Does the Checkersrallys franchise agreement consider an involuntary disposition of ownership interest in the franchisee as a 'transfer of the franchise'?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
"Transfer the Franchise" – or similar words – The direct or indirect sale, assignment, transfer, exchange, conversion, license, sublicense, lease, sublease, mortgage, pledge, collateral assignment, grant of a security, collateral or conditional interest or other encumbrance in or on, or other disposition, whether voluntary, involuntary, by operation of law or otherwise, of this Agreement, any interest in or right under this Agreement, any form of legal or beneficial ownership interest in you or any of your Owners, or any form of ownership interest or right to participate in or receive the benefit of the assets, revenues, income or profits of your Franchised Restaurant, or any one or more
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkersrallys Franchise Disclosure Document, the franchise agreement considers both voluntary and involuntary dispositions of ownership interest as a 'transfer of the franchise.'
The agreement defines 'Transfer the Franchise' to include any disposition of ownership, whether voluntary or involuntary. This encompasses various scenarios like sales, assignments, or other encumbrances of the agreement itself, any rights within it, or any form of legal or beneficial ownership in the franchisee or their owners. It also extends to any ownership interest or right to participate in the assets, revenues, income, or profits of the franchised restaurant.
This broad definition means that any change in ownership, even if not initiated by the franchisee, is subject to the transfer provisions of the franchise agreement. This is a common practice in franchising, allowing Checkersrallys to maintain control over who operates their franchises and ensuring that any new owners meet their standards and qualifications. The franchisee should carefully review the transfer provisions in Section 13 of the franchise agreement.