Under what conditions must a Checkersrallys franchisee transfer all of their restaurants to a transferee?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
or | Section 18.08 | | k. | "Transfer" by franchisee defined | Section 1.04 | | l. | Franchisor's approval of transfer by franchisee | Sections 13.01 and 13.02 | | | PROVISION | SECTION IN FRANCHISE OR OTHER AGREEMENT | SUMMARY | |----|------------------------------------------------------------------------------------|-----------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | m. | Conditions for franchisor's approval of transfer | Section 13.02 | Restaurant must have opened. Transferee must qualify, complete training, sign existing or new agreement and pay transfer fee; you must guaranty transferee obligations; transferee cannot be public company. You must transfer all of your Restaurants; be in compliance with agreements; subordinate debts and sign a release and non-compete for each transferred Restaurant; we must approve price and payment terms; transferee must agree to remodel; you must execute such other documents that we may reasonably require to protect our rights under the Franchise Agreement and any development agreement. | | n. | Franchisor's right of first refusal | Section 13.06 | We can match any offer for your business. | | o. | Franchisor's option to purchase franchisee's franchise | Section 16.04 | We may acquire your Franchised Restaurant upon expiration (without renewal) at fair market value and upon termination at appraised asset value or net book value, whichever is less. | | p.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 66–71)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a franchisee is required to transfer all of their restaurants when seeking the franchisor's approval for a transfer. This condition is outlined in Section 13.02 of the Franchise Agreement and Section 7.02 of the Development Agreement.
Specifically, to gain Checkersrallys's approval for a transfer, the franchisee must transfer all of their restaurants to the transferee. Additionally, the franchisee must be in compliance with all agreements, and the restaurant must have already opened. The franchisee is also required to guarantee the transferee's obligations, subordinate debts, and sign a release and non-compete agreement for each transferred restaurant. Checkersrallys must also approve the price and payment terms of the transfer.
Furthermore, the transferee must meet Checkersrallys's qualifications, complete the required training, and sign either the existing franchise agreement or a new one. The transferee cannot be a public company and must agree to remodel the restaurants. The franchisee must also execute any other documents that Checkersrallys reasonably requires to protect its rights under the Franchise Agreement and any development agreement. These conditions ensure that any transfer maintains the standards and protects the interests of the Checkersrallys franchise system.