Can Checkers be acquired by a business that operates Competitive Businesses in the Checkers Development Area?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
e System or whether such restaurants operate under other trademarks, service marks or trade dress and/or use other operating systems.
Except as otherwise expressly provided in the Development Agreement, we and all of our affiliates (and our or their respective successors and assigns, by purchase, merger, consolidation or otherwise) retain all of our rights and discretion with respect to the Marks, the System and Restaurants anywhere in the world, and the right to engage in any business whatsoever (without compensation to you), including the right to: (a) operate, and grant to others the right to operate, Restaurants at such locations and on such terms and conditions as we deem appropriate; (b) sell any products or services under the Marks, or under other trademarks, service marks or trade dress, through alternative channels of distribution (including the internet or similar electronic media and supermarkets); (c) operate, and grant to others the right to operate, restaurants identified by trademarks, service marks or trade dress, other than the Marks, under the terms and conditions we deem appropriate; and (d) be acquired (whether through acquisition of assets, ownership interests or otherwise, regardless of the form of transaction), by a business providing products and services similar to those provided at Checkers Restaurants or Rally's Restaurants, or by another business, even if such business operates, franchises and/or licenses Competitive Businesses in the Development Area.
You must be developing, or have open and operating in the Development Area, at least the cumulative number of Checkers Restaurants or Rally's Restaurants set out in the Development Schedule. We have no obligation under any circumstances to extend the Development Schedule. Your failure to develop and operate Checkers Restaurants or Rally's Restaurants in accordance with the Development Schedule will be a material breach of the Development Agreement; however, our right to terminate the Development Agreement will be our exclusive remedy for your failure to meet the Development Schedule. Except as noted above, a Developer's exclusivity in the Protected Area is not dependent on achieving certain sales volume, market penetration or any other contingency.
Competing Businesses
Company-owned and/or franchised Checkers Restaurants and Rally's Restaurants may compete with your Franchised Restaurant generally, although we do not currently intend to establish or franchise Checkers Restaurants in any Rally's franchisee's general market area, or Rally's Restaurants in any Checkers franchisee's general market area.
Source: Item 12 — TERRITORY (FDD pages 57–61)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, Checkers can be acquired by a business that operates Competitive Businesses in the Development Area. The FDD states that Checkers has the right to be acquired by a business providing similar products and services, even if that business operates, franchises, and/or licenses Competitive Businesses in the Development Area. A Competitive Business is defined as any business that operates as a restaurant or similar food-service provider and derives more than 20% of its revenue from selling hamburgers, cheeseburgers, or hot dogs in a fast-food, quick-service, drive-thru or drive-in format, or grants franchises or licenses to others to operate that type of business.
This means that a prospective Checkers franchisee should be aware that the parent company, Checkers, could be acquired by a competitor. This could potentially lead to changes in the franchise system, such as modifications to the menu, operating procedures, or brand standards. While the FDD does not elaborate on the specific implications of such an acquisition, it is important for franchisees to understand that such a scenario is possible.
However, an equity ownership of less than 5% of a business entity meeting the description of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph. This exception provides some clarity regarding minor investments in publicly traded companies that might technically qualify as competitors.
Prospective franchisees should consider the potential impact of a change in ownership on their investment and operations. It would be prudent to discuss this possibility with the franchisor and current franchisees to gain a better understanding of the potential risks and benefits.