Who is responsible for funding all expenses associated with developing the Checkersrallys Franchised Restaurant?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree that such increases are to compensate us for our expenses, including the administrative and collection efforts with respect to the fee, and are not interest charges, time-price differentials or penalties for an overdue payment. Notwithstanding the foregoing, your failure to pay the initial franchise fee when due constitutes grounds for termination of this Agreement, as provided in Section 14.
If this Agreement is executed pursuant to a separate agreement between us and you or your Affiliate for multi-unit development of Restaurants (a "Development Agreement"), the initial franchise fee is subject to any applicable credit of a portion of the development fee against the initial franchise fee in accordance with the provisions of the relevant Development Agreement. If this Agreement is executed in connection with your purchase of an existing Restaurant from us or our Affiliate, then you must also pay us an asset transfer fee of Ten Thousand Dollars ($10,000) in addition to the initial franchise fee, payable on or before closing of your purchase of the Franchised Restaurant's assets. Notwithstanding the foregoing, if this Agreement is executed in connection with your independent purchase of (or other receipt of transferred ownership interests in) the Franchised Restaurant's assets from a third party owner, then you will not pay us an initial franchise fee, but we must have received (on or before the Effective Date) the full amount of any associated transfer fee that was due to us in connection with that transaction.
The initial franchise fee (and asset transfer fee, if applicable) is fully earned by us as of the Effective Date and is non-refundable, except that we may provide you a refund of fifty percent (50%) of the initial franchise fee paid to us if: (a) you (i) are unable to obtain a site acceptable to us within the Designated Area for the Franchised Restaurant within the time period prescribed in Section 3.02, or (ii) despite having expended good faith best efforts (as we determine in our sole jud
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the franchisee is primarily responsible for funding all expenses associated with developing the franchised restaurant. While the provided excerpts do not explicitly state this, they imply it through various financial obligations placed on the franchisee.
The franchisee must pay an initial franchise fee, which, according to the document, is fully earned by Checkersrallys as of the effective date and is generally non-refundable. There is an exception where 50% of the initial franchise fee may be refunded if the franchisee cannot secure a suitable site or obtain necessary permits within specified timeframes. Additionally, if the franchisee purchases an existing restaurant from Checkersrallys or its affiliate, they must pay an asset transfer fee of $10,000 in addition to the initial franchise fee.
Furthermore, the franchisee is responsible for covering all compensation and expenses, including travel, meals, and lodging, for themselves and their personnel while attending any required training programs. The franchisee also acknowledges that the success of the Checkersrallys venture is largely dependent on their own business abilities, efforts, and financial resources, reinforcing the idea that the franchisee bears the financial burden of developing and operating the restaurant.
While Checkersrallys may establish and administer a National Production Fund (NPF) for marketing and advertising, franchisees are required to contribute to this fund, with contributions not to exceed 3% of net sales. This further emphasizes the franchisee's financial responsibility in the overall operation and development of the Checkersrallys restaurant.