What constitutes a 'cross-default' under the Checkers franchise agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.03 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 Agree
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a 'cross-default' occurs when a franchisee (or their owners) or their affiliates (or their owner's affiliates) breaches any agreement they have with Checkers or its affiliates. This breach is then considered a default under the specific Franchise Agreement in question.
In simpler terms, if a Checkers franchisee has multiple agreements with the franchisor (for example, multiple franchise agreements or a loan agreement), a default in any one of those agreements can trigger a default in all of them. This is a significant point for prospective franchisees to consider, especially if they plan to expand and enter into multiple agreements with Checkers.
The cross-default provision is a fairly standard clause in franchise agreements. It protects Checkers by allowing them to take action across all agreements if a franchisee is not meeting their obligations under one agreement. This can include termination of all franchise agreements, even if the other restaurants are performing adequately. Franchisees should be aware of this interconnectedness and ensure compliance across all their dealings with Checkers to avoid triggering a cross-default.