If a Checkersrallys franchise agreement is executed in connection with the purchase of an existing restaurant from Checkersrallys or its affiliate, what fee, in addition to the initial franchise fee, must be paid, and when is it due?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
nt, as provided in Section 14.
If this Agreement is executed pursuant to a separate agreement between us and you or your Affiliate for multi-unit development of Restaurants (a "Development Agreement"), the initial franchise fee is subject to any applicable credit of a portion of the development fee against the initial franchise fee in accordance with the provisions of the relevant Development Agreement. If this Agreement is executed in connection with your purchase of an existing Restaurant from us or our Affiliate, then you must also pay us an asset transfer fee of Ten Thousand Dollars ($10,000) in addition to the initial franchise fee, payable on or before closing of your purchase of the Franchised Restaurant's assets. Notwithstanding the foregoing, if this Agreement is executed in connection with your independent purchase of (or other receipt of transferred ownership interests in) the Franchised Restaurant's assets from a third party owner, then you will not pay us an initial franchise fee, but we must have received (on or before the Effective Date) the full amount of any associated transfer fee that was due to us in connection with that transaction.
The initial franchise fee (and asset transfer fee, if applicable) is fully earned by us as of the Effective Date and is non-refundable, except that we may provide you a refund of fifty percent (50%) of the initial franchise fee paid to us if: (a) you (i) are unable to obtain a site acceptable to us within the Designated Area for the Franchised Restaurant within the time period prescribed in Section 3.02, or (ii) despite having expended good faith best efforts (as we determine in our sole judgment), have not obtained all necessary permits, licenses, or other regulatory or municipal approvals t
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, if a franchise agreement is executed when purchasing an existing restaurant from Checkersrallys or its affiliate, the franchisee must pay an asset transfer fee in addition to the initial franchise fee. The asset transfer fee is Ten Thousand Dollars ($10,000). This fee is payable on or before the closing of the purchase of the Franchised Restaurant's assets.
However, if the franchise agreement is executed in connection with an independent purchase of the Franchised Restaurant's assets from a third-party owner, the franchisee will not pay Checkersrallys an initial franchise fee. Instead, Checkersrallys must have received the full amount of any associated transfer fee that was due to them in connection with that transaction on or before the Effective Date.
It is important to note that the initial franchise fee and asset transfer fee, if applicable, are fully earned by Checkersrallys as of the Effective Date and are non-refundable. There is an exception where Checkersrallys may provide a refund of fifty percent (50%) of the initial franchise fee if the franchisee is unable to obtain a suitable site within the designated area or cannot obtain necessary permits and approvals within sixty (60) days after executing the lease or purchase agreement, provided the franchisee and owners execute general releases of claims against Checkersrallys.