What happens if a Checkersrallys franchisee makes a material misstatement in their application for development rights?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to our right to terminate pursuant to other provisions of this Agreement or under applicable law, we may terminate this Agreement, effective upon delivery of notice of termination to you:
- (c) if you or any of your Owners or Affiliates make any material misstatement or omission in the application for the development rights conferred by this Agreement or in any other information provided to us, or are convicted of, or plead no contest to, a felony or other crime or offense that we reasonably believe may adversely affect the goodwill associated with the Marks;
We have no obligation whatsoever to refund any portion of the development fee upon any termination, except that we will refund the unapplied portion of the development fee paid pursuant to Section 2.01 in the event of a termination pursuant to Section 8.02(g).
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, if a franchisee or any of their owners or affiliates makes a material misstatement or omission in the application for development rights, Checkersrallys has the right to terminate the Development Agreement. This termination is effective upon delivery of a termination notice to the franchisee.
This provision means that prospective Checkersrallys franchisees must ensure the accuracy and completeness of all information provided during the application process for development rights. Any false or misleading statements, whether intentional or unintentional, could lead to the termination of the agreement. This includes not only the initial application but also any other information provided to Checkersrallys throughout the process.
Checkersrallys is under no obligation to refund any portion of the development fee upon termination, except for the unapplied portion of the development fee paid pursuant to Section 2.01 in the event of a termination pursuant to Section 8.02(g). This highlights the importance of due diligence and honesty when applying for development rights, as a misstatement could result in the loss of the development fee and the rights to develop Checkersrallys restaurants. Franchisees should consult with legal counsel to ensure full compliance with the application requirements and to understand the potential consequences of any misstatements or omissions.