What happens if a Checkersrallys franchisee makes an unauthorized transfer of the Development Rights?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Accordingly, neither you nor any of your Owners may Transfer the Development Rights without our prior approval and without complying with the terms and conditions of Section 7.
Any transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect.
- 8.02 Termination Upon Notice.
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:
- (b) if you or any of your Owners or Affiliates make an unauthorized transfer of the Development Rights;
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 their owners/affiliates makes an unauthorized transfer of the Development Rights, it constitutes a breach of the Area Franchise Agreement. Such a transfer is considered void and of no force or effect. Additionally, Checkersrallys has the right to terminate the Area Franchise Agreement, effective immediately upon delivering a termination notice to the franchisee.
This means that a Checkersrallys franchisee cannot transfer their rights to develop restaurants in their designated area without prior approval from Checkersrallys. Failure to obtain this approval can lead to serious consequences, including the termination of the franchise agreement. The franchisee would lose the right to develop further restaurants in their area and potentially lose any existing restaurants if the franchise agreement is terminated.
Checkersrallys does not have any 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 adhering to the transfer conditions outlined in the Area Franchise Agreement to avoid potential financial losses and termination of the franchise agreement.