What are the specific grounds for immediate termination of the Checkersrallys franchise agreement, as outlined in section 14.01?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Affiliates. Under no circumstances may you or any of your Owners issue or sell your securities or the securities of any of your Affiliates, if: (1) such securities would be required to be registered pursuant to the Securities Act of 1933, as amended, or such securities would be owned by more than 35 persons; or (2) after such issuance or sale, you or such Affiliate would be required to comply with the reporting and information requirements of the Securities Exchange Act of 1934, as amended.
14. TERMINATION OF AGREEMENT.
14.01 Immediate Termination.You are in material breach of this Agreement, and this Agreement will automatically terminate without notice, at our discretion, if you become insolvent by reason of your inability to pay your debts as they mature; if you are adjudicated bankrupt or insolvent; if you file a petition in bankruptcy, reorganization or similar proceedings under the bankruptcy laws of the United States or have such a petition filed against you which is not discharged within thirty (30) days; if a receiver or other custodian, permanent or temporary, is appointed for your business, assets, property; if you request the appointment of a receiver or make a general assignment for the benefit of creditors; if final judgment against you in the amount of Twenty-Five Thousand Dollars ($25,000)
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, section 14.01 outlines the conditions under which the franchise agreement can be immediately terminated without notice. These conditions involve severe financial distress or legal actions against the franchisee.
Specifically, Checkersrallys can immediately terminate the agreement if the franchisee becomes insolvent due to an inability to pay debts, is adjudicated bankrupt or insolvent, or files for bankruptcy, reorganization, or similar proceedings that are not discharged within 30 days. The appointment of a receiver for the franchisee's business, assets, or property, or a request for such appointment, also constitutes grounds for immediate termination. Similarly, making a general assignment for the benefit of creditors can trigger immediate termination.
Furthermore, Checkersrallys can terminate the agreement immediately if a final judgment of $25,000 or more remains unsatisfied for 30 days or longer, if the franchisee's bank accounts, property, or accounts receivable are attached, or if execution is levied against the business or property. The filing of a suit to foreclose any lien or mortgage against the franchisee's assets, which is not dismissed within 30 days, also allows for immediate termination. Finally, voluntary dissolution or liquidation, or the filing of a petition for corporate or partnership dissolution that is not dismissed within 30 days, can lead to immediate termination by Checkersrallys.
These terms highlight the critical importance of maintaining financial stability and addressing legal challenges promptly for Checkersrallys franchisees. Failure to do so can result in the immediate loss of the franchise, emphasizing the high-stakes nature of the agreement.