What is the consequence if any of the Checkers franchisee's Owners or Affiliates are in breach of any Franchise Agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
f the Development Rights;
- (c) if you or any of your Owners or Affiliates make any material misstatement or omission in the application for the development rights conferred by this Agreement or in any other information provided to us, or are convicted of, or plead no contest to, a felony or other crime or offense that we reasonably believe may adversely affect the goodwill associated with the Marks;
- (d) if you or any of your Owners or Affiliates make any unauthorized use or disclosure of the Confidential Information;
- (e) if you or any of your Owners or Affiliates fail to comply with any other provision of this Agreement and do not correct such failure within 30 days after written notice of such failure to comply is delivered to you;
- (f) if you or any of your Owners or Affiliates are in breach of any Franchise Agreement or other agreement with us or our Affiliates such that we or our Affiliates have the right to terminate the Franchise Agreement or such other agreement, whether or not we or they elect to exercise such right of termination; or
- (g) if we determine that any applicable federal or state legislation, regulation or rule, which is enacted, promulgated or amended after the Effective Date, may have an adverse effect on our rights, remedies or discretion in franchising Restaurants.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, if a Checkers franchisee, their owners, or affiliates breach any Franchise Agreement or other agreement with Checkers or its affiliates, Checkers or its affiliates have the right to terminate the Franchise Agreement or other agreements. This right to terminate exists whether or not Checkers or its affiliates actually choose to exercise that right.
Furthermore, any default or breach by the franchisee (or their owners) or their affiliate (or their owner's affiliates) of any other agreement with Checkers or its affiliate will be considered an event of default under the Franchise Agreement. Conversely, any default or breach by the franchisee (or their owners) of the Franchise Agreement will be considered an event of default or breach by the franchisee under any and all agreements between Checkers or its affiliate and the franchisee (or any of their owners) or their affiliate (or any of their owner's affiliates).
If the nature of the default under any other agreement would have been considered an event of default under the Franchise Agreement, then Checkers or its affiliate has the right to terminate all other agreements between Checkers or its affiliate and the franchisee (or any of their owners) or their affiliate (or any of their owner's affiliates) in accordance with the termination provisions of the Franchise Agreement. This is known as cross-default.
This cross-default provision is a significant point for prospective Checkers franchisees. It means that a breach in one agreement can trigger a default and potential termination of all agreements with Checkers and its affiliates, creating a potentially wide-ranging impact on the franchisee's business relationship with the company.