What is covered in Section 2.02 of the Checkers Franchise Agreement regarding protected areas and reservations of rights?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
2.02 Your Protected Area. During the Term, and subject to the following Section 2.03, we will not operate (directly or through an Affiliate), or grant to a third party the right to operate, any "Checkers" or "Rally's"-branded restaurant located
within a particular geographic area (the "Protected Area"). The Protected Area, as defined by us, shall be the lesser of: (i) a one (1) mile radius from the center of the Premises if your Franchised Restaurant is located in a suburban or rural area or (ii) an area immediately surrounding the Premises that encompasses a population of twenty thousand (20,000) residents if your Franchised Restaurant is located in an urban area. Notwithstanding the foregoing, we may, from time to time during the Term, at our sole option and upon providing notice to you, reduce or otherwise modify the size and/or boundaries of the Protected Area to encompass a geographic area immediately surrounding the Premises consisting of thirty thousand (30,000) residents. If at any time during the Term the population in the Protected Area becomes less than thirty thousand (30,000) residents, we have no obligation to expand or modify the size and/or boundaries of the Protected Area to include a greater population. You and we agree that upon any modification to the size and/or boundaries 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.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkers Franchise Disclosure Document, Section 2.02 of the franchise agreement defines the franchisee's protected area. During the term of the agreement, Checkers will not operate or grant a third party the right to operate a Checkers or Rally's restaurant within the franchisee's protected area. The protected area is defined as the lesser of a one-mile radius from the center of the premises if the restaurant is in a suburban or rural area, or an area immediately surrounding the premises encompassing a population of 20,000 residents if the restaurant is in an urban area.
However, Checkers retains the right to modify the size and/or boundaries of the protected area, at its sole option, by providing notice to the franchisee. The modified protected area will encompass a geographic area immediately surrounding the premises consisting of 30,000 residents. If the population in the protected area decreases to less than 30,000 residents during the term, Checkers is not obligated to expand or modify the protected area. Any modifications to the size and/or boundaries of the protected area will be reflected in an amendment to the franchise agreement.
This means that a Checkers franchisee may have a protected area, but the size and boundaries can change during the term of the agreement. The franchisee should be aware that Checkers can reduce or modify the protected area, potentially allowing other Checkers or Rally's restaurants to operate closer to their location. The franchisee should also understand that Checkers has no obligation to expand the protected area if the population decreases below 30,000 residents. This lack of control over the protected area represents a risk for the franchisee, as the competitive landscape could change during the term of the agreement.