For Checkersrallys, what must a franchisee do if there is a proposed change to the ownership structure during the term of the agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.02 Disclosure of Ownership Interests.You and all of your Owners represent, warrant and agree that Exhibit A is current, complete and accurate as of the Effective Date. You agree to promptly notify us of any proposed or intended change to your ownership structure during the Term, to obtain our approval in accordance with the transfer conditions of Section 13.02 below before initiating any such change, and to sign a then-updated and accurate form of Exhibit A (which will replace its predecessor version of Exhibit A) if we approve the change. Each person who is or becomes an Owner must execute an agreement in form and substance as we then prescribe, undertaking to be bound jointly and severally by this Agreement. Each Owner must be an individual acting in his individual capacity, unless we waive this requirement.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, if a franchisee intends to change the ownership structure during the term of the agreement, they must promptly notify Checkersrallys of the proposed change. Before initiating any such change, the franchisee must obtain approval from Checkersrallys, adhering to the transfer conditions outlined in Section 13.02 of the franchise agreement. If Checkersrallys approves the change, the franchisee must sign an updated and accurate version of Exhibit A, which will replace the previous version.
Furthermore, each individual who becomes an Owner must execute an agreement, in a form and substance prescribed by Checkersrallys, committing to be bound jointly and severally by the existing agreement. Unless Checkersrallys waives this requirement, each Owner must act in their individual capacity.
This process ensures that Checkersrallys maintains control over who its franchisees are and that all owners are bound by the franchise agreement. It protects Checkersrallys's interests by ensuring that any new owners meet their standards and agree to the terms of the franchise agreement. Prospective franchisees should carefully review Section 13.02 to understand the specific conditions for transfer approval, as failure to comply with these requirements could result in the denial of the ownership change.