Is Checkers allowed to operate or franchise Checkers-branded restaurants that directly compete with a franchisee's Checkers restaurant?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ies of the Protected Area pursuant to this Section, we are authorized to amend this Agreement to reflect such modification. You and we hereby agree that upon the amendment of this Agreement by us in accordance with this Section, the particular geographic area identified thereon shall be deemed the Protected Area under this Agreement.
2.03 Our Reservation of Rights. Except as expressly limited by Section 2.02 above, we and our Affiliates (and our respective successors and assigns, by purchase, merger, consolidation or otherwise) retain all rights and discretion with respect to the Marks, the System, the sale of products and services similar or dissimilar to those offered by "Checkers" and "Rally's"-branded restaurants, and the operation or franchising of "Checkers" and "Rally's"-branded restaurants anywhere located or to be located, and may engage in any business activities whatsoever, within or outside the Protected Area, whenever and wherever we desire. Specifically, by way of example and without limitation, we reserve the following rights: (a) to establish and operate, and grant to others the right to operate, "Checkers" and "Rally's"-branded restaurants at locations outside the Protected Area, on such terms and conditions as we deem appropriate (you acknowledge that such "Checkers" and "Rally's"-branded restaurants may be in direct competition with your Franchised Restaurant, without regard to any adverse effects of such activities on your Franchised Restaurant and without any obligation or liability to you); (b) to establish and operate, and grant to others the right to operate, "Checkers" and "Rally's"branded restaurants, or other restaurants using any part or all of the System and/or Marks, that are located at or operated from Non-Traditional Sites within or outside the Protected Area; (c) to sell any products or services under the Marks or under any other trademarks, service marks or trade dress, through alternative channels of distribution, wherever located or operating (including, without limitation, the internet or similar electronic media and supermarkets); (d) to establish and operate, and grant to others the right to operate, restaurants identified by trademarks, service marks or trade dress, other than the Marks (including the INSERT BRAND: "Checkers"/"Rally's" name and mark), pursuant to such terms and conditions as we
deem appropriate and wherever such restaurants are located; (e) to acquire the assets or ownership interests of one or more businesses providing products and services similar or dissimilar to those provided at "Checkers" and "Rally's"-branded restaurants, and to franchise, license or create similar arrangements with respect to these businesses once acquired, and which businesses we may (at our sole discretion, and without obligation) convert, or allow to be converted, to operations as "Checkers" or "Rally's"-branded restaurants using any of the Marks and/or the System, wherever these businesses (or the franchisees or licensees of these businesses) are located or operating (including in the Protected Area, if applicable); and (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 "Checkers" or "Rally's"-branded restaurants, or by another business, even if such business operates, franchises and/or licenses Competitive Businesses in the Protected Area.
You acknowledge and agree that, except as expressly granted to you in Section 2.02 hereof, your rights hereunder are non-exclusive and you have no rights under this Agreement to participate in or benefit from any other business activity we or our Affiliate may undertake, regardless of whether such activity involves the Marks or the System. You waive, to the fullest extent permitted under applicable law, all claims, demands, or causes of action arising from or relating to any of the foregoing activities by us or any of our Affiliates in connection with our reserved rights under this Section 2.03.
3.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers retains significant rights regarding the operation and franchising of restaurants, including the right to establish restaurants that may directly compete with a franchisee's location. Specifically, Checkers reserves the right to operate or franchise Checkers-branded restaurants outside of a franchisee's protected area, even if those restaurants directly compete with the franchisee's business. This means that while a franchisee may have a protected area, Checkers is not restricted from opening or franchising other locations outside that area, regardless of the impact on the franchisee's business.
Checkers also reserves the right to operate or franchise restaurants at non-traditional sites, both within and outside the protected area. These non-traditional sites could include locations like airports, universities, or stadiums. Furthermore, Checkers can sell products or services under its trademarks through alternative channels of distribution, such as the internet or supermarkets, which could also compete with a franchisee's restaurant sales. These rights are retained by Checkers and its affiliates, and franchisees acknowledge that they have no rights to participate in or benefit from these activities.
This lack of exclusivity means that a Checkers franchisee's success is heavily dependent on their own business acumen and efforts within their specific location. The franchisee bears the risk of potential competition from other Checkers-branded outlets or alternative distribution channels established by the franchisor. Prospective franchisees should carefully consider this aspect and evaluate the potential impact of such competition on their investment. It is important to conduct thorough market research and assess the competitive landscape in the chosen area before committing to a Checkers franchise.
In summary, while Checkers offers a franchise opportunity, it retains considerable control over market expansion and distribution channels. This structure allows Checkers to pursue various business strategies, but it also places a degree of competitive risk on individual franchisees. Potential franchisees should fully understand these terms and assess their comfort level with the franchisor's retained rights before investing in a Checkers franchise.