | 98,449 | \$ | 18,785 | \$ | 117,234 |  |
#### **CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(In thousands)**

|                                                                                                                                                | Successor |                                       |                                                            | Predecessor        |                                                            |                |
|------------------------------------------------------------------------------------------------------------------------------------------------|-----------|---------------------------------------|------------------------------------------------------------|--------------------|------------------------------------------------------------|----------------|
|  |  | Year Ended December 30, 2024 | Period from June 17, 2023 through January 1, 2024 |  | Period from January 3, 2023 through June 16, 2023 |  |
| Operating activities: |  |  |  |  |  |  |
| Net income (loss) | \$ | 21,260 | \$ | (2,570) |  | (91,106) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |  |  |  |  |  |
| Depreciation and amortization |  | 9,312 |  | 4,638 |  | 8,552 |
| Amortization of deferred financing costs |  | 294 |  | 54 |  | 892 |
| Provision for credit losses |  | 582 |  | 122 |  | 94 |
| Deferred income tax expense (benefit) |  | (25,962) |  | 4 |  | (7,529) |
| Noncash operating lease expense, net |  | 14,873 |  | 5,490 |  | 6,878 |
| Right-of-use asset amortization for finance lease |  | 2,699 |  | 455 |  | 262 |
| Change in favorable leasehold interests |  | 427 |  | 232 |  | 146 |
| Change in unfavorable leasehold interests |  | 56 |  | (31) |  | (29) |
| Noncash stock based compensation |  | 498 |  | 132 |  | 5,720 |
| Noncash interest on long-term debt |  | 5,201 |  | 2,534 |  | 13,808 |
| Impairment of long-lived assets |  | 2,384 |  | 623 |  | 66,633 |
| Net loss on disposal of fixed assets |  | 64 |  | 670 |  | 839 |
| Changes in operating assets and liabilities: |  |  |  |  |  |  |
| Decrease (increase) in accounts receivable, net |  | (264) |  | (1,693) |  | 221 |
| Decrease (increase) in inventory |  | (250) |  | 927 |  | (564) |
| Decrease (increase) in prepaid expenses |  | (30) |  | (1,618) |  | 1,137 |
| Decrease (increase) in other current assets |  | 1,881 |  | (1,241) |  | 105 |
| Decrease in other noncurrent assets |  | 1,150 |  | 231 |  | 602 |
| (Decrease) increase in accounts payable |  | 582 |  | (16) |  | (247) |
| (Decrease) increase in accrued liabilities, accrued wages and benefits, deferred |  |  |  |  |  |  |
| revenue, self-insurance, and long-term liabilities |  | (680) |  | (7,774) |  | 9,416 |
| Change in operating lease liabilities |  | (17,434) |  | (8,154) |  | (8,250) |
| Other changes, net |  | (793) |  | (237) |  | (584) |
| Net cash provided by (used in) operating activities |  | 15,850 |  | (7,222) |  | 6,996 |
| Investing activities: |  |  |  |  |  |  |
| Capital expenditures |  | (10,024) |  | (7,269) |  | (5,513) |
|  |  |  |  |  |  |  |
| Net cash used in investing activities |  | (10,024) |  | (7,269) |  | (5,513) |
| Financing activities: |  |  |  |  |  |  |
| Payment for debt issuance costs |  | - |  | (500) |  | - |
| Principal payments on long-term debt |  | (812) |  | (1,304) |  | (1,360) |
| Principal payments on financing obligations |  | (73) |  | (47) |  | (400) |
| Repayments on finance lease liabilities |  | (1,885) |  | (254) |  | (159) |
| Proceeds from short-term financing |  | 1,464 |  | 1,540 |  | - |
| Payment on short-term financing |  | (1,515) |  | - |  | - |
| Proceeds from the issuance of long-term financing |  | - |  | 10,000 |  | - |
|  |  |  |  |  |  |  |
| Net cash (used in) provided by financing activities |  | (2,821) |  | 9,435 |  | (1,919) |
| NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS |  | 3,005 |  | (5,056) |  | (436) |
| Cash, cash equivalents, and restricted cash at beginning of period |  | 12,557 |  | 17,613 |  | 18,049 |
| Cash, cash equivalents, and restricted cash at end of period | \$ | 15,562 | \$ | 12,557 | \$ | 17,613 |
| Supplemental disclosure of cash flow information: |  |  |  |  |  |  |
| Cash paid for interest | \$ | 7,859 | \$ | 4,619 | \$ | 458 |
| Income taxes paid, net of refunds |  | 558 |  | 18 |  | 43 |
|  |  |  |  |  |  |  |
| Non-cash activities: |  |  |  |  |  |  |
| Non-cash right-of-use assets obtained in exchange for operating leases | \$ | 664 | \$ | 1,006 | \$ | 1,058 |
| Non-cash right-of-use assets obtained in exchange for finance

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 7

What is the total amount listed in the financial data provided for Checkersrallys?

Accepted Answer

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount                                          |
|--------------------------------------|-------------------------------------------------|
| 2025 | $ 3,166 |
| 2026 | 3,166 |
| 2027 | 3,166 |
| 2028 | 3,166 |
| 2029 | 3,166 |
| Thereafter | $ 11,042 |
| Total | 26,872 |

---
[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount                                |
|--------------------------------------|---------------------------------------|
| 2025 | $ 321 |
| 2026 | 321 |
| 2027 | 327 |
| 2028 | 257 |
| 2029 | 105 |
| Total                                | $ 1,331                           |

---
[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                                     | Amount           |
|--------------------------------------------------------|------------------|
| 2025                                                   | $ 1,788      |
| 2026 | 850 |
| 2027 | 11,024 |
| 2028                                                   | 78,738           |
| Total payments                                         | 92,400           |
| Less: current portion | (1,788) |
| Less: deferred financing cost | (341) |
| Non-current portion                                    | $ 90,271     |

---
[Item 21: FINANCIAL STATEMENTS]

| Fiscal year ending | Amount      |
|--------------------|-------------|
| 2024               | $ 93    |
| 2025               | 93          |
| 2026               | 93          |
| 2027               | 95          |
| 2028               | 93          |
| Thereafter         | 882         |
| Total              | $ 1,349 |

---
[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending | Amount      |
|--------------------|-------------|
| 2025               | $ 91    |
| 2026               | 91          |
| 2027               | 92          |
| 2028               | 90          |
| 2029               | 90          |
| Thereafter         | 769         |
| Total              | $ 1,223 |

---
[Item 21: FINANCIAL STATEMENTS]

|                           | (  | Gross                       | All | owance   | Net   |     | Gross | All   | owance     |     | Net  |
|---------------------------|----|-----------------------------|-----|----------|-------|-----|-------|-------|------------|-----|------|
| Current receivables       |    |                             |     |          |       | 1.5 |
| Accounts receivable       | $ | 7,913                       | $  | (514) $ | 7,399 | $  | 6,436 | $    | (384)      | $  | 6,05 |
| Notes receivable          |    |                             |     | •        | -     |     | 91    |       | -          |     | 9    |
| Total current receivables | $ | 7,913                       | $  | (514) $ | 7,399 | $  | 6,527 | $    | (384)      | $  | 6,14 |

---
[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount |
|--------------------------------------|--------|
| 2025 | $ | 67 |
| 2026 |  | 144 |
| 2027 |  | 155 |
| 2028 |  | 166 |
| 2029 |  | 144 |
| Thereafter                           |        | 7,174                          |
| Total payments                       |        | 7,850                          |
| Less: current portion                |        | (67)                           |
| Non-current portion                  | $     | 7,783                          |

---
[Item 21: FINANCIAL STATEMENTS]

| Fair Value of stock consideration                                    | $ | 97,819    |
|----------------------------------------------------------------------|----|-----------|
| Current assets: |  | 15.612 |
| Cash and cash equivalents |  | 17,613 |
| Accounts and notes receivable, net |  | 5,828 |
| Inventory |  | 3,105 |
| Prepaid expenses |  | 3,690 |
| Other current assets | * | 1,600 |
| Total current assets |  | 31,836 |
| Property and equipment, net |  | 26,300 |
| Operating Right-of-Use Assets |  | 152,445 |
| Finance Right-of-Use Assets |  | 14,831 |
| Intangible assets |  | 198,900 |
| Favorable leasehold interests |  | 2,080 |
| Other assets | - | 2,584 |
| Total assets |  | 428,976 |
|  |  |  |
| Current liabilities: |  |  |
| Accounts payable | $ | (3,126) |
| Accrued liabilities |  | (21,547) |
| Accrued wages and benefits |  | (3,829) |
| Current portion of deferred revenue |  | (2,761) |
| Current maturities of long-term debt, and financing obligations |  | (923) |
| Current portion of accrued self-insurance |  | (1,565) |
| Current portion of Operating Lease Liabilities |  | (11,939) |
| Current portion of Finance Lease Liabilities | V | (374) |
| Total current liabilities |  | (46,064) |
| Deferred income tax liabilities |  | (48,326) |
| Operating Lease Liability |  | (158,850) |
| Finance Lease Liability |  | (16,548) |
| Long-term debt, less current maturities and deferred financing c

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 8

What is the total amount listed in the Checkersrallys financial statements?

