What is the definition of the 'Protected Area' granted to Checkers franchisees?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
nchise Agreement does not provide you with any options, rights of first refusal or similar rights to acquire additional franchises.
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands we control. However, you may receive a limited protected area, as follows: we will not operate (directly or through an affiliate), or grant to a third party the right to operate, any Checkers Restaurant or Rally's Restaurant located within the particular geographic area identified in Exhibit B attached to the Franchise Agreement (the "Protected Area"). The Protected Area, as defined by us, will 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 20,000 residents if your Franchised Restaurant is located in an urban area. We do not provide a Protected Area to franchisees that operate Restaurants from Non-Traditional Sites.
Except for the rights we expressly grant you under the Franchise Agreement, we and all of our affiliates (and our respective successors and assigns, by purchase, merger, consolidation or otherwise) retain all of our rights and discretion with respect to the Marks, the System, Restaurants anywhere in the world, and the right to engage in any business whatsoever (without compensation to you), including the rights to:
(a) establish and operate, and grant to others the right to operate,
Restaurants at locations outside the Protected Area, on terms and conditions we deem appropriate;
- (b) establish and operate, and grant to others the right to operate, Restaurants, or other restaurants using any part or all of the System and/or Marks, that are located at or operated from Non-Traditional Sites within or outside the Protected Area;
Source: Item 12 — TERRITORY (FDD pages 57–61)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, a franchisee may receive a limited protected area. Checkers will not operate or grant to a third party the right to operate a Checkers or Rally's Restaurant within the Protected Area. The Protected Area is defined by Checkers 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. Franchisees operating from Non-Traditional Sites do not receive a Protected Area.
Checkers retains the right to modify the Protected Area during the term of the agreement by providing notice to the franchisee. The modified Protected Area will encompass a geographic area immediately surrounding the premises consisting of a population of 20,000 residents. Checkers has no obligation to expand or modify the Protected Area if the population within it decreases to less than 20,000 residents. Any modifications to the Protected Area will be reflected in an amendment to Exhibit B of the Franchise Agreement.
It is important to note that the continuation of exclusivity in the Protected Area is not dependent on achieving a certain sales volume or market penetration. However, Checkers retains significant rights, including the right to establish restaurants outside the Protected Area and to sell products through alternative channels of distribution, such as the internet or supermarkets, even within the franchisee's general market area. Additionally, Checkers may operate or franchise other restaurant concepts under different trademarks, potentially competing with the franchisee's Checkers restaurant.