If a Checkersrallys franchisee signs a Franchise Agreement in connection with a Development Agreement, how does the development fee affect the initial franchise fee?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
the location of the Franchised Restaurant.
If you sign the Franchise Agreement in connection with a Development Agreement, then the applicable portion of the development fee you paid under the Development Agreement toward the Franchised Restaurant will be credited against the initial franchise fee payable and due to us under the Franchise Agreement, according to that Development Agreement's terms. If you sign the Franchise Agreement and a Non-Traditional Site Addendum to operate the Franchised Restaurant from a Non-Traditional Site, then the initial franchise fee will be reduced to $15,000 as discussed below. If you sign the Franchise Agreement as part of your independent purchase of (or receipt of transferred ownerships interests in) the Franchised Restaurant's assets from a third party owner, then you will not pay us an initial franchise fee, but you must ensure that we receive the full amount of the associated transfer fee due to us as a result of that transaction (by way of example only, see successor franchise fee under Item 6).
Source: Item 5 — INITIAL FEES (FDD pages 17–21)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, if a franchisee signs a Franchise Agreement in connection with a Development Agreement, a portion of the development fee paid under the Development Agreement will be credited against the initial franchise fee. The standard initial franchise fee is $30,000. The development agreement requires a fee of $10,000 per restaurant to be developed.
Specifically, $10,000 of the development fee is credited towards the initial franchise fee payable for each restaurant the franchisee is required to open under the Development Agreement. This credit continues until the entire development fee has been credited.
This arrangement benefits the franchisee by reducing the upfront costs associated with opening multiple Checkersrallys restaurants under a Development Agreement. The development fee is typically non-refundable unless Checkersrallys terminates the Development Agreement due to adverse franchise legislation, in which case the uncredited portion of the development fee will be refunded.