Accepted Answer

ignificant audit findings, and certain internal control-related matters that we identified during the audit.

Tampa, Florida April 1, 2025

#### **CONSOLIDATED BALANCE SHEETS**

**(In thousands, except share and per share data)**

|                                                                                                                                                       |                      | Successor          |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|--------------------|
|  | December 30, | January 1, |
|  | 2024 | 2024 |
| ASSETS                                                                                                                                                |                      |                    |
| Current assets                                                                                                                                        |                      |                    |
| Cash and cash equivalents                                                                                                                             | \$ 15,562         | \$ 12,557       |
| Accounts and notes receivable, net                                                                                                                    | 7,717                | 7,399              |
| Inventory                                                                                                                                             | 2,428                | 2,178              |
| Prepaid expenses                                                                                                                                      | 5,338                | 5,308              |
| Other current assets                                                                                                                                  | 799                  | 2,867              |
| Total current assets                                                                                                                                  | 31,844               | 30,309             |
| Property and equipment, net                                                                                                                           | 31,679               | 29,309             |
| Operating lease right-of-use assets                                                                                                                   | 132,807              | 145,380            |
| Finance lease right-of-use assets                                                                                                                     | 31,231               | 22,632             |
| Intangibles assets, net                                                                                                                               | 198,723              | 198,849            |
| Favorable leasehold interests                                                                                                                         | 1,421                | 1,848              |
| Goodwill, net                                                                                                                                         | 26,872               | 30,037             |
| Other assets                                                                                                                                          | 1,203                | 2,353              |
| Total assets                                                                                                                                          | \$ 455,780        | \$ 460,717      |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                  |                      |                    |
| Current liabilities                                                                                                                                   |                      |                    |
| Accounts payable                                                                                                                                      | \$ 3,563          | \$ 2,650        |
| Accrued liabilities                                                                                                                                   | 13,855               | 13,801             |
| Accrued wages and benefits                                                                                                                            | 3,708                | 4,148              |
| Current portion of deferred revenue                                                                                                                   | 2,652                | 2,717              |
| Current maturities of long-term debt                                                                                                                  | 1,788                | 1,802              |
| Current maturities of financing obligations                                                                                                           | 67                   | 77                 |
| Current portion of accrued self-insurance                                                                                                             | 2,365                | 1,640              |
| Current portion of operating lease liabilities                                                                                                        | 11,490               | 11,742             |
| Current portion of finance lease liabilities                                                                                                          | 966                  | 545                |
| Total current liabilities                                                                                                                             | 40,454               | 39,122             |
| Deferred income tax liabilities                                                                                                                       | 22,368               | 48,330             |
| Operating lease liabilities, less current portion                                                                                                     | 134,307              | 149,180            |
| Finance lease liabilities, less current portion                                                                                                       | 33,979               | 24,738             |
| Long-term debt, less current maturities                                                                                                               | 90,271               | 85,812             |
| Financing obligations, less current maturities                                                                                                        | 7,783                | 7,846              |
| Deferred revenue, less current portion                                                                                                                | 6,373                | 6,937              |
| Accrued self-insurance, less current portion                                                                                                          | 2,020                | 2,211              |
| Unfavorable leasehold interests | 113 | 169 |
| Other long-term liabilities | 878 | 1,077 |
|                                                                                                                                                       |                      |                    |
| Total liabilities                                                                                                                                     | 338,546              | 365,422            |
| Commitments and contingencies (Note 15)                                                                                                               |                      |                    |
| Stockholders' equity | - | - |
| Common stock, \$0.01 par value, 100 shares authorized, issued, and outstanding as of |  |  |
| December 30, 2024 and January 1, 2024 |  |  |
| Additional paid-in capital                                                                                                                            | 98,449               | 97,951             |
| Retained earnings (deficit)                                                                                                                           | 18,785               | (2,656)            |
| Total stockholders' equity                                                                                                                            | 117,234              | 95,295             |
| Total liabilities and stockholders' equity                                                                                                            | \$ 455,780        | \$ 460,717      |
|                                                                                                                                                       |                      |                    |

#### **CONSOLIDATED STATEMENTS OF OPERATIONS**

**(In thousands)**

|                                          |                                       | Successor | Predecessor                                                |         |    |                                                            |
|------------------------------------------|---------------------------------------|-----------|------------------------------------------------------------|---------|----|------------------------------------------------------------|
|  | Year Ended December 30, 2024 |  | Period from June 17, 2023 through January 1, 2024 |  |  | Period from January 3, 2023 through June 16, 2023 |
| Revenues |  |  |  |  |  |  |
| Restaurant sales | \$ | 255,474 | \$ | 141,217 | \$ | 130,191 |
| Franchise and retail royalty revenue |  | 35,389 |  | 18,608 |  | 15,385 |
| Franchise fees and other income |  | 9,518 |  | 5,317 |  | 4,061 |
| Total revenues |  | 300,381 |  | 165,142 |  | 149,637 |
| Costs and expenses |  |  |  |  |  |  |
| Restaurant food and paper costs |  | 81,660 |  | 45,102 |  | 41,194 |
| Restaurant labor costs |  | 79,230 |  | 44,446 |  | 38,348 |
| Restaurant occupancy costs |  | 22,378 |  | 11,778 |  | 11,145 |
| Restaurant depreciation |  | 5,871 |  | 2,524 |  | 7,529 |
| Other restaurant operating expenses |  | 34,053 |  | 20,357 |  | 17,423 |
| General and administrative expenses |  | 39,215 |  | 19,435 |  | 36,471 |
| Franchise support and service expenses |  | 5,226 |  | 3,634 |  | 1,696 |
| Advertising expense |  | 14,397 |  | 8,077 |  | 6,810 |
| Other depreciation and amortization |  | 3,441 |  | 2,093 |  | 900 |
| Restaurant retirement costs |  | 139 |  | 300 |  | 596 |
| Impairment of long-lived assets |  | 2,384 |  | 623 |  | 66,633 |
| Net loss on disposal of fixed assets |  | 64 |  | 670 |  | 839 |
| Total costs and expenses |  | 288,058 |  | 159,039 |  | 229,584 |
| Operating income (loss) |  | 12,323 |  | 6,103 |  | (79,947) |
| Other income (expense) |  |  |  |  |  |  |
| Interest expense |  | (15,789) |  | (8,134) |  | (18,326) |
| Other income (expense) |  | 3 |  | 1 |  | (375) |
| Total other (expense) income |  | (15,786) |  | (8,133) |  | (18,701) |
| Loss before income tax expense (benefit) |  | (3,463) |  | (2,030) |  | (98,648) |
| Income tax expense (benefit) |  | (24,723) |  | 540 |  | (7,542) |
| Net income (loss) | \$ | 21,260 | \$ | (2,570) | \$ | (91,106) |
#### **CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)**

**(In Thousands)**

|                                        | Successor    |   |    |                                  |    |                                   |                                  |         |  |
|-------------

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 9

What is the total amount listed in the Checkersrallys financial statements across all fiscal years ending between 2025 and 2029?

Accepted Answer

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending | Amount      |
|--------------------|-------------|
| 2025               | $ 91    |
| 2026               | 91          |
| 2027               | 92          |
| 2028               | 90          |
| 2029               | 90          |
| Thereafter         | 769         |
| Total              | $ 1,223 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount                                |
|--------------------------------------|---------------------------------------|
| 2025 | $ 321 |
| 2026 | 321 |
| 2027 | 327 |
| 2028 | 257 |
| 2029 | 105 |
| Total                                | $ 1,331                           |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount                                          |
|--------------------------------------|-------------------------------------------------|
| 2025 | $ 3,166 |
| 2026 | 3,166 |
| 2027 | 3,166 |
| 2028 | 3,166 |
| 2029 | 3,166 |
| Thereafter | $ 11,042 |
| Total | 26,872 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount |                                |
|--------------------------------------|--------|--------------------------------|
| 2025 | $ | 67 |
| 2026 |  | 144 |
| 2027 |  | 155 |
| 2028 |  | 166 |
| 2029 |  | 144 |
| Thereafter                           |        | 7,174                          |
| Total payments                       |        | 7,850                          |
| Less: current portion                |        | (67)                           |
| Non-current portion                  | $     | 7,783                          |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                  | Operating Leases                |
|-------------------------------------|-----------------------------------|
| 2025 | $ 1,717 |
| 2026 | 1,367 |
| 2027 | 964 |
| 2028 | 568 |
| 2029                                | 307                               |
| Thereafter                          | 356                               |
| Total future minimum lease receipts | $ 5,279                        |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                                     | Amount           |
|--------------------------------------------------------|------------------|
| 2025                                                   | $ 1,788      |
| 2026 | 850 |
| 2027 | 11,024 |
| 2028                                                   | 78,738           |
| Total payments                                         | 92,400           |
| Less: current portion | (1,788) |
| Less: deferred financing cost | (341) |
| Non-current portion                                    | $ 90,271     |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal year ending | Aı | mount |
|--------------------|----|-------|
| 2024               | $ | 368   |
| 2025               |    | 342   |
| 2026               |    | 314   |
| 2027               |    | 257   |
| 2028               |    | 146   |
| Thereafter         | -  | 252   |
| Total              | $ | 1,679 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal year ending           | A  | mount  |
|------------------------------|----|--------|
| 2024                         | $ | 1,879  |
| 2025                         |    | 942    |
| 2026                         |    | 994    |
| 2027                         |    | 10,761 |
| 2028                         |    | 74,118 |
| Thereafter                   |    | 7,290  |
| Total payments               |    | 95,984 |
| Less current portion         |    | 1,879  |
| Less deferred financing cost |    | 447    |
| Non-current portion          | $ | 93,658 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal year ending | A  | mount  |
|--------------------|----|--------|
| 2024               | $ | 3,166  |
| 2025               |    | 3,166  |
| 2026               |    | 3,166  |
| 2027               |    | 3,227  |
| 2028               |    | 3,166  |
| Thereafter         |    | 14,146 |
| Total              | $ | 30,037 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal year ending | A  | mount |
|--------------------|----|-------|
| 2024               | $ | 393   |
| 2025               |    | 393   |
| 2026               |    | 393   |
| 2027               |    | 401   |
| 2028               |    | 262   |
| Total              | $ | 1,842 |

