What constitutes a 'material breach' that would allow Checkersrallys to immediately terminate the agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
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, Checkersrallys has the right to immediately terminate the agreement without notice if the franchisee is in material breach of the agreement. This includes specific instances related to financial solvency and legal compliance.
The agreement will automatically terminate if the franchisee becomes insolvent due to an inability to pay debts, is adjudicated bankrupt or insolvent, files for bankruptcy or similar proceedings that are not discharged within 30 days, or has a receiver appointed for their business. Similarly, Checkersrallys can terminate the agreement immediately if a final judgment of $25,000 or more remains unsatisfied for 30 days, if the franchisee's bank accounts or property are attached, or if a suit to foreclose a lien against their assets is not dismissed within 30 days.
Further, Checkersrallys can immediately terminate the agreement if the franchisee voluntarily dissolves or liquidates, has a petition filed for corporate or partnership dissolution that is not dismissed within 30 days, or if the franchisee's assets are blocked under laws related to terrorist activities. These conditions highlight the critical importance of maintaining financial stability and adhering to legal and regulatory requirements to avoid immediate termination of the franchise agreement.