What is considered an exception to the abandonment rule for a Checkers franchise, regarding termination?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, if you are operating under a Development Agreement that terminates solely as a result of your failure to comply with the development schedule set forth in that agreement, then such termination of the Development Agreement will not result in a termination (constructive or otherwise) of this Agreement if you have
fully performed and otherwise been in compliance with all of your obligations under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkers Franchise Disclosure Document, an exception to termination occurs if a franchisee operates under a Development Agreement that is terminated solely due to failure to comply with the development schedule. This exception applies only if the franchisee has fully performed and complied with all other obligations under the Franchise Agreement. This means that even if a Checkers franchisee fails to meet the development schedule outlined in their Development Agreement, their individual Franchise Agreement will not be automatically terminated.
This provision protects Checkers franchisees who may face challenges in meeting the initial development timelines but are otherwise fulfilling their obligations. It ensures that the franchisee's entire investment isn't jeopardized solely due to development delays, provided they remain compliant with other aspects of the agreement. This exception offers a degree of security, allowing franchisees to focus on operating their existing restaurant without the immediate threat of termination due to development schedule setbacks.
However, it is crucial for prospective Checkers franchisees to understand the specific terms and conditions of both the Franchise Agreement and the Development Agreement. Franchisees should ensure they fully understand their obligations and the potential consequences of failing to meet the development schedule. While this clause provides an exception to termination, it does not excuse franchisees from adhering to the development schedule or from fulfilling all other obligations under the Franchise Agreement. Franchisees should seek legal counsel to fully understand their rights and obligations under these agreements.