Does a Checkers Development Agreement grant an exclusive territory?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
The Development Agreement grants you the right to develop an agreed upon number of Checkers Restaurants or Rally's Restaurants within a geographical area described in Exhibit A to the Development Agreement (the "Development Area"). The size of the Development Area will depend on the number of Checkers Restaurants or Rally's Restaurants suitable for the Development Area, as mutually determined in light of factors such as population density and the residential or commercial character of the area. The number of Checkers Restaurants or Rally's Restaurants and the dates they are to be open and operating, including development schedules for such restaurants, will be set out in Exhibit A to the Development Agreement (the "Development Schedule").
You will not receive an exclusive territory in the Development Area. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. During the term of the Development Agreement, as long as you and your affiliates are in compliance with the agreement and all other agreements with us or any of our affiliates (including Franchise Agreements signed under the Development Agreement), we will: (a) grant to you, in accordance with Section 3 of the Development Agreement, at least that cumulative number of franchises for Checkers Restaurants or Rally's Restaurants set forth in Exhibit A to the Development Agreement, all of which are to be located within the Development Area (the locations of which we will approve in accordance with our then current criteria for selection of a Checkers Restaurant or Rally's Restaurant site); and (b) not operate (directly or through an affiliate), nor grant the right to operate, any Checkers Restaurants or Rally's Restaurants located within the Development Area, except for: (1) franchises granted pursuant to the Development Agreement; (2) Restaurants open (or under commitment to open) as of the date of the Development Agreement; (3) Checkers Restaurants, Rally's Restaurants or other restaurants using any part or all of the System and/or Marks at Non-Traditional Sites; and (4) restaurants that we purchase (or as to which we purchase the rights as franchisor) that are part of another franchise system or chain, regardless whether such restaurants are converted to operations as Checkers Restaurants or Rally's Restaurants using any of the
Source: Item 12 — TERRITORY (FDD pages 57–61)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, a Development Agreement with Checkers does not grant an exclusive territory. While the agreement does grant the developer the right to develop an agreed-upon number of Checkers or Rally's restaurants within a defined geographical area, Checkers retains the right to allow other franchisees, company-owned outlets, or other distribution channels to compete within that same area. This means a developer could face competition from other Checkers or Rally's restaurants, or even other competitive brands that Checkers controls, within their designated Development Area.
However, Checkers does commit to granting the developer at least the cumulative number of franchises for Checkers or Rally's restaurants as outlined in Exhibit A of the Development Agreement, provided the developer remains in compliance with all agreements. These restaurants must be located within the Development Area, subject to Checkers's site approval criteria. Checkers also agrees not to operate or grant the right to operate any Checkers or Rally's restaurants within the Development Area, except for franchises granted under the Development Agreement, restaurants already open or committed to open, restaurants at Non-Traditional Sites, and restaurants acquired from other franchise systems.
This lack of an exclusive territory means that a Checkers developer needs to carefully evaluate the market potential of their Development Area, considering potential competition from various sources. While Checkers commits to a development schedule and number of franchises, the absence of territorial exclusivity introduces a level of risk that prospective developers should carefully consider. It is important to note that Checkers retains significant rights regarding the Marks, the System, and Restaurants, including the right to operate and grant franchises to others, sell products through alternative channels, and even be acquired by a business that operates competitive businesses in the Development Area.