If a Checkersrallys franchisee requests a transfer before opening their restaurant, what must they pay as a pre-closing condition, besides the transfer fee?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
4. Additional Condition(s).
a. If, before you open the Franchised Restaurant, you request and we approve a transfer in accordance with Section 13, then as a pre-closing condition of the transfer (in addition to any transfer fee payable) you must pay us the amount of the Initial Fee Reduction prior to the transfer.
b. If you breach, fail to satisfy, or are later found to have violated or failed to satisfy, any of the criteria listed in Section 2 above in this Addendum, at any point during the Term, then in addition to any other remedies available under the Franchise Agreement or at applicable law, you must pay us (no later than thirty (30) days after our written notice to you) the amount of the Initial Fee Reduction plus the value of any royalty fee reduction, discount, and any other benefit afforded to you hereunder (as measured, if necessary, against the standard fee amount or level specified for new franchisees of Restaurants on the Effective Date of the Franchise Agreement).
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- No Exclusivity or Protected Territory.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, if a franchisee requests a transfer before opening their restaurant and Checkersrallys approves it, the franchisee must pay the amount of the Initial Fee Reduction before the transfer can be completed, in addition to any transfer fee that is payable. Alternatively, the franchisee may have to pay the full standard amount of the initial franchise fee (as measured on the Effective Date of your Franchise Agreement) that was reduced or waived pursuant to the addendum.
This means that Checkersrallys franchisees who received a reduction or waiver of the initial franchise fee will have to pay back the reduced amount or waived amount if they decide to transfer the franchise before opening their restaurant. This policy ensures that Checkersrallys recovers the initial investment it made in the franchisee if the franchisee does not fulfill their obligation to open and operate the restaurant.
It is important for prospective Checkersrallys franchisees to understand this condition before signing the franchise agreement. They should carefully consider their ability to open and operate the restaurant before seeking a transfer, as they will be responsible for repaying the initial fee reduction or waiver. This could represent a significant financial obligation, especially for franchisees who received a substantial reduction in the initial franchise fee.