What conditions must be satisfied for Checkersrallys to approve a transfer by the developer?
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, the company has the right to approve all transfers by a developer, but will not unreasonably withhold approval if certain conditions are met.
For Checkersrallys to approve a transfer, the developer must transfer all of their restaurants, be in compliance with all agreements, and have at least one restaurant open. Additionally, the developer must sign a release and non-compete agreement for each transferred restaurant, and fulfill any other requests made by Checkersrallys.
The prospective transferee must also meet specific criteria. They must qualify as a franchisee, sign the existing agreement, and pay the transfer fee. Importantly, the transferee cannot be a public company.
These conditions are designed to ensure that any transfer of development rights maintains the integrity and standards of the Checkersrallys brand. By requiring the transfer of all restaurants and adherence to existing agreements, Checkersrallys aims to prevent piecemeal transfers that could negatively impact the overall network. The non-compete and release agreements further protect Checkersrallys's interests by preventing the former developer from engaging in competing businesses and ensuring a clean break. The stipulation that the transferee cannot be a public company may reflect a preference for privately held entities that align more closely with Checkersrallys's business model and values.