What payment, beyond the transfer fee, is required from a Checkersrallys franchisee as a pre-closing condition of transfer if the transfer is requested before the restaurant opens?
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 of the Franchise Agreement, 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.
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 as a pre-closing condition of the transfer, in addition to any transfer fee payable. This means that if Checkersrallys offered a reduced initial franchise fee to the franchisee, that reduction must be repaid before the transfer can be completed.
This condition ensures that Checkersrallys recovers the initial investment incentive they provided to the original franchisee if that franchisee decides to transfer the franchise rights before actually opening the restaurant. It protects Checkersrallys from franchisees who might try to take advantage of reduced fees without ever intending to operate the business.
For a prospective Checkersrallys franchisee, this means understanding the terms of the initial franchise fee and any reductions or waivers that may apply. If they anticipate a potential need to transfer the franchise before opening, they should factor in the repayment of this reduction as a cost associated with the transfer. This is a fairly standard practice in franchising, as franchisors want to ensure that initial incentives are not exploited.