For Checkersrallys, is an Owner required to be an individual acting in his individual capacity?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.02 Disclosure of Ownership Interests.You and all of your Owners represent, warrant and agree that Exhibit A is current, complete and accurate as of the Effective Date. You agree to promptly notify us of any proposed or intended change to your ownership structure during the Term, to obtain our approval in accordance with the transfer conditions of Section 13.02 below before initiating any such change, and to sign a then-updated and accurate form of Exhibit A (which will replace its predecessor version of Exhibit A) if we approve the change. Each person who is or becomes an Owner must execute an agreement in form and substance as we then prescribe, undertaking to be bound jointly and severally by this Agreement. Each Owner must be an individual acting in his individual capacity, unless we waive this requirement.
- 8.03 Operating Partner.If you are, or at any time become, a business corporation, partnership, limited liability company or other legal entity, you must designate in Exhibit A as the "Operating Partner" an individual we approve who must: (a) own and control, or have the right to own and control (subject to conditions reasonably acceptable to us) not less than ten percent (10%) of your equity and voting rights; (b) have the authority to make, and bind you and all your Owners to, all operational decisions regarding the Franchised Restaurant; and (c) complete our training program to our satisfaction before engaging in his or her operational duties. You may not change the Operating Partner without our prior written consent.
You (or your Operating Partner): (a) shall exert full-time, best efforts to the development and operation of the Franchised Restaurant and all other Restaurants you own; and (b) may not engage in any other business or activity, directly or indirectly, that requires substantial management responsibility or time commitments or otherwise may conflict with your obligations hereunder.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, each Owner must be an individual acting in their individual capacity, unless Checkersrallys waives this requirement. An "Owner" is defined as each person or entity that has a direct or indirect legal or beneficial ownership interest in the franchisee if the franchisee is a business corporation, partnership, limited liability company, or other legal entity.
If the franchisee is a business corporation, partnership, limited liability company or other legal entity, they must designate an Operating Partner. The Operating Partner must (a) own and control, or have the right to own and control (subject to conditions reasonably acceptable to Checkersrallys) not less than ten percent (10%) of the franchisee's equity and voting rights; (b) have the authority to make, and bind the franchisee and all its Owners to, all operational decisions regarding the Franchised Restaurant; and (c) complete Checkersrallys's training program to their satisfaction before engaging in his or her operational duties. The franchisee may not change the Operating Partner without Checkersrallys's prior written consent.
The franchisee (or the Operating Partner) must exert full-time, best efforts to the development and operation of the Franchised Restaurant and all other Restaurants they own, and may not engage in any other business or activity, directly or indirectly, that requires substantial management responsibility or time commitments or otherwise may conflict with their obligations under the Franchise Agreement. Prospective franchisees should note that Checkersrallys retains the right to either enforce or waive the individual capacity requirement for Owners, providing some flexibility in structuring the ownership of the franchise.