If Checkersrallys exercises its right to cure a default by the tenant under the lease, what option does Checkersrallys have?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Landlord agrees that if Franchisor exercises its right to cure a default by Tenant and/or another lessee under the Lease, then Franchisor may, at its option, succeed to Tenant's and/or such other lessee's interests under the Lease and
shall be recognized by Landlord as the lessee or sublessee thereunder for the remaining term of the Lease.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, if Checkersrallys chooses to cure a default by the tenant (the franchisee) under the lease agreement, Checkersrallys has the option to take over the tenant's rights and interests in the lease. Specifically, Checkersrallys can become the new lessee or sublessee for the remaining term of the lease. This means Checkersrallys can step into the franchisee's shoes and continue operating the restaurant at that location.
This provision is included in the lease agreement to protect Checkersrallys's interests. By securing the right to cure defaults and assume the lease, Checkersrallys ensures that the restaurant can continue operating under its brand name even if the franchisee fails to meet their lease obligations. This is a significant protection for the franchise system, as it prevents a location from being lost due to a franchisee's financial difficulties or mismanagement.
For a prospective Checkersrallys franchisee, this clause means that Checkersrallys has a safety net in place if they are unable to meet their lease obligations. However, it also means that Checkersrallys has considerable control over the restaurant location and can take over the lease if necessary. Franchisees should carefully consider this provision and understand the circumstances under which Checkersrallys might exercise this right. It is also important to note that Checkersrallys has the right to enter the premises to make modifications or alterations to protect its franchise system, trademarks, trade names, trade dress and other intellectual property.
Furthermore, Checkersrallys has the right to assign the lease or sublease the premises to an entity they own or control, or to another Checkersrallys franchisee, with the landlord's written consent, which cannot be unreasonably withheld, conditioned, or delayed. No assignment fee is permitted, nor can the rent be accelerated as a result of the assignment.