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 10

What is the total amount listed in the provided financial data for Checkersrallys?

Accepted Answer

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount                                          |
|--------------------------------------|-------------------------------------------------|
| 2025 | $ 3,166 |
| 2026 | 3,166 |
| 2027 | 3,166 |
| 2028 | 3,166 |
| 2029 | 3,166 |
| Thereafter | $ 11,042 |
| Total | 26,872 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                                     | Amount           |
|--------------------------------------------------------|------------------|
| 2025                                                   | $ 1,788      |
| 2026 | 850 |
| 2027 | 11,024 |
| 2028                                                   | 78,738           |
| Total payments                                         | 92,400           |
| Less: current portion | (1,788) |
| Less: deferred financing cost | (341) |
| Non-current portion                                    | $ 90,271     |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount                                |
|--------------------------------------|---------------------------------------|
| 2025 | $ 321 |
| 2026 | 321 |
| 2027 | 327 |
| 2028 | 257 |
| 2029 | 105 |
| Total                                | $ 1,331                           |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal year ending | Amount      |
|--------------------|-------------|
| 2024               | $ 93    |
| 2025               | 93          |
| 2026               | 93          |
| 2027               | 95          |
| 2028               | 93          |
| Thereafter         | 882         |
| Total              | $ 1,349 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending | Amount      |
|--------------------|-------------|
| 2025               | $ 91    |
| 2026               | 91          |
| 2027               | 92          |
| 2028               | 90          |
| 2029               | 90          |
| Thereafter         | 769         |
| Total              | $ 1,223 |

---

[Item 21: FINANCIAL STATEMENTS]

| Fiscal Year Ending                   | Amount |
|--------------------------------------|--------|
| 2025 | $ | 67 |
| 2026 |  | 144 |
| 2027 |  | 155 |
| 2028 |  | 166 |
| 2029 |  | 144 |
| Thereafter                           |        | 7,174                          |
| Total payments                       |        | 7,850                          |
| Less: current portion                |        | (67)                           |
| Non-current portion                  | $     | 7,783                          |

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 11

What is the total amount reported for Checkersrallys across all fiscal years listed in the table?

Accepted Answer

| Fiscal Year Ending                   | Amount                                |
|--------------------------------------|---------------------------------------|
| 2025 | $ 321 |
| 2026 | 321 |
| 2027 | 327 |
| 2028 | 257 |
| 2029 | 105 |
| Total                                | $ 1,331                           |

---

| Fiscal Year Ending                   | Amount                                          |
|--------------------------------------|-------------------------------------------------|
| 2025 | $ 3,166 |
| 2026 | 3,166 |
| 2027 | 3,166 |
| 2028 | 3,166 |
| 2029 | 3,166 |
| Thereafter | $ 11,042 |
| Total | 26,872 |

---

| Fiscal year ending | Amount      |
|--------------------|-------------|
| 2024               | $ 93    |
| 2025               | 93          |
| 2026               | 93          |
| 2027               | 95          |
| 2028               | 93          |
| Thereafter         | 882         |
| Total              | $ 1,349 |

---

| Fiscal Year Ending | Amount      |
|--------------------|-------------|
| 2025               | $ 91    |
| 2026               | 91          |
| 2027               | 92          |
| 2028               | 90          |
| 2029               | 90          |
| Thereafter         | 769         |
| Total              | $ 1,223 |

---

| Fiscal Year Ending                                     | Amount           |
|--------------------------------------------------------|------------------|
| 2025                                                   | $ 1,788      |
| 2026 | 850 |
| 2027 | 11,024 |
| 2028                                                   | 78,738           |
| Total payments                                         | 92,400           |
| Less: current portion | (1,788) |
| Less: deferred financing cost | (341) |
| Non-current portion                                    | $ 90,271     |

---

| Fiscal year ending | Aı | mount |
|--------------------|----|-------|
| 2024               | $ | 368   |
| 2025               |    | 342   |
| 2026               |    | 314   |
| 2027               |    | 257   |
| 2028               |    | 146   |
| Thereafter         | -  | 252   |
| Total              | $ | 1,679 |

---

| Fiscal year ending           | A  | mount  |
|------------------------------|----|--------|
| 2024                         | $ | 1,879  |
| 2025                         |    | 942    |
| 2026                         |    | 994    |
| 2027                         |    | 10,761 |
| 2028                         |    | 74,118 |
| Thereafter                   |    | 7,290  |
| Total payments               |    | 95,984 |
| Less current portion         |    | 1,879  |
| Less deferred financing cost |    | 447    |
| Non-current portion          | $ | 93,658 |

---

| Fiscal year ending | A  | mount |
|--------------------|----|-------|
| 2024               | $ | 393   |
| 2025               |    | 393   |
| 2026               |    | 393   |
| 2027               |    | 401   |
| 2028               |    | 262   |
| Total              | $ | 1,842 |

---

| Fiscal year ending | A  | mount  |
|--------------------|----|--------|
| 2024               | $ | 3,166  |
| 2025               |    | 3,166  |
| 2026               |    | 3,166  |
| 2027               |    | 3,227  |
| 2028               |    | 3,166  |
| Thereafter         |    | 14,146 |
| Total              | $ | 30,037 |

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 12

What was the total number of Checkersrallys franchise transfers in Florida between 2022 and 2024?

Accepted Answer

| State | Year | Number of Transfers |
|---|---|---|
| Delaware | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Florida | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 77–91)

Question 13

What was the total number of Checkersrallys transfers in 2022?

Accepted Answer

| State | Year | Number of Transfers |
|---|---|---|
|  | 2023 | 0 |
|  | 2024 | 0 |
| Total | 2022 | 36 |
|  | 2023 | 6 |
|  | 2024 | 9 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 77–91)

Question 14

What is the total on-the-job training time for Checkersrallys franchisees?

Accepted Answer

The initial training program consists of hands-on training covering all phases of restaurant operations, including food preparation, equipment operation and maintenance, cost control, inventory control and basic techniques of management. The initial training program is substantially similar for all Restaurants, with some variation based on preparation methods used by Checkers Restaurants or Rally's Restaurants. The subjects covered, approximate hours of classroom and on-the-job training, and other information about our initial training program is described below:

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 46–57)

Question 15

What is the total projected number of new franchised Checkersrallys outlets expected to open in the next fiscal year, according to the FDD?

Accepted Answer

| State | Franchise Agreements Signed But Outlet Not Opened | Projected New Franchised Outlets In The Next Fiscal Year | Projected New Company-Owned Outlets In the Next Fiscal Year |
|---|---|---|---|
| Tennessee | 2 | 2 | 0 |
| Texas | 0 | 1 | 0 |
| Wisconsin | 0 | 1 | 0 |
| Total | 13 | 10 | 0 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 77–91)

Question 16

Are all Checkersrallys franchisees required to contribute to the NPF on the same basis?

Accepted Answer

In addition to the Initial Advertising Deposit described in Item 5, you must contribute to the NPF amounts that are established by us from time to time, not to exceed 3% of Net Sales, which are payable semi-monthly at the same time as the royalty fees due under the Franchise Agreement. As of the issuance date of this Franchise Disclosure Document, you must contribute a monthly advertising fee (currently, 2.65%, but can be increased up to 3.0% of your Net Sales) to the NPF depending on the geographical area where your Franchised Restaurant is located (See Note 5 in Item 6). Other domestic franchisees contribute on the same basis to the NPF, except for certain operators of Rally's Restaurants operating under older forms of agreement. The NPF receives and administers monies from operators of Restaurants. All company-owned Checkers Restaurants and Rally's Restaurants also currently contribute on the same basis as franchisees to the NPF, but we and our affiliates are not obligated to do so (or to continue doing so throughout your franchise term). Some third party vendors also contribute to the NPF.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 46–57)

Question 17

How does the initial franchise fee for Checkersrallys in Item 5 compare to the ongoing royalty fees described in Item 6?

