What happens if a Checkersrallys franchisee breaches the conditions for the fee reduction?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
4. Additional Condition(s).
- a.
If, before you open the Franchised Restaurant, you request and we approve a transfer in accordance with Section 13, then as a pre-closing condition of the transfer (in addition to any transfer fee payable) you must pay us the amount of the Initial Fee Reduction prior to the transfer.
- b.
If you breach, fail to satisfy, or are later found to have violated or failed to satisfy, any of the criteria listed in Section 2 above in this Addendum, at any point during the Term, then in addition to any other remedies available under the Franchise Agreement or at applicable law, you must pay us (no later than thirty (30) days after our written notice to you) the amount of the Initial Fee Reduction plus the value of any royalty fee reduction, discount, and any other benefit afforded to you hereunder (as measured, if necessary, against the standard fee amount or level specified for new franchisees of Restaurants on the Effective Date of the Franchise Agreement).
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, if a franchisee fails to meet the criteria for a fee reduction, several consequences may arise. Specifically, if a Checkersrallys franchisee breaches, fails to satisfy, or violates any criteria listed in Section 2 of the addendum at any point during the term of the agreement, they will be required to pay the franchisor the amount of the initial fee reduction.
This payment must be made no later than thirty days after receiving written notice from Checkersrallys. In addition to repaying the initial fee reduction, the franchisee must also pay the value of any royalty fee reduction, discount, and any other benefit they received. This valuation will be based on the standard fee amount or level specified for new franchisees of Restaurants on the effective date of the Franchise Agreement.
Furthermore, this financial obligation is in addition to any other remedies that Checkersrallys may pursue under the Franchise Agreement or applicable law. These remedies could potentially include termination of the franchise agreement. Therefore, it is crucial for prospective Checkersrallys franchisees to fully understand and comply with all conditions attached to any fee reductions or incentives to avoid these financial and legal repercussions.