What conditions must a Checkersrallys developer satisfy for the franchisor's approval of a transfer of development rights?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE OR OTHER AGREEMENT | SUMMARY | |
|---|---|---|---|
| e. | Termination by franchisor without cause | Not applicable | Not applicable |
| f. | Termination by franchisor with cause | Section 8 | We can terminate only for specified causes (if we terminate, we may also terminate any franchise agreements you have signed with us) |
| g. | "Cause" defined: curable defaults | Section 8.02 | 30 days to cure certain breaches of the Development Agreement. |
| h. | "Cause" defined non-curable defaults | Sections 8.01 and 8.02 | Includes insolvency; failure to meet development schedule; unauthorized transfer; misrepresentations; conviction of a felony; unauthorized disclosure of confidential information; any default by you under a franchise agreement; adverse franchise legislation. |
| i. | Developer's obligations on termination/ nonrenewal | Section 9 | Comply with covenant not to compete |
| j. | Assignment of contract by franchisor | Section 10.08 | No restriction on our right to assign |
| k. | "Transfer" by developer defined | Section 1.04 | Includes transfer of agreement, sale of business and ownership changes. |
| l. | Franchisor's approval of transfer by developer | Sections 7.01 and 7.02 | We have the right to approve all transfers but will not unreasonably withhold approval if conditions satisfied. |
| m. | Conditions for franchisor's approval of transfer | Section 7.02 | You must transfer all of your Restaurants; be in compliance with agreements; have at least one Restaurant open; sign release and non-compete for each transferred restaurant; and do other things we request. Transferee must qualify, sign existing agreement and pay transfer fee; transferee cannot be public company. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 66–71)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a developer seeking to transfer their development rights must meet several conditions to gain the franchisor's approval. These conditions ensure that the transfer does not negatively impact the Checkersrallys system and that the new developer is capable and committed.
Specifically, the developer must transfer all of their Restaurants, be in compliance with all existing agreements with Checkersrallys, and have at least one Restaurant open and operating. Additionally, the transferring developer is required to sign a release and non-compete agreement for each restaurant being transferred, protecting Checkersrallys's interests in those locations. The franchisor also has the right to request that the developer fulfill other requirements deemed necessary for the transfer's approval.
Furthermore, the prospective transferee must also meet certain criteria. The transferee must qualify as a suitable Checkersrallys developer, agree to sign the existing development agreement, and pay the applicable transfer fee. A significant restriction is that the transferee cannot be a public company. These stipulations ensure that the new developer is financially stable, committed to the Checkersrallys brand, and not structured in a way that could create conflicts of interest or management issues for the franchise system.
These transfer conditions are typical in franchising, designed to protect the brand and ensure continuity of operations under qualified management. A prospective Checkersrallys developer should carefully review Section 7.02 of the Development Agreement, as referenced in Item 17 of the FDD, to fully understand all requirements and potential implications before seeking to transfer their development rights.