Does Checkersrallys require franchisees to obtain consent before issuing or selling securities?

Based on the 2025 Franchise Disclosure Document, Checkersrallys requires that if the proposed transferee of a franchise is an entity, or is affiliated with an entity, that is required to comply with reporting and information requirements of the Securities Exchange Act of 1934, as amended, the transfer will not be approved. This means that Checkersrallys wants to avoid dealing with franchisees that are subject to the regulations and scrutiny associated with publicly traded companies.

This condition is in place to ensure that franchisees are primarily focused on operating the Checkersrallys restaurant and adhering to the franchise agreement, rather than being influenced by the demands and complexities of securities regulations. It also allows Checkersrallys to maintain a degree of control over who becomes a franchisee, ensuring they meet the brand's standards and operational requirements.

For a prospective franchisee, this means that if they plan to operate the Checkersrallys franchise through a legal entity, that entity cannot be subject to the reporting requirements of the Securities Exchange Act. This could limit the franchisee's options for raising capital or structuring their business, as they would need to avoid triggering these reporting requirements. It is important for potential franchisees to carefully consider this restriction and its implications for their business plans and financial structure.