Can an entity required to comply with the Securities Exchange Act of 1934 be a Checkersrallys transferee?

According to Checkersrallys's 2025 Franchise Disclosure Document, a proposed transferee may not be an entity, or affiliated with an entity, that is required to comply with the reporting and information requirements of the Securities Exchange Act of 1934, as amended. This means that Checkersrallys places restrictions on who can become a transferee, specifically excluding entities that have obligations under federal securities laws.

This condition is part of a broader set of requirements that Checkersrallys imposes on transfers of development rights. These requirements also include the need for the current franchisee and their owners to be in compliance with their agreements, the operation of at least one restaurant at the time of the transfer, and the transferee meeting Checkersrallys's approval regarding character, experience, and financial resources. The transferee must also agree to be bound by the existing agreement's terms and acquire all franchise agreements held by the current franchisee.

Additionally, a transfer fee of $20,000 must be paid to Checkersrallys, and both the current franchisee and their owners must execute a general release of claims against Checkersrallys. These conditions collectively ensure that Checkersrallys maintains control over who enters into an agreement and that the new franchisee meets their standards. This also protects Checkersrallys from potential liabilities and ensures a smooth transition.