Accepted Answer

required to be disclosed in this Item.

# **ITEM 5 INITIAL FEES**

#### **Franchise Agreement**

#### *Initial Franchise Fee*

The standard initial franchise fee is \$30,000. If we have approved the location of the Franchised Restaurant prior to signing the Franchise Agreement, then you must pay the full amount of the initial franchise fee when you sign the Franchise Agreement. If we and you have not agreed upon an approved location of the Franchised Restaurant before signing the Franchise Agreement, then the initial franchise fee is payable as follows: \$10,000 on the date you sign the Franchise Agreement; and the remaining \$20,000 within 30 days of our approval of the location of the Franchised Restaurant.

If you sign the Franchise Agreement in connection with a Development Agreement, then the applicable portion of the development fee you paid under the Development Agreement toward the Franchised Restaurant will be credited against the initial franchise fee payable and due to us under the Franchise Agreement, according to that Development Agreement's terms. If you sign the Franchise Agreement and a Non-Traditional Site Addendum to operate the Franchised Restaurant from a Non-Traditional Site, then the initial franchise fee will be reduced to \$15,000 as discussed below. If you sign the Franchise Agreement as part of your independent purchase of (or receipt of transferred ownerships interests in) the Franchised Restaurant's assets from a third party owner, then you will not pay us an initial franchise fee, but you must ensure that we receive the full amount of the associated transfer fee due to us as a result of that transaction (by way of example only, see successor franchise fee under Item 6).

In addition, should you qualify (as we solely determine) for any incentive programs or other sales promotions we are then offering in connection with sales of new franchises, or accelerated openings of franchises not yet opened (as the case may be), then your initial franchise fee or other applicable amounts due under the Franchise Agreement may be reduced according to conditions of that promotional offer (including signing an addendum to the

Franchise Agreement, as we may then require). We describe certain promotional offers currently in effect on the issuance date of this Franchise Disclosure Document below in this Item 5.

The initial franchise fee is fully earned by us on the effective date of the franchise agreement and is non-refundable, except that we may provide you a refund of 50% of the initial franchise fee if: (a) you (i) are unable to obtain a site acceptable to us within the Designated Area for the Franchised Restaurant within 180 days after the effective date of the franchise agreement, or (ii) despite having expended good faith best efforts (as we determine in our sole judgment), have not obtained all necessary permits, licenses, or other regulatory or municipal approvals to be able to open the Franchised Restaurant according to applicable law within 60 days after you sign the proposed lease, sublease, or purchase agreement for the location of the Franchised Restaurant; and (b) you and your owners execute general releases, in form and substance satisfactory to us, of any and all claims against us, and our affiliates, officers, directors, employees, agents, successors and assigns.

If you fail to pay the initial franchise fee before you open the Franchised Restaurant, then the amount of the initial franchise fee will increase by \$500 per day on and after the opening date until we receive the full amount of the initial franchise fee, including all cumulative daily increases accruing since the opening date. These increases compensate us for our expenses, including the administrative and collection efforts with respect to the fee, and are not interest charges, time-price differentials or penalties for an overdue payment.

### *Asset Transfer Fee (on sale of company-owned Restaurant)*

If your Franchise Agreement is for an existing Checkers Restaurant or Rally's Restaurant you are buying from us or our affiliate, then you must pay us a \$10,000 asset transfer fee in addition to the initial franchise fee, payable on or before you close on the purchase of the Franchised Restaurant's assets. We may also impose the daily incremental late charge of \$500 per day, as we describe above for a past-due initial franchise fee, if you do not pay the asset transfer fee before closing. This fee is full earned by us as of the effective date of the Franchise Agreement.

#### *Initial Advertising and Promotional Program Deposit*

If your Franchise Agreement is for a new Checkers Restaurant or Rally's Restaurant, you must pay a \$15,000 advertising deposit (the "Initial Advertising Deposit") to our affiliate, NPF Inc., who administers the National Production Fund (described in Item 11). The Initial Advertising Deposit is due at the earlier of when you commence construction at the Premises for the Franchised Restaurant or 10 weeks from the anticipated opening date of the Franchised Restaurant.

Question 18

How does the initial franchise fee for Checkersrallys (Item 5) compare to the ongoing royalty fees (Item 6) as a percentage of the estimated initial investment (Item 7)?

Accepted Answer

ased operations.

#### 1. MODULAR DESIGN DRIVE-THRU RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement. | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | NPF Inc. |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building Costs (See Note 2) | $354,653- $1,292,640 | Dependent upon bank financing | As agreed | Suppliers, Lending Institutions |
| Restaurant Equipment & Technology (See Note 2) | $42,153 - $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (see Note 3) | $17,200 - $225,625 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $11,914 - | As | On ordering | Suppliers |
| Menuboards | $97,690 | incurred |  |  |
| Inventory (See Note | $4,000 - $12,000 | As | When delivered | Suppliers |
| 4) |  | incurred |  |  |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $514,920 - $2,132,493 |  |  |  |#### 2. CONVERSION RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | National Production Fund |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building (See Note 2) | $322,062- $739,445 | Dependent upon bank financing | As agreed | Contractors, Suppliers, Lending Institutions |
| Restaurant Equipment & Technology | $193,260- $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (See Note 3) | $50,000- $89,710 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $29,050- | As incurred | On ordering | Us or Other |
| Menuboards | $134,081 |  |  | Supplier |
| Inventory (See Note | $4,000 - | As incurred | When delivered | Suppliers |
| 4) | $12,000 |  |  |  |
| Col

Question 19

How does the initial franchise fee for Checkersrallys (Item 5) compare to the total estimated initial investment (Item 7) for different restaurant formats?

Accepted Answer

ased operations.

#### 1. MODULAR DESIGN DRIVE-THRU RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement. | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | NPF Inc. |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building Costs (See Note 2) | $354,653- $1,292,640 | Dependent upon bank financing | As agreed | Suppliers, Lending Institutions |
| Restaurant Equipment & Technology (See Note 2) | $42,153 - $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (see Note 3) | $17,200 - $225,625 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $11,914 - | As | On ordering | Suppliers |
| Menuboards | $97,690 | incurred |  |  |
| Inventory (See Note | $4,000 - $12,000 | As | When delivered | Suppliers |
| 4) |  | incurred |  |  |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $514,920 - $2,132,493 |  |  |  |#### 2. CONVERSION RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | National Production Fund |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building (See Note 2) | $322,062- $739,445 | Dependent upon bank financing | As agreed | Contractors, Suppliers, Lending Institutions |
| Restaurant Equipment & Technology | $193,260- $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (See Note 3) | $50,000- $89,710 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $29,050- | As incurred | On ordering | Us or Other |
| Menuboards | $134,081 |  |  | Supplier |
| Inventory (See Note | $4,000 - | As incurred | When delivered | Suppliers |
| 4) | $12,000 |  |  |  |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $683,372 - $1,479,774 |  |  |  |#### 3. SITE BUILT RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | National Production Fund |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building (See Note 2) | $785,150- $1,112,973 | Dependent upon bank financing | As agreed | Contractors, Suppliers, Lending Institutions |
| Restaurant Equipment & Technology | $122,976- $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (See Note 3) | $28,500- $150,000 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $39,031- | As incurred | On ordering | Us or Other |
| Menuboards | $97,690 |  |  | Supplier |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| Inventory (See Note | $4,000 - | As incurred | When delivered | Suppliers |
| 4) | $12,000 |  |  |  |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $1,064,657 - $1,877,201 |  |  |  |# 4. ENDCAP RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement. | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | National Production Fund |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building Costs (See Note 2) | $85,000 - $700,000 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Restaurant Equipment & Technology (See Note 2) | $199,763 - $329,538 | As incurred | On ordering | Suppliers |
| Soft Costs (See Note 3) | $0 - $42,250 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| Signage including | $9,607 - | As incurred | On ordering | Us or Other |
| Menuboards | $61,750 |  |  | Supplier |
| Inventory (See Note | $4,000 - | As incurred | When delivered | Suppliers |
| 4) | $12,000 |  |  |  |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $383,370 - $1,320,538 |  |  |  |#### 5. IN-LINE RESTAURANT IN HIGH DENSITY MARKET

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement. | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | National Production Fund |
| Asset Transfer Fee | $0 - $10,000 | Lump Sum | At time of signing the Franchise Agreement | Us |
| Restaurant Building Costs (See Note 2) | $395,000 - $477,250 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Restaurant Equipment & Technology (See Note 2) | $75,500 - $352,000 | As incurred | On ordering | Suppliers |
| Column 1 Type of expenditure | Column 2 Amount | Column 3 Method of payment | Column 4 When Due | Column 5 To whom payment is to be made |
| Soft Costs (See Note 3) | 27,500 – 33,000 | Dependent upon bank financing | Dependent upon bank financing | Contractors, Suppliers, Lending Institutions |
| Signage including | $14,725 - | As incurred | On ordering | Us or Other |
| Menuboards | $17,729 |  |  | Supplier |
| Inventory (See Note | $4,000 - | As incurred | When delivered | Suppliers |
| 4) | $12,000 |  |  |  |
| Additional Funds - 3 Months (See Note 5) | $50,000 - $120,000 | As incurred | As incurred | Employees, suppliers, utilities, etc. |
| TOTAL ESTIMATED INITIAL INVESTMENT (exclusive of real estate and related costs (see Note 2 and 6)) | $601,725 – $1,066,979 |  |  |  |## 6.

