What is the amount of the successor franchise fee for Checkersrallys, and how is it calculated?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a successor franchise agreement will be for either 10 or 20 years, depending on the agreement between Checkersrallys and the franchisee. Upon signing the successor franchise agreement, the franchisee must pay a successor franchise fee. If the successor franchise term is for 20 years, the fee is one-half (50%) of the then-current initial franchise fee for new restaurants. If the successor franchise term is for 10 years, the fee is one-third (33.33%) of the then-current initial franchise fee for new restaurants.
According to the FDD, the initial franchise fee is $30,000. Therefore, if the successor franchise term is for 20 years, the successor franchise fee would be $15,000 (50% of $30,000). If the successor franchise term is for 10 years, the successor franchise fee would be $10,000 (33.33% of $30,000).
In addition to the successor franchise fee, the franchisee and their owners must execute general releases of any and all claims against Checkersrallys and its affiliates. Failure to sign these agreements and releases within 30 days after delivery will be deemed an election not to acquire a successor franchise for the franchised restaurant. Upon expiration of the successor franchise agreement, the franchisee will have a further right to acquire a future successor franchise on terms and conditions contained in the successor franchise agreement.