Does the Designated Area for a Checkers franchise confer any territorial exclusivity or protection?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Selection of Premises. If you have suggested a location for the Franchised Restaurant which we have approved before or concurrently with the execution of this Agreement, the Premises will be set forth on Exhibit B. If we and you have not agreed upon an approved location for the Franchised Restaurant before signing this Agreement, then you are responsible for selecting the site for the Franchised Restaurant within the geographic area described in Exhibit B ("Designated Area"). The Designated Area is delineated for the sole purpose of site selection and does not confer any territorial exclusivity or protection. You agree to obtain our written approval of the Franchised Restaurant's proposed site before signing any lease, sublease, or other document for the site. Within one hundred eighty (180) days after the Effective Date, you must locate and submit for our approval a site acceptable to us within the Designated Area for the Franchised Restaurant. We will use reasonable efforts to help analyze your market area, to help determine site feasibility, and to assist in designating the location, although we will not conduct site selection activities for you. We will not unreasonably withhold our approval of a site that meets our criteria for demographic characteristics; traffic patterns; parking; character of neighborhood; competition from, proximity to, and nature of other businesses; other commercial characteristics; and the proposed site's size, appearance, and other physical characteristics.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the Designated Area is solely for site selection and does not provide any territorial exclusivity or protection to the franchisee. The franchisee is responsible for selecting a site within the Designated Area, as described in Exhibit B of the Franchise Agreement. This site is subject to Checkers's approval before the franchisee can sign any lease or sublease.
Within 180 days of the Effective Date of the franchise agreement, the franchisee must find and submit a site within the Designated Area that meets Checkers's approval. Checkers will offer reasonable assistance in analyzing the market area and determining site feasibility, but the franchisee is ultimately responsible for site selection. Checkers will not unreasonably withhold approval of a site that meets their criteria for demographic characteristics, traffic patterns, parking, neighborhood character, competition, and the site's physical characteristics.
This lack of exclusivity means that Checkers can establish other franchises or operate its own restaurants, including Checkers or Rally's-branded locations, in the same general area as the franchisee's location. This is a significant risk for franchisees as it introduces the possibility of direct competition from the franchisor or other franchisees, potentially impacting the profitability of their restaurant.