Under what condition regarding restaurant opening and the Franchise Agreement would a Checkersrallys franchisee be required to pay the Initial Fee Reduction?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
4. Additional Condition(s).
- a.
If, before you open the Franchised Restaurant, you request and we approve a transfer in accordance with Section 13, then as a pre-closing condition of the transfer (in addition to any transfer fee payable) you must pay us the amount of the Initial Fee Reduction prior to the transfer.
- b.
If you breach, fail to satisfy, or are later found to have violated or failed to satisfy, any of the criteria listed in Section 2 above in this Addendum, at any point during the Term, then in addition to any other remedies available under the Franchise Agreement or at applicable law, you must pay us (no later than thirty (30) days after our written notice to you) the amount of the Initial Fee Reduction plus the value of any royalty fee reduction, discount, and any other benefit afforded to you hereunder (as measured, if necessary, against the standard fee amount or level specified for new franchisees of Restaurants on the Effective Date of the Franchise Agreement).
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a franchisee may be required to pay the Initial Fee Reduction under specific conditions related to restaurant opening and compliance with the Franchise Agreement.
Specifically, if a Checkersrallys franchisee breaches, fails to satisfy, or is later found to have violated or failed to satisfy any of the criteria listed in Section 2 of the addendum at any point during the term of the agreement, they will be required to pay the Initial Fee Reduction. This is in addition to any other remedies available to Checkersrallys under the Franchise Agreement or applicable law. The franchisee must pay this amount no later than thirty (30) days after receiving written notice from Checkersrallys.
This condition is significant because it ties the benefits of any initial fee reduction to the franchisee's ongoing compliance with the terms of the agreement and the specific criteria outlined in Section 2. Failing to meet these criteria at any point during the term can trigger the obligation to repay the reduced portion of the initial franchise fee. Prospective franchisees should carefully review Section 2 of the addendum to fully understand the criteria they must meet to avoid this penalty.
Additionally, if a Checkersrallys franchisee requests and Checkersrallys approves a transfer of the franchise before the restaurant opens, the franchisee must pay the amount of the Initial Fee Reduction prior to the transfer as a pre-closing condition. This is in addition to any transfer fee that may be payable. This ensures that Checkersrallys recovers the waived portion of the initial fee if the franchisee decides to transfer the franchise before commencing operations.