Can Checkers be acquired by a business that operates Competitive Businesses in a franchisee's Protected Area?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
(f) to 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 Restaurants, or by another business, even if such business operates, franchises and/or licenses Competitive Businesses in the Protected Area. A "Competitive Business" means any business that: (i) 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 (ii) grants franchises or licenses to others to operate the type of business specified in subparagraph (i) (other than a Checkers Restaurant or Rally's Restaurant operated under a franchise agreement with us); but excludes equity ownership of less than 5% of a business entity meeting this description 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.
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, even if those businesses are within a franchisee's Protected Area. A Competitive Business is defined as any business that operates as a restaurant or food-service provider deriving more than 20% of its revenue from selling hamburgers, cheeseburgers, or hot dogs in a fast-food format, or that franchises or licenses others to do so. An exception exists for equity ownership of less than 5% in a publicly traded company meeting this description.
This clause means that a franchisee's protected area is not a barrier to Checkers being acquired by a larger entity, even if that entity owns competing fast-food restaurants. This could potentially increase competition within a franchisee's protected area if the acquiring company chooses to leverage its existing brands.
This is a significant risk factor for prospective franchisees. While Checkers grants a limited protected area, this protection does not extend to preventing Checkers itself from being acquired by a competitor. Franchisees should carefully consider this possibility and its potential impact on their business before investing in a Checkers franchise.