Question 20

What is the standard amount of the current initial franchise fee otherwise due for a new Checkersrallys Restaurant?

Accepted Answer

or any of our Affiliates. We, at our sole discretion, are entitled to prosecute, defend and/or settle any proceeding arising out of your use of any Mark pursuant to this Agreement, and, if we undertake to prosecute, defend and/or settle any such matter, we will have no obligation to indemnify or reimburse you for any fees or disbursements of any legal counsel or other advisors you may have retained.

# **6. FEES**.

**6.01 Initial Franchise Fee**. If we have approved the location of the Franchised Restaurant before signing this Agreement, then you agree to pay us an initial franchise fee of Thirty Thousand Dollars (\$30,000) on the date you sign this Agreement. If we and you have not agreed upon an approved location for the Franchised Restaurant before signing this Agreement, then you agree to pay us an initial franchise fee of Thirty Thousand Dollars (\$30,000) in two installments as follows:

Installment 1: Ten Thousand Dollars (\$10,000) on the date you sign this

Agreement; and

Installment 2: the remaining Twenty Thousand Dollars (\$20,000) within

30 days of our approval of the Premises.

If you fail, for whatever reason, to pay the initial franchise fee before the Franchised Restaurant is opened, the amount of the initial franchise fee shall increase by Five Hundred Dollars (\$500) per day upon and after the opening date until we receive the full amount of the initial franchise fee, including all cumulative daily increases accruing since the opening date. You agree that such increases are to compensate us for our expenses, including the administrative and collection efforts with respect to the fee, and are not interest charges, time-price differentials or penalties for an overdue payment.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 21

Does the text allow for comparison of financial data between 2024 and 2023 for Checkersrallys?

Accepted Answer

[Item 21: FINANCIAL STATEMENTS] | | For the | Periods | For the Years Ended | | | | |-----------------------------------------------------------------------|------------------------------------------------------------|--------------------------------------------------------------|----------------------------------|----------------------------------|--|--| | | June 17, 2023 through January 1, 2024 (Successor) | January 3, 2023 through June 16, 2023 (Predecessor) | January 2, 2023 (Predecessor) | January 3, 2022 (Predecessor) | | | | Federal income tax benefit computed at statutory rate | | $ (20,786) | $ (5,617) | $ (2,157) | | | | State and local income tax benefit, net of federal income tax benefit | (20) | (3,871) | (907) | (804) | | | | Permanent differences and other | 397 | 2,203 | 139 | (1,369) | | | | Unrecognized tax benefits | . | 10 | 9 | 8 | | | | Other | 16 | 1,778 | (7) | 104 | | | | Deferred taxasset write-off | | 2,366 | | 3 5 8 | | | | State accrual changes | ( + 0) | 544 | (1,458) | (695) | | | | State tax rate change | • | (17) | (1,867) | 120 | | | | Change in deferred tax asset valuation allowance | 641 | 10,231 | 6,756 | 4,707 | | | | Total income tax expense (benefit) | $ 540 | $ (7,542) | $ (2,952) | $ (206) | | | --- [Item 21: FINANCIAL STATEMENTS] (Tabular Dollars in Thousands, Except Share and per Share Data) #### 6. Accounts and Notes Receivable The following table summarizes the Company's receivables and allowances as of January 1, 2024 (Successor) and January 2, 2023 (Predecessor): --- [Item 21: FINANCIAL STATEMENTS] | | For the Periods Ended | | | | | |-------------------------------------------------------------------|-----------------------|-------------------------------|------------------------------------|-----------|--| | | | nuary 1, 2024 (ccessor) | January 2, 2023 (Predecessor | | | | Deferred tax assets: | | | | | | | Net operating loss carryforwards | $ | ~ | $ | 13,890 | | | Business interest limitation carryforward | | 21,518 | | 15,579 | | | Accruals | | 2,211 | | 1,757 | | | Operating right-of-use assets | | 39,355 | | 53,837 | | | Difference between book and tax basis of property and equipment | | 9,423 | | 34 | | | Allowance for credit losses | | 69 | | 94 | | | Stock-based compensation | | 32 | | 967 | | | Alternative minimum tax and tax credit carry forwards | | 121 | | 3,943 | | | Deferred revenue and other | | 2,507 | | 4,479 | | | Deferred tax assets | | 75,115 | | 94,546 | | | Less valuation allowance | | (38,288) | - | (42,399) | | | Net deferred tax assets | | 36,827 | - | 52,147 | | | Deferred tax liabilities: | | | | | | | Difference between book and tax basis of brands intangible assets | | (48,300) | | (55,294) | | | Difference between book and tax basis of other intangible assets | | (1,365) | | (6,512) | | | Difference between book and tax basis of property and equipment | | :*) | | (256) | | | Operating lease liabilities | | (35,246) | | (45,346) | | | Other | | (246) | | (33) | | | Deferred tax liabilities | | (85,157) | | (107,441) | | | Deferred income tax liabilities, net | $ | (48,330) | $ | (55,294) | | --- [Item 21: FINANCIAL STATEMENTS] | Report of Independent Auditors | 1 | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---| | Consolidated Balance Sheets as of January 1, 2024 (Successor) and January 2, 2023 (Predecessor) | 3 | | Consolidated Statements of Operations for the periods June 17, 2023 through January 1, 2024 (Successor) and January 3, 2023 through June 16, 2023 (Predecessor), and the fiscal years ended January 2, 2023 (Predecessor) and January 3, 2022 (Predecessor) | 4 | | Consolidated Statements of Cash Flows for the periods June 17, 2023 through January 1, 2024 (Successor) and January 3, 2023 through June 16, 2023 (Predecessor), and the fiscal years ended January 2, 2023 (Predecessor) and January 3, 2022 (Predecessor) | 5 | | Consolidated Statements of Stockholder's Equity (Deficit) for the periods June 17, 2023 through January 1, 2024 (Successor) and January 3, 2023 through June 16, 2023 (Predecessor) and the fiscal years ended January 2, 2023 (Predecessor) and January 3, 2022 (Predecessor) | 6 | | Notes to Consolidated Financial Statements | 7 | Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 22

What happens if the Checkersrallys initial franchise fee is not paid before the restaurant opens?

Accepted Answer

employees, agents, successors and assigns.

If you fail to pay the initial franchise fee before you open the Franchised Restaurant, then the amount of the initial franchise fee will increase by \$500 per day on and after the opening date until we receive the full amount of the initial franchise fee, including all cumulative daily increases accruing since the opening date. These increases compensate us for our expenses, including the administrative and collection efforts with respect to the fee, and are not interest charges, time-price differ

Source: Item 5 — INITIAL FEES (FDD pages 17–21)

Question 23

If a petition is filed against a Checkersrallys franchisee in bankruptcy, reorganization, or similar proceeding, how long does the franchisee have to discharge it before the agreement is terminated?

Accepted Answer

The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 24

If a petition is filed for corporate or partnership dissolution of a Checkersrallys franchise, how long does the franchisee have to dismiss the petition to avoid termination?

Accepted Answer

if you voluntarily dissolve or liquidate or have a petition filed for corporate or partnership dissolution and such petition is not dismissed within thirty (30) days

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 25

If a suit is filed to foreclose a lien or mortgage against a Checkersrallys franchisee's assets, how long does the franchisee have to dismiss the suit to avoid termination of the franchise agreement?

Accepted Answer

es may you or any of your Owners issue or sell your securities or the securities of any of your Affiliates, if: (1) such securities 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 busine

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 26

After Checkersrallys accepts a proposed site, what must a franchisee demonstrate to receive a franchise agreement?

Accepted Answer

- (c) We also may require that you and your Owners furnish us financial statements (historical and pro forma), statements of the sources and uses of capital funds, budgets and other information regarding yourself, your Owners and the development and operation of any Restaurant you propose, as well as any then-existing Restaurants you and your Affiliates own. All such information shall be verified by you and your Owners as being complete and accurate in all respects, shall be submitted to us in accordance with our requirements and will be relied on by us in determining whether to grant a franchise for the proposed Restaurant. We may refuse to grant you a franchise for a Restaurant if you fail to demonstrate sufficient financial and management capabilities to properly develop and operate the proposed Restaurant and the then existing Restaurants you and your Affiliates own. We will evaluate such financial and management capabilities in accordance with standards we use to establish Restaurants in other comparable market areas.
- (d) Upon our acceptance of a proposed site, and provided you have demonstrated the requisite financial and management capabilities, all as above required, we will offer you a franchise to operate a Restaurant at the proposed site by delivering to you our then-current form of standard franchise agreement, together with all standard ancillary documents (including exhibits, riders, collateral assignments of leases, Owner guarantees and other related documents) that we then customarily use in granting franchises for the operation of Restaurants in the state in which the Restaurant is to be located (the "Franchise Agreement"). The Franchise Agreement must be executed by you and your Owners and returned to us not earlier than 7 days and not later than 21 days after we deliver it to you, with payment of the initial fees required thereunder. If we do not receive the fully executed Franchise Agreement and payment of the required initial fees, we may revoke our offer to grant you a franchise to operate a Restaurant at the proposed site and may revoke our acceptance of the proposed site.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 27

According to the Checkersrallys addendum, what happens if a franchisee breaches the criteria listed in Section 2?

Accepted Answer

# 4. **Additional Condition(s)**.

- b. If you breach, fail to satisfy, or are later found to have violated or failed to satisfy, any of the criteria listed in Section 2 above in this Addendum, at any point during the Term, then in addition to any other remedies available under the Franchise Agreement (including termination) or at applicable law, you must pay us (no later than thirty (30) days after our written notice to you) the amount or value of any fee reduction, discount, or other benefit afforded to you hereunder.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 28

According to the Checkersrallys agreement, what happens if a franchisee defaults on another agreement with Checkersrallys or its affiliates?

Accepted Answer

- (q) are in default or suffer termination of any other agreement with us or any of our Affiliates.

- **14.03 Cross-Default**.

Any default or breach by you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates) of any other agreement with us or our Affiliate will be considered an event of default under this Agreement, and any default or breach by you (or any of your Owners) of this Agreement will be considered an event of default or breach by you under any and all agreements between us or our Affiliate and you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates).

If the nature of the default under any other agreement would have been considered an event of default under this Agreement, then we or our Affiliate will have the right to terminate all other agreements between us or our Affiliate and you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates) in accordance with the termination provisions of this Agreement.

Notwithstanding the foregoing, if you are operating under a Development Agreement that terminates solely as a result of your failure to comply with the development schedule set forth in that agreement, then such termination of the Development Agreement will not result in a termination (constructive or otherwise) of this Agreement if you have

fully performed and otherwise been in compliance with all of your obligations under this Agreement.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 29

According to the Checkersrallys agreement, what happens if a franchisee requests a transfer before opening their restaurant and it is approved?

Accepted Answer

# 4. **Additional Condition(s)**.

- a. If, before you open the Franchised Restaurant, you request and we approve a transfer in accordance with Section 13, then as a pre-closing condition of the transfer (in addition to any transfer fee payable) you must pay us the full standard amount of the initial franchise fee (as measured on the Effective Date of your Franchise Agreement) that was reduced or waived pursuant to this Addendum.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 30

According to California's Franchise Investment Law, what happens to any provision in a Checkersrallys franchise agreement requiring a franchisee to waive specific provisions of the law?

Accepted Answer

California's Franchise Investment Law (Corporations Code sections 31512 and 31512.1) states that any provision of a franchise agreement or related document requiring the franchisee to waive specific provisions of the law is contrary to public policy and is void and unenforceable.

The law also prohibits a franchisor from disclaiming or denying (i) representations it, its employees, or its agents make to you, (ii) your ability to rely on any representations it makes to you, or (iii) any violations of the law.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 31

According to the FDD, what happens if a higher number of claims occur compared to original estimates for Checkersrallys' self-insurance programs?

Accepted Answer

The Company is partially self-insured for a portion of its expected losses under its workers' compensation and general liability programs. We also carry excess liability limits above the primary coverages as we have determined necessary. We believe we maintain insurance coverage that is customary for businesses of our size and type.

The Company's reserves for both general liability and workers' compensation claims are based, in part, on estimates provided by a third-party specialist of expected losses based on actuarial analysis of historical industry data, as well as the Company's own estimates based on actual historical data. These assumptions are adjusted when warranted by changing circumstances. Should a higher number of claims occur compared to original estimates or if the cost of those claims is higher than anticipated, liabilities for selfinsurance may not be sufficient and additional expense may be recorded. Should the actual claims experience be more favorable than estimated, a resulting expense reduction may be recorded.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 32

According to the Checkersrallys franchise agreement, what happens if a franchisee fails to abide by their obligations or promises and the franchisor or franchisee seeks enforcement in a judicial or arbitration proceeding?

Accepted Answer

If I fail or refuse to abide by any of my foregoing obligations or promises made under this Agreement, and Franchisor or Franchisee obtains enforcement in a judicial or arbitration proceeding, then my obligations and responsibilities specified under the breached covenant will be tolled during the period(s) of time that the covenant is breached and/or Franchisor or Franchisee seeks to enforce it, and will continue for two (2) years starting from the effective date of the order enforcing the covenant.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 33

After adopting ASC 842, under what circumstances does Checkersrallys recognize favorable and unfavorable leasehold interests?

Accepted Answer

| January 2, 2023 (Predecessor) |         |    |             |    |       |  |  |
|-------------------------------|---------|----|-------------|----|-------|--|--|
|  | Gross Amount | A A | ccumulated mortization |  | Net 1101 |  |  |
| \$ | 4,605 (2,380) | \$ | (3,195) 2,129 | \$ | 1,410 (251) |  |  |
|  |  |  |  |  |  |  |  |
| \$ | 2,225 | \$ | (1,066) | \$ | 1,159 |  |  |
Upon a business combination, U.S. GAAP requires leases, where the Company is a lessor and a lessee, recognize an asset or liability when the contractual lease payments are different than market lease payments, commonly referred to as an off-market component of a lease. Prior to the adoption of ASC 842, the Company recognized favorable leasehold interests and unfavorable leasehold interests for leases where the Company is a lessor and a lessee. As part of the adoption of ASC 842, *Leases*, on January 4, 2022, favorable and unfavorable leasehold interests for lease agreements where the Company is the lessee were reclassified as an adjustment to the "right-of-use assets, net." This resulted in the Company derecognizing \$19.4 million of "favorable leasehold interest" and \$11.8 million of "unfavorable leasehold interests". This derecognition resulted in 202 favorable and 118 unfavorable leasehold interests being derecognized for prime leases.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 34

What are the advertising requirements for a Checkersrallys franchisee if their restaurant is located in a geographical area where no advertising cooperative has been established?

Accepted Answer

vertising expenditure we currently require you to make.

NOTE 6: If your Franchised Restaurant is located in a geographical area where we have not established an advertising cooperative, then, at our option, you will be required to either (i) spend the difference between the current NPF contribution rate and 4.5% of your Net Sales marketing your Franchised Restaurant in your local market, (ii) contribute the difference between the current NPF contribution rate and 4.5% of your Net Sales to an advertising purchasing collective that we establish and control (which may not be governed by by-laws similar to a typical local or regional advertising cooperative where you will have voting rights), or (iii) join a local or regional cooperative that we create in your designated marketing area (in which case your contribution rate will be determined by the cooperative in accordance with its by-laws).

NOTE 7: We offer an optional Delivery Program that allows you to offer Delivered Products through one or more DSPs to customers within the radii and zones (each a "Delivery Area") and during the hours of operation exclusively established by each DSP. If you are eligible and elect to participate in the Delivery Program, you will be required to pay us the Delivery Administration Fee as outlined in the table above.

Source: Item 6 — OTHER FEES (FDD pages 21–29)

Question 35

Is the application of Florida law in the Checkersrallys Franchise Agreement and Development Agent Agreement always enforceable under California law?

Accepted Answer

The Franchise Agreement and Development Agent Agreement require application of the laws of the State of Florida.

This provision might not be enforceable under California law.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 36

What are the conditions that must be met for Checkersrallys to indemnify a franchisee for costs incurred defending a claim brought against them for authorized use of a Mark?

Accepted Answer

- **5.05 Indemnification of Franchisee**.We agree to indemnify you against, and to reimburse you for, all damages for which you are held liable in any proceeding arising out of your authorized use of any Mark pursuant to and in compliance with this Agreement and, except as provided herein, for all costs you reasonably incur in defending any such claim brought against you, provided: (i) you timely notified us of such claim pursuant to Section 5.04, and (ii) that you and your Owners and Affiliates are in compliance with this Agreement and all other agreements with us or any of our Affiliates.

We, at our sole discretion, are entitled to prosecute, defend and/or settle any proceeding arising out of your use of any Mark pursuant to this Agreement, and, if we undertake to prosecute, defend and/or settle any such matter, we will have no obligation to indemnify or reimburse you for any fees or disbursements of any legal counsel or other advisors you may have retained.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 37

What are the conditions to qualify for a reduction of the initial franchise fee for Checkersrallys?

