Does the Checkers Development Rights Agreement allow for restaurants that are part of another franchise system to operate within the Development Area?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
this Agreement. At the time you sign this Agreement, you must pay us a development fee in the amount set forth in Exhibit A. The development fee is non-refundable and shall be deemed earned when paid.
2.02 Development Rights. During the Term and provided you and your Affiliates are in compliance with this Agreement and all other agreements with us or any of our Affiliates (including Franchise Agreements signed pursuant to this Agreement), we will: (a) grant to you,
in accordance with Section 3, at least that cumulative number of franchises for Restaurants set forth in Exhibit A, all of which are to be located within the geographical area described in Exhibit A (the "Development Area"); and (b) not operate (directly or through an Affiliate), nor grant the right to operate, any "Checkers" or "Rally's"-branded restaurants located within the Development Area, except for: (1) franchises granted pursuant to this Agreement; (2) "Checkers" and "Rally's"-branded restaurants open (or under commitment to open) as of the Effective Date; (3) "Checkers"-branded restaurants, "Rally's"-branded restaurants or other restaurants using any part or all of the System and/or Marks at any sites, locations or venues in the Development Area that independently generate customer traffic flow separate from the general customer traffic flow of the surrounding area, or by their nature are not tied to a particular physical location, including, without limitation: military bases, transportationrelated venues (e.g., airports, train or bus stations, marinas, travel plazas or toll roads), sports or entertainment venues (e.g., stadiums, arenas, concert halls), major industrