What constitutes a material breach of the Checkersrallys agreement that leads to immediate termination?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
or any securities of any of your Affiliates, regardless of whether such sale or offer would be required to be registered pursuant to the provisions of the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction, without obtaining our prior consent and complying with all of our requirements and restrictions concerning use of information about us and our Affiliates. Under no circumstances may you or any of its Owners issue or sell your securities or any securities of any of your Affiliates if: (a) such securities would be required to be registered pursuant to the Securities Act of 1933, as amended, or such securities would be owned by more than 35 persons; or (b) after such issuance or sale, you or such Affiliate would be required to comply with the reporting and information requirements of the Securities Exchange Act of 1934, as amended.
8. TERMINATION OF THE AGREEMENT.
- 8.01 Immediate Termination. You are in material breach of this Agreement, and this Agreement will automatically terminate without notice, at our discretion, if you become insolvent by reason of your inability to pay your debts as they mature; if you are adjudicated bankrupt or insolvent; if you file a petition in bankruptcy, reorganization or similar proceeding under the bankruptcy laws of the United States or have such a petition filed against you which is not discharged within 30 days; if
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, there are specific conditions that constitute a material breach of the agreement, leading to automatic termination without prior notice. These conditions primarily revolve around financial instability and legal violations.
Specifically, the Checkersrallys agreement will automatically terminate if the franchisee becomes insolvent due to an inability to pay debts, is adjudicated bankrupt or insolvent, or files for bankruptcy, reorganization, or similar proceedings that are not discharged within 30 days. The appointment of a receiver for the franchisee's business, assets, or property, or a request for such appointment, also triggers immediate termination. Similarly, making a general assignment for the benefit of creditors leads to immediate termination.
Further, if a final judgment against the franchisee amounting to $25,000 or more remains unsatisfied for 30 days or longer, or if the franchisee's bank accounts, property, or accounts receivable are attached, the agreement is immediately terminated. The same applies if execution is levied against the business or property, or if a suit to foreclose any lien or mortgage against the franchisee's assets is not dismissed within 30 days. Voluntarily dissolving or liquidating the business, or facing a petition for corporate or partnership dissolution that is not dismissed within 30 days, also results in immediate termination. Finally, if the franchisee's assets, property, or interests are "blocked" under laws related to terrorist activities, or if the franchisee violates such laws, the agreement is immediately terminated.
These stipulations highlight the critical importance of maintaining financial solvency and adhering to legal and regulatory requirements for Checkersrallys franchisees. Failure to do so can result in the immediate loss of the franchise, emphasizing the risks associated with financial mismanagement or legal non-compliance.