If an assignment of a lease is prohibited for a Checkersrallys franchise, what alternative arrangement is required?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
16.05 Right to Lease Real Estate.
- (a) Upon termination of this Agreement (for any reason, no reason, or upon expiration without renewal), if you or any of your Owners or Affiliates directly or indirectly owns the building and/or land (the "Real Estate") on which the Franchised Restaurant is located, we may, and at our option (in our sole discretion) and in conjunction with our purchase of the Franchised Restaurant pursuant to Section 16.04 hereof, require you to execute and deliver to us or our designee a lease for the Restaurant Location pursuant to the terms of Section 16.05(b).
- (b) If we elect to require you to execute and deliver to us or our designee a lease for the Restaurant Location, we shall deliver written notice to you within ten (10) days after the effective date of termination or expiration of this Agreement of such election. Following such notice, you and we shall negotiate in good faith a lease for the Real Estate containing commercially reasonable terms with a term equal to a minimum of the remaining Term under this Agreement. If you and we have not agreed to a lease within thirty (30) days after your receipt of our election, we shall engage a Real Estate Appraiser to prepare a lease with commercially reasonable terms. The Real Estate Appraiser's determination will be binding, and you must
execute and deliver to us a lease for the Restaurant Location containing the commercially reasonable terms provided by the Real Estate Appraiser. All fees, compensation and cost and expense reimbursements of the Real Estate Appraiser shall be borne equally by the parties. Upon your execution of the lease for the Restaurant Location, you agree to vacate the Restaurant Location promptly and completely, rendering all necessary assistance to us to enable us to take prompt possession.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
Based on the 2025 Checkersrallys Franchise Disclosure Document, if a franchisee or their owners directly or indirectly owns the building and/or land where the franchised restaurant is located, Checkersrallys has the option to require the franchisee to execute and deliver a lease for the restaurant location to Checkersrallys or its designee upon termination or expiration of the franchise agreement. This is in conjunction with Checkersrallys's purchase of the franchised restaurant.
Checkersrallys must provide written notice of this election within ten days of the termination or expiration of the agreement. Following this notice, both parties are required to negotiate in good faith a lease with commercially reasonable terms, with a minimum term equal to the remaining term under the original agreement. If an agreement cannot be reached within thirty days of the election notice, a Real Estate Appraiser will be engaged to prepare a lease with commercially reasonable terms, which will be binding on both parties.
The franchisee is then obligated to execute and deliver the lease based on the appraiser's terms and vacate the restaurant location promptly, providing assistance to Checkersrallys to take possession. The fees, compensation, and expenses of the Real Estate Appraiser are to be shared equally between Checkersrallys and the franchisee. This ensures that Checkersrallys can continue operating the restaurant at that location even if the original franchisee's agreement ends and a lease assignment is not possible.