What is the consequence if any of the Checkers franchisee's Owners or Affiliates are in breach of any other agreement with Checkers?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
8.03 Cross-Default. Any default or breach by you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates) of any other agreement with us or our Affiliate will be considered an event of default under this Agreement, and any default or breach by you (or any of your Owners) of this Agreement will be considered an event of default or breach by you under any and all agreements between us or our Affiliate and you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates). If the nature of the default under any other agreement would have been considered an event of default under this Agreement, then we or our Affiliate will have the right to terminate all other agreements between us or our Affiliate and you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates) in accordance with the termination provisions of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a breach of any agreement with Checkers or its affiliates by a franchisee, their owners, or their affiliates can trigger significant consequences. Specifically, such a breach is considered an event of default under the franchise agreement. This is known as a cross-default provision.
This cross-default provision means that if the franchisee or related parties fail to meet their obligations in one agreement with Checkers, Checkers can treat it as a default across all agreements. This gives Checkers the right to terminate all other agreements between Checkers or its affiliates and the franchisee, their owners, or their affiliates. The termination would be carried out according to the termination provisions outlined in the franchise agreement.
For a prospective Checkers franchisee, this clause highlights the importance of ensuring all parties involved (including owners and affiliates) fully comply with all agreements with Checkers. Failure to do so could jeopardize not only the specific agreement in question but also the entire franchise operation. Franchisees should carefully review all agreements and ensure they understand the implications of any potential breach.