What is the required representation regarding liens, restrictions, agreements, and encumbrances on ownership interest for Checkersrallys franchisees?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
certificates representing direct or indirect legal or beneficial ownership interests now or hereafter issued must bear a legend in conformity with applicable law reciting or referring to such restrictions.
- 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.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees and their owners must disclose and maintain accurate information regarding ownership interests. Specifically, Exhibit A of the franchise agreement, which details the ownership structure, must be current, complete, and accurate as of the effective date of the agreement.
Checkersrallys requires franchisees to promptly inform them of any planned changes to the ownership structure during the term of the agreement. Before implementing any such change, the franchisee must obtain approval from Checkersrallys, adhering to the transfer conditions outlined in Section 13.02 of the agreement. If the change is approved, the franchisee must sign an updated version of Exhibit A, which will then replace the previous version. This ensures that Checkersrallys has an accurate record of the current ownership of each franchise.
Furthermore, Checkersrallys mandates that each person who is or becomes an owner must execute an agreement that binds them jointly and severally to the franchise agreement. Unless Checkersrallys waives this requirement, each owner must be an individual acting in their individual capacity. Additionally, any certificates representing direct or indirect legal or beneficial ownership interests must bear a legend that conforms with applicable law, referencing the restrictions on those interests. This comprehensive approach allows Checkersrallys to maintain control over the franchise network and ensure compliance with the franchise agreement.