What assets are excluded from the 'Purchased Assets' that Checkersrallys may purchase upon termination or expiration?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Upon termination or expiration (without renewal) of this Agreement, we have the right, exercisable by giving notice thereof ("Appraisal Notice") within ten (10) days after the date of such termination or expiration, to require that a determination be made of the "Agreed Value" (as defined below) of all the personal property used in the Franchised Restaurant which you own, including inventory of non-perishable products, materials, supplies, furniture, equipment, signs, but excluding any cash and short-term investments and any items not meeting our specifications for Restaurants (the "Purchased Assets"). At any time following our providing you an Appraisal Notice, we shall have the unrestricted right to assign this option to purchase separate and apart from the remainder of this Agreement, including, without limitation, to another third-party franchisee. Upon such notice, you may not sell or remove any of the personal property of the Franchised Restaurant from the Premises and must give us (or our assignee), our (or our assignee's) designated agents and the "Appraiser" (as defined below) full access to the Franchised Restaurant and all of your books and records at any time during customary business hours in order to conduct inventories and determine the purchase price for the Purchased Assets.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, upon termination or expiration of the franchise agreement, Checkersrallys has the option to purchase certain assets of the franchised restaurant. The assets Checkersrallys may purchase are defined as "Purchased Assets", which include all personal property used in the Franchised Restaurant that the franchisee owns, such as inventory of non-perishable products, materials, supplies, furniture, equipment, and signs.
However, the agreement specifically excludes certain assets from the "Purchased Assets" that Checkersrallys may acquire. These exclusions are cash, short-term investments, and any items that do not meet Checkersrallys's specifications for Restaurants. This means that while Checkersrallys can purchase the physical assets necessary to continue operating the restaurant, the franchisee retains control over liquid assets like cash and investments.
For a prospective franchisee, this clause has important implications. It clarifies what assets Checkersrallys can claim if the franchise agreement ends, allowing the franchisee to plan accordingly. Knowing that cash and short-term investments are excluded provides some financial security, while understanding that non-compliant items will not be purchased encourages franchisees to adhere to Checkersrallys's standards and specifications throughout the term of the agreement.