For Checkersrallys, what must franchisees and their owners represent, warrant, and agree to regarding Exhibit A?
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.
- 8.03 Operating Partner.If you are, or at any time become, a business corporation, partnership, limited liability company or other legal entity, you must designate in Exhibit A as the "Operating Partner" an individual we approve who must: (a) own and control, or have the right to own and control (subject to conditions reasonably acceptable to us) not less than ten percent (10%) of your equity and voting rights; (b) have the authority to make, and bind you and all your Owners to, all operational decisions regarding the Franchised Restaurant; and (c) complete our training program to our satisfaction before engaging in his or her operational duties. You may not change the Operating Partner without our prior written consent.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees and their owners must represent, warrant, and agree that Exhibit A, which likely details ownership interests, is current, complete, and accurate as of the franchise agreement's effective date. This means that the information provided about who owns the franchise and their respective stakes must be truthful and up-to-date when the agreement is signed.
The franchisee must promptly notify Checkersrallys of any proposed or intended changes to the ownership structure during the term of the agreement. Before initiating any such change, the franchisee must obtain Checkersrallys's approval, adhering to the transfer conditions outlined in Section 13.02 of the agreement. If the change is approved, the franchisee must sign an updated version of Exhibit A, which will then replace the previous version. This ensures that Checkersrallys always has accurate records of the franchise's ownership.
Furthermore, each person who is or becomes an owner must execute an agreement, in a form and substance prescribed by Checkersrallys, undertaking to be bound jointly and severally by the franchise agreement. Unless Checkersrallys waives this requirement, each owner must be an individual acting in their individual capacity. If the franchisee is a business entity, they must designate an approved "Operating Partner" in Exhibit A who meets specific criteria, including owning at least 10% of the equity and voting rights, having the authority to make operational decisions, and completing Checkersrallys's training program. The franchisee cannot change the Operating Partner without Checkersrallys's prior written consent.
These stipulations are typical in franchising, as franchisors need to maintain control over who owns and manages their franchises to protect the brand and ensure consistent operations. The requirements surrounding Exhibit A and ownership changes are designed to give Checkersrallys oversight and approval rights regarding the individuals involved in running a franchise location.