Does Checkersrallys have a right of first refusal to purchase a franchise when the franchisee wants to transfer ownership?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
If you or any of your Owners desires to transfer the Development Rights for legal consideration, you or such Owner(s) must obtain a bona fide, executed written offer and earnest money deposit in the amount of at least 5% of the offering price from a responsible and fully disclosed purchaser and must deliver immediately to us a complete and accurate copy of such offer.
If the offeror proposes to buy any other property or rights from you or any of your Owners or Affiliates (other than rights under development and franchise agreements for Restaurants) as part of the bona fide offer, the proposal for such property or rights must be set forth in a separate, contemporaneous offer that is fully disclosed to us, and the price and terms of purchase offered to you or your Owners for
the transfer of the Development Rights must reflect the bona fide price offered therefor and not reflect any value for any other property or rights.
We have the option, exercisable by notice delivered to you and your Owners within 30 days from the date of delivery of a complete and accurate copy of such offer to us, to purchase such interest in this Agreement or in Area Franchisee for the price and on the terms and conditions contained in such offer, provided that: (a) we may substitute cash for any form of payment proposed in such offer; (b) our credit shall be deemed equal to the credit of any proposed purchaser; and (c) we shall have not less than 90 days from the option exercise date to consummate the transaction. We have the right to investigate and analyze the business, assets and liabilities and all other matters we deem necessary or desirable in order to make an informed investment decision with respect to the fairness of the terms of the right of first refusal. We may conduct such investigation and analysis in any manner we deem reasonably appropriate, and you and your Owners must cooperate fully with us in connection therewith.
If we exercise our option to purchase, we will be entitled to purchase such interest subject to all representations and warranties, releases, non-competition covenants, closing documents and indemnities as we may reasonably require. If we do not exercise our option to purchase, you or your Owners may complete the sale to such offeror pursuant to and on the exact terms of such offer, subject to our approval of the transfer as provided in Sections 7.01 and 7.02, provided that if the sale to such offeror is not completed within 90 days after delivery of such offer to us, or if there is a material change in the terms of the offer, you must promptly notify us and we have an additional option to purchase (on the terms of the revised offer, if any, and otherwise as set forth herein) during the 30 day period following your notification of the expiration of the 90 day period or a material change to the terms of the offer.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Checkersrallys does have a right of first refusal if a franchisee or their owners want to transfer the Development Rights for legal consideration. To initiate the process, the franchisee must obtain a bona fide, executed written offer along with an earnest money deposit that is at least 5% of the offering price from a responsible and fully disclosed purchaser. The franchisee must then provide Checkersrallys with a complete and accurate copy of this offer. If the offer includes the purchase of other property or rights, these must be outlined in a separate, contemporaneous offer.
Checkersrallys has 30 days from the date they receive the offer to decide whether to exercise their option to purchase the interest in the agreement or the Area Franchisee at the price and terms specified in the offer. Checkersrallys can substitute cash for any proposed form of payment and their credit is considered equal to that of any proposed purchaser. Checkersrallys has at least 90 days to complete the transaction after exercising the option. Checkersrallys also has the right to investigate the business, assets, and liabilities to make an informed decision, and the franchisee must cooperate fully with this investigation.
If Checkersrallys exercises its option to purchase, it will be entitled to the interest subject to representations, warranties, releases, non-competition covenants, closing documents, and indemnities. If Checkersrallys does not exercise its right of first refusal, the franchisee can proceed with the sale to the original offeror, provided the sale is completed within 90 days of the original offer and the terms remain the same. If the sale is not completed within this timeframe or if there are material changes to the offer, Checkersrallys has an additional 30-day option to purchase the franchise under the revised terms.