What is the required representation regarding the nature and extent of each owner's interest in the Checkersrallys franchise?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
You, and your Owners, if applicable, represent and warrant to us, that: (a) neither you nor any of your Owners has made any untrue statement of any material fact or has omitted to state any material fact in obtaining the rights granted hereunder; (b) neither you nor any of your Owners has any direct or indirect legal or beneficial interest in any business that may be deemed a Competitive Business, except as otherwise completely and accurately disclosed in your franchise application submitted to us; and (c) the execution and performance of this Agreement will not violate any other agreement to which you or of any of your Owners may be bound. You recognize that we have approved your franchise application in reliance on all of the statements you and your Owners have made in connection therewith.
- 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 the 2025 Checkersrallys Franchise Disclosure Document, both the franchisee and their owners must accurately disclose their business interests. Specifically, they must represent and warrant that neither they nor their owners have made any untrue statement of material fact or omitted any material fact when obtaining franchise rights. They also must disclose any direct or indirect legal or beneficial interest in any business that may be deemed a competitive business. Furthermore, they must ensure that executing and performing the Franchise Agreement does not violate any other agreement they or their owners are bound by.
Checkersrallys requires that Exhibit A to the Franchise Agreement, which details ownership, is current, complete, and accurate. Franchisees must promptly notify Checkersrallys of any proposed changes to their ownership structure during the term of the agreement and obtain approval before initiating such changes. If Checkersrallys approves the change, an updated Exhibit A must be signed. Each person who becomes an owner must execute an agreement to be bound jointly and severally by the Franchise Agreement.
If the franchisee is a business entity, they must designate an Operating Partner in Exhibit A who meets specific criteria. This Operating Partner must own and control at least 10% of the equity and voting rights, have the authority to make operational decisions, and complete the Checkersrallys training program. The Operating Partner must exert full-time effort to the development and operation of the franchised restaurant and may not engage in other conflicting business activities. These stipulations ensure that Checkersrallys maintains control over the franchise's operation and protects its brand integrity.