Accepted Answer

WHEREAS, Franchisor has implemented an incentive program available to certain qualified franchisees that acquire and open new "Checkers" or "Rally's" restaurants or convert an existing restaurant to a "Checkers" or "Rally's" restaurant under which Franchisor offers qualified franchisees a temporary reduction on royalty fees and a reduction of initial franchise fees if the franchisee signs a Franchise Agreement on or before December 31, 2025 (the "**2024 Growth Incentive**" or "**Incentive**");

# 3. **Conditional Development Incentive and Reduced Fee(s)**.

- b.

Reduction of Initial Franchise Fee: If you meet the conditions in 3(a) above, and you open 3 or more Restaurants that comply with the then-current reimaging requirements to the general public within 18 months of signing the applicable franchise agreement by December 31, 2026, then we will reduce the initial franchise fee payable for the third and subsequent Restaurants opened by fifty percent (50%).

WHEREAS, Franchisor has implemented an incentive program available to qualified existing franchisees of "Checkers" or "Rally's" restaurants under which the Initial Franchise Fee due under Franchisor's current form of franchise agreement is reduced by $10,000 if the franchisee opens its Restaurant within one (1) year of signing the Franchise Agreement (the "**Existing Franchisee Incentive**" or "**Incentive**");

WHEREAS, Franchisee is an existing franchisee under separate franchise agreements with Franchisor for the operation of at least two (2) "Checkers" or "Rally's" restaurants;

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 38

What are the conditions under which Checkersrallys will reduce the initial franchise fee by fifty percent?

Accepted Answer

Reduction of Initial Franchise Fee: If you meet the conditions in 3(a) above, and you open 3 or more Restaurants that comply with the then-current reimaging requirements to the general public within 18 months of signing the applicable franchise agreement by December 31, 2026, then we will reduce the initial franchise fee payable for the third and subsequent Restaurants opened by fifty percent (50%).

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 39

What contractual premium is Checkersrallys required to pay upon each principal repayment of the Second Out Loans, and how does the percentage change over time?

Accepted Answer

s prior to the first anniversary (ii) 7% on or after the first anniversary, but prior to the second anniversary, (iii) 5% on or after the second anniversary, but prior to the third anniversary, and (iv) 3% on or after the third anniversary.

Pursuant to the Out-of-Court Restructuring, each First Lien Lender exchanged all of its First Lien Loans for (i) if such First Lien Lender did not elect to provide New Money Commitments, its pro rata share of (a) 55% of the equity of Topco and (b) \$75 million in "Last-Out Term Loans" under the New Credit Agreement (the "Second Out Loans"), or (ii) if such First Lien Lender did elect to provide New Money Commitments, (a) its pro rata share of 55% of the equity of Topco, (b) its pro rata share of Second Out Loans, (c) its adjusted pro rata share (based on the amount of New Money Commitments provided by such First Lien Lender) of 40% of the equity of Topco and (d) the amount of New Money Loans funded by such First Lien Lender on the effective date of the Out-of-Court Restructuring pursuant to its New Money Commitments. The Second

#### **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

Out Loans accrue interest at a floating rate, which can be, at the Company's option, (x) an alternative base rate plus 8.00% per annum or (y) the Adjusted Term Secured Overnight Financing Rate plus 9.00% per annum plus a credit adjustment spread. The Company has the option to pay interest on the Second Out Loans that has accrued at a rate equal to 6.00% per annum in kind, rather than in cash. The Second Out Loans mature on June 16, 2028. Additionally, the Company is required to make recurring quarterly principal payments on the Second Out Loans in the amount equivalent to 0.25% of the original principal amount. The remainder of the principal amount is due upon maturity.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)

Question 40

Is the covenant not to compete in the Checkersrallys Franchise Agreement and Development Agreement, which extends beyond termination, always enforceable under California law?

Accepted Answer

- 7. The Franchise Agreement and Development Agreement contain a covenant not to compete that extends beyond the termination of the franchise. This provision may not be enforceable under California law.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 41

When does Checkersrallys have to defer payment of the development fee and other initial payments owed by Area Franchisee?

Accepted Answer

2. Development Fee. Section 2.01 of the Agreement shall be amended by adding the following:

Despite the payment provisions above, Franchisor will defer collection of all initial fees owed by Area Franchisee to Franchisor under this Agreement until Franchisor has completed all of its pre-opening obligations under the first franchise agreement entered into pursuant to this Agreement and Area Franchisee has commenced doing business under the first franchise agreement. This deferral requirement has been imposed by the Illinois Attorney General's Office based on the Franchisor's financial condition.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 42

Does the definition of 'Confidential Information' for Checkersrallys include information not explicitly designated as proprietary or confidential?

Accepted Answer

I agree that during the term of my employment by, ownership participation in, association with or service to Franchisee, or at any time thereafter, I will not communicate, divulge or use for the benefit of any other person, persons, partnership, proprietorship, association, corporation or entity, Franchisor's proprietary and confidential information relating to the development and operation of Restaurants, including but not limited to: (1) ingredients, recipes, and methods of preparation and presentation of food products Franchisor authorizes; (2) site selection criteria for Restaurants and plans and specifications for the development of Restaurants; (3) sales, marketing and advertising programs and techniques for Restaurants; (4) identity of suppliers, and knowledge of specifications and pricing for food products, materials, supplies and equipment, Franchisor authorizes; (5) knowledge of operating results and financial performance of Restaurants, other than those Restaurants Franchisee owns; (6) methods of inventory control, storage, product handling, training and management relating to Restaurants; (7) computer systems and software programs; and (8) any and all other information Franchisor provides to me, Franchisee, Franchisee's Owners or Affiliates that is designated orally or in writing as proprietary or confidential, or by its nature would reasonably be understood to be proprietary or confidential, regardless of whether such information is specifically designated as proprietary or confidential (collectively, all information referenced above, including examples (1) through (8), is known as the "Confidential Information"). Furthermore, any and all information, knowledge,

know-how, techniques and information which the entities mentioned above or their officers designate as confidential is considered (and hereby acknowledged by me as) Confidential Information for the purposes of this Agreement, except information which I can demonstrate came to my attention before disclosure or which had become or becomes a part of the public domain through publication or communication by others (unless the publication or communication violates a similar confidentiality agreement), but in no event through any act of mine.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 43

How are Checkersrallys' Early Termination Damages calculated if the restaurant has not operated for 24 months prior to termination?

Accepted Answer

**16.06 Early Termination Damages**. If we terminate this Agreement as a result of your breach, you and we agree that the amount of damages which we would incur for any such early termination would be difficult, if not impossible, to accurately ascertain. Accordingly, within 30 days following such termination, you shall pay us an amount equal to the average monthly royalty fees and advertising contributions that you owed to us for the past 24 months multiplied by the number of months remaining in the Term ("**Early Termination Damages**"). If you have not operated the Franchised Restaurant for 24 months prior to the termination of this Agreement, the Early Termination Damages will be calculated by using the average monthly royalties and advertising contributions you owed for the number of months that the Franchised Restaurant operated multiplied by the number of months remaining in the Term. These Early Termination Damages shall constitute liquidated damages and are not to be construed as a penalty and shall be the joint and several liability of you and each of your Owners who personally guarantees your obligations under this Agreement.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 44

Does the estimated initial investment for Checkersrallys restaurants apply if I am reopening an existing restaurant that ceased operations?

Accepted Answer

D INITIAL INVESTMENT**

### **YOUR ESTIMATED INITIAL INVESTMENT**

The following charts estimate the initial investment for Restaurants in 5 different formats: (1) the modular design drive-thru restaurant; (2) conversion of a drive-thru restaurant; (3) a site built restaurant; (4) an endcap strip-center; (5) an in-line restaurant in a high-density market; and (6) gas station/station, Non-Traditional, or Walmart restaurant. These estimates may also apply if you are reopening an existing Restaurant that ceased operations.

#### 1. MODULAR DESIGN DRIVE-THRU RESTAURANT

| Type of expenditure | Amount | Method of payment | When Due | To whom payment is to be made |
|---|---|---|---|---|
| Initial Franchise Fee (See Note 1) | $20,000 - $30,000 | Lump sum | At time of signing the Franchise Agreement. | Us |
| Initial Advertising Deposit | $15,000 | Lump sum | When you begin construction at the Premises | NPF Inc.

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 30–39)

Question 45

Does the estimated initial investment for Checkersrallys restaurants apply to reopening an existing restaurant that ceased operations?

Accepted Answer

The following charts estimate the initial investment for Restaurants in 5 different formats: (1) the modular design drive-thru restaurant; (2) conversion of a drive-thru restaurant; (3) a site built restaurant; (4) an endcap strip-center; (5) an in-line restaurant in a high-density market; and (6) gas station/station, Non-Traditional, or Walmart restaurant. These estimates may also apply if you are reopening an existing Restaurant that ceased operations.

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 30–39)

Question 46

In the event of a settlement regarding an event for which a Checkersrallys franchisee is providing indemnity, what consent is required from the franchisee?

