Does Checkersrallys consider the transfer, surrender, or loss of possession, control, or management of the Franchised Restaurant by the franchisee or their Owners to be a form of direct or indirect transfer?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
other acts or events not covered by the foregoing that we reasonably determine to be a form of direct or indirect transfer, including: (1) any transfer, redemption or issuance of a legal or beneficial ownership interest in the capital stock of, or a membership or partnership interest in, you or your Owners, or of any interest convertible into or exchangeable for capital stock of, or a membership or partnership interest in, you or your Owners; (2) any merger or consolidation between you and another entity, whether or not you are the surviving entity, or any conversion of you or your Owners from one form of legal entity into another form of legal entity, or any sale, exchange, encumbrance or other disposition of your or their assets; (3) any transfer in connection with or as a result of a divorce, dissolution of marriage or similar proceeding or a property settlement or legal separation agreement in the context of a divorce, dissolution or marriage or similar proceeding, an insolvency, bankruptcy or assignment for benefit of creditors, a judgment, a corporate, limited liability company or partnership dissolution or otherwise by operation of law; (4) any transfer by gift, declaration of trust, transfer in trust, revocation of trust, trustee succession, trust termination, discretionary or mandatory trust distribution, occurrence of any event (e.g., death of a person) that affects or ripens the rights of contingent beneficiaries, exercise of a power of appointment, exercise of a withdrawal right, adjudication of you or any Owner as legally disabled, or upon or after your death or the death of any of your Owners by will, disclaimer of the laws of intestate succession or otherwise; or (5) any foreclosure upon your Franchised Restaurant or the transfer, surrender or loss by you or your Owners of possession, control or management of your Franchised Restaurant.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the transfer, surrender, or loss of possession, control, or management of a franchised restaurant by the franchisee or their owners is considered a form of direct or indirect transfer.
Specifically, the FDD defines events that Checkersrallys considers to be a form of direct or indirect transfer. These include, but are not limited to, any transfer, redemption, or issuance of a legal or beneficial ownership interest in the capital stock of the franchisee or their owners. It also encompasses mergers or consolidations, transfers due to divorce or bankruptcy, and transfers resulting from gifts, trusts, or inheritance.
Critically, Checkersrallys explicitly includes "any foreclosure upon your Franchised Restaurant or the transfer, surrender or loss by you or your Owners of possession, control or management of your Franchised Restaurant" within its definition of events that constitute a direct or indirect transfer. This means that if a franchisee loses control of the restaurant, even without a formal sale, Checkersrallys considers it a transfer subject to the terms of the franchise agreement.