What is the dependency between an Area Franchisee's default and Checkers' right to terminate the Checkers franchise agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to our right to terminate pursuant to other provisions of this Agreement or under applicable law, we may terminate this Agreement, effective upon delivery of notice of termination to you:
- (a) if you fail to meet any part of the Development Schedule;
- (b) if you or any of your Owners or Affiliates make an unauthorized transfer of 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.
We have no obligation whatsoever to refund any portion of the development fee upon any termination, except that we will refund the unapplied portion of the development fee paid pursuant to Section 2.01 in the event of a termination pursuant to Section 8.02(g).
8.03 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 Agreement will be considered an event of default or breach by you under any and all agreements between us or our Affiliate and you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates). If the nature of the default under any other agreement would have been considered an event of default under this Agreement, then we or our Affiliate will have the right to terminate all other agreements between us or our Affiliate and you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates) in accordance with the termination provisions of this Agreement.
9. EFFECT OF TERMINATION AND EXPIRATION.
9.01 Continuing Obligations.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers has the right to terminate the Area Franchise Agreement if the Area Franchisee defaults. Specifically, if the Area Franchisee, their Owners, or Affiliates fail to comply with any provision of the agreement and do not correct the failure within 30 days after receiving written notice, Checkers can terminate the agreement.
Additionally, a default or breach by the Area Franchisee (or their Owners) or their Affiliate of any other agreement with Checkers or its Affiliate will be considered an event of default under the Area Franchise Agreement. This is known as a cross-default provision. If such a default occurs that would have been considered an event of default under the Area Franchise Agreement, Checkers or its Affiliate has the right to terminate all other agreements between them and the Area Franchisee (or their Owners) or their Affiliate.
Furthermore, Checkers can terminate the agreement if any unauthorized use or disclosure of confidential information occurs by the Area Franchisee, their Owners, or Affiliates. Checkers can also terminate the agreement if any federal or state legislation, regulation, or rule enacted, promulgated, or amended after the effective date of the agreement may have an adverse effect on Checkers' rights, remedies, or discretion in franchising restaurants.
It is important to note that if Checkers exercises its right to terminate the agreement due to an act of default by the Area Franchisee, the Area Franchisee must pay Checkers all actual, consequential, special, and incidental damages Checkers incurs as a result of the termination, regardless of whether such damages are reasonably foreseeable. The Area Franchisee acknowledges that their act of default is the proximate cause of such damages, not Checkers' exercise of its right to terminate.