Accepted Answer

We agree to give you reasonable notice of any event of which we become aware for which indemnification may be required, and we may elect (but are not obligated) to direct the defense thereof, including the selection of appropriate counsel at our sole determination. We may, in our reasonable discretion, take such actions as we deem necessary and appropriate to investigate, defend, or settle any event or take other remedial or corrective actions with respect thereto as may be necessary for the protection of indemnitees or Restaurants generally, provided however, that any settlement shall be subject to your consent, which consent shall not be unreasonably withheld or delayed. Further, notwithstanding the foregoing, if the insurer on a policy or policies obtained in compliance with your Franchise Agreement agrees to undertake the defense of an event (an "Insured Event"), we agree not to exercise our right to select counsel to defend the event if such would cause your insurer to deny coverage. We reserve the right to retain counsel to represent us with respect to an Insured Event at our sole cost and expense. This Section shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 47

Does the Checkersrallys franchise agreement allow the franchisor to enforce the agreement in states other than Florida?

Accepted Answer

NONETHELESS, FRANCHISEE AND FRANCHISEE'S OWNERS AGREE THAT FRANCHISOR MAY ENFORCE THIS AGREEMENT AND ANY ARBITRATION ORDERS AND

AWARDS IN THE COURTS OF THE STATE OR STATES IN WHICH FRANCHISEE IS DOMICILED OR THE FRANCHISED BUSINESS IS LOCATED**.**

**18.08 Governing Law**.This Agreement and any dispute, claim, or matter arising out of or relating in any way to the relationship between the parties (whether based in contract, tort, statute or otherwise and regardless of the relief sought) shall be construed under the laws of the State of Florida, provided the foregoing shall not constitute a waiver of any of your rights under any applicable franchise law of another state that does not conflict with Florida law. In the event of any conflict of law, Florida law will prevail, without regard to its conflict of law principles. However, if any provision of this Agreement would not be enforceable under Florida law, and if the Franchised Restaurant is located outside of Florida and such provision would be enforceable under the laws of the state in which the Franchised Restaurant is located, then such provision shall be construed under the laws of that state.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 48

For a Checkersrallys franchise, what is the deadline to open the franchised restaurant after construction or installation is completed, if the franchised restaurant receives training support?

Accepted Answer

You must open the Franchised Restaurant within fourteen (14) days after the date construction or installation is completed, or, if the Franchised Restaurant receives training support from us, within nineteen 19 days after construction or installation is completed. We must approve the Franchised Restaurant for opening. If, after expending good faith best efforts (as we determine in our sole judgment), you are unable to obtain all requisite approvals and permits or complete construction of the Franchised Restaurant within the prescribed time periods under this paragraph, and we did not previously grant you an extension under Sections 3.02 or 3.03 above, then you may request an extension of time to obtain such governmental approvals and permits or complete construction, which we may grant to you in our sole discretion.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 49

Does a Checkersrallys franchisee's failure to comply with the development schedule in a Development Agreement automatically result in termination of the Franchise Agreement?

Accepted Answer

Notwithstanding the foregoing, if you are operating under a Development Agreement that terminates solely as a result of your failure to comply with the development schedule set forth in that agreement, then such termination of the Development Agreement will not result in a termination (constructive or otherwise) of this Agreement if you have

fully performed and otherwise been in compliance with all of your obligations under this Agreement.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 50

Is a Checkersrallys franchisee's right to acquire a successor franchise guaranteed if they provide the initial notice, or is it subject to other conditions?

Accepted Answer

nter into an agreement with us whereby you agree within a specified time period, starting on the signing of a successor franchise agreement, to remodel the Franchised Restaurant, add or replace improvements, fixtures, furnishings, equipment and signs and otherwise modify the Franchised Restaurant to upgrade the Franchised Restaurant to the specifications and standards then applicable for new Restaurants. You will be obligated to pay a renewal fee in the relevant amount described in Section 15.03 below.

**15.02 Notices**.You must give us written notice of your desire to acquire a successor franchise at least one hundred eighty (180) days prior to the expiration of this Agreement. We will give you notice, not later than sixty (60) days after receipt of your notice, of our decision whether or not you have the right to acquire a successor franchise pursuant to Section 15.01. Notwithstanding any notice of our decision that you have the right to acquire a successor franchise for the Franchised Restaurant, your right will be subject to your continued compliance with all the provisions of this Agreement up to the date of its expiration.

**15.03 Agreements**.If you have the right to acquire a successor franchise in accordance with Section 15.01 and state your desire to exercise that right in accordance with Section 15.02, we and you (and your Owners) will execute the form of franchise agreement (which may contain provisions, including royalty fees, materially different from those contained herein) and all ancillary agreements (including, personal guarantees by your Owners and a remodeling agreement on such terms as we determine to be appropriate) which we then customarily use in granting successor franchises for the operation of Restaurants. The successor franchise agreement will be for a successor franchise term of either ten (10) years or twenty (20) years, as you and we may then agree. You must pay us a successor franchise fee due upon signing the successor franchise agreement, depending on the duration of that future agreement's term, in the amount of: (i) one half (1/2), or fifty percent (50%), of the amount of our then current initial franchise fee due for new Restaurants, if your

successor franchise term is for twenty (20) years; or (ii) one-third (1/3), or thirty-three and one-third percent (33.33%), of the amount of our then current initial franchise fee due for new Restaurants, if your successor franchise term is for ten (10) years. In addition, you and your Owners must execute general releases, in form and substance satisfactory to us or as we then explicitly prescribe, of any and all claims against us, and our Affiliates, owners, officers, directors, employees, agents, successors and assigns. Failure by you (and your Owners) to sign such agreements and releases within thirty (30) days after delivery to you shall be deemed an election by you not to acquire a successor franchise for the Franchised Restaurant. Upon expiration of such successor franchise agreement, you will have a further right on terms and conditions contained in the successor franchise agreement to acquire a future successor franchise as we then prescribe.

# **16. EFFECT OF TERMINATION OR EXPIRATION**.

# **16.01 Payment of Amounts Owed to Us**.

Within thirty (30) days after the effective date of termination or expiration (without renewal) of this Agreement, you must pay us and our Affiliates all royalties, NPF contributions, amounts owed for purchases from us or our Affiliates, interest due on any of the foregoing and all other amounts owed to us or our Affiliates which are then unpaid.

# **16.02 Discontinue Use of Marks and Confidential Information**.

Upon the termination or expiration (without renewal) of this Agreement, you will:

- (a) not directly or indirectly at any time or in any manner use any Mark, any colorable imitation or other indicia of a Restaurant;
- (b) take such action as may be required to cancel all fictitious or assumed name registrations relating to your use of any Mark;

Source: Item 22 — CONTRACTS (FDD pages 91–92)

Question 51

For Checkersrallys franchises in California, what is the potential impact on a franchisee's marital assets due to the personal guarantee?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 52

For Checkersrallys franchises in California, what is the potential impact on a franchisee's marital assets due to the personal guarantee if the franchise fails?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 53

For Checkersrallys franchises in California, what is the potential impact on a franchisee's marital assets due to the personal guarantee if the franchise fails and they are married?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 54

For Checkersrallys franchises in California, what is the potential impact on a franchisee's marital and personal assets due to the personal guarantee?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 55

For Checkersrallys franchises in California, what is the potential impact on a franchisee's marital and personal assets due to the personal guarantee if the franchise fails?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 56

For Checkersrallys franchises in California, what is the potential impact on a franchisee's marital and personal assets due to the personal guarantee if the franchise fails and they are married?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 57

For Checkersrallys franchises in California, what is the potential impact on a franchisee's personal assets due to the personal guarantee if the franchise fails?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 58

For Checkersrallys franchises in California, what is the potential impact on a franchisee's personal assets due to the personal guarantee if the franchise fails and they are married?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 59

For Checkersrallys franchises in California, what is the potential impact on a franchisee's spouse's assets due to the personal guarantee?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 60

For Checkersrallys franchises in California, what is the potential impact on a franchisee's spouse's assets due to the personal guarantee if the franchise fails?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 61

For Checkersrallys franchises in California, what is the potential impact on a franchisee's spouse's assets due to the personal guarantee if the franchise fails and they are married?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

- 3. The "**Special Risks to Consider about** *This* **Franchise**" cover page is amended by adding the following:

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 62

For Checkersrallys franchises in California, what is the potential impact on a franchisee's spouse's marital assets due to the personal guarantee?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 63

For Checkersrallys franchises in California, what is the potential impact on a franchisee's spouse's marital assets due to the personal guarantee if the franchise fails?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Question 64

For Checkersrallys franchises in California, what is the potential impact on a franchisee's spouse's marital assets due to the personal guarantee if the franchise fails and they are married?

Accepted Answer

**Personal Guarantee**: Franchisees and all owners must sign a personal guarantee, making you and your spouse individually liable for your financial obligations under the agreement if you are married. The guarantee will place your and your spouse's marital and personal assets at risk if your franchise fails.

Source: Item 23 — RECEIPTS (FDD pages 92–384)

Checkersrallys 2025 FDD FAQ