What conditions for approval are outlined in Section 7.02 of the Checkersrallys Restaurant Development Agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
e (or, if any individual or entity attains any status identified above after the Effective Date, within ten (10) days after such individual or entity's attains such status) and shall furnish to us copies of all executed Nondisclosure and Non-Competition Agreements within ten (10) days following their execution.
7. AREA FRANCHISEE'S RIGHT TO TRANSFER.
- 7.01 Franchisor's Approval. Your rights and duties under this Agreement are personal to you and if you are a business corporation, partnership, limited liability company or any other legal entity, your Owners. Accordingly, neither you nor any of your Owners may Transfer the Development Rights without our prior approval and without complying with the terms and conditions of Section 7. Any transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect.
- 7.02 Conditions for Approval. If we have not exercised our right of first refusal under Section 7.06, we will not unreasonably withhold our approval of a Transfer of the Development Rights that meets all of the reasonable restrictions, requirements and conditions we impose on the transfer, the transferor(s) and/or the transferee(s), including the following:
- (a) You and your Owners and Affiliates must be in compliance with the provisions of this Agreement and all Franchise Agreements executed pursuant hereto;
- (b) at the time of the proposed Transfer, you have opened and continue to operate at least one (1) Restaurant;
- (c) the proposed transferee and its owners (if the proposed transferee is a corporation, partnership, limited liability company or other legal entity) must provide us on a timely basis all information we request, and must be individuals acting in their individual capacities who are of good character and reputation, who must have sufficient business and development experience, aptitude and financial resources to develop Restaurants pursuant to this Agreement, and who must otherwise meet our approval;
- (d) the proposed transferee may not be an entity, or be affiliated with an entity, that is required to comply with the reporting and information requirements of the Securities Exchange Act of 1934, as amended;
- (e) the transferee and its owners must agree to be bound by all of the provisions of this Agreement for the remainder of its term;
- (f) the transferee must acquire, in a concurrent transaction, all of your rights and the rights of your Owners and Affiliates under all franchise agreements for Re
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Section 7.02 outlines the conditions for approval of a transfer of development rights. Checkersrallys will not unreasonably withhold approval if the transfer meets their restrictions, requirements, and conditions.
These conditions include that the franchisee and their owners/affiliates must be in compliance with the Development Agreement and all related Franchise Agreements. The franchisee must have opened and be operating at least one Checkersrallys restaurant at the time of the proposed transfer. The proposed transferee and their owners must provide all requested information, be of good character, and possess sufficient business, development experience, aptitude, and financial resources.
Additional conditions stipulate that the transferee cannot be affiliated with an entity required to comply with the Securities Exchange Act of 1934. The transferee and their owners must agree to be bound by the Development Agreement's terms for the remainder of its term. The transferee must acquire all of the franchisee's rights under all franchise agreements. A transfer fee of $20,000 must be paid to Checkersrallys. The franchisee and their owners/affiliates must execute a general release of claims against Checkersrallys. The franchisee and their immediate family must agree not to engage in activities proscribed in Section 9.02 for two years after the transfer. Finally, the franchisee and their owners/affiliates must execute any other documents reasonably required by Checkersrallys to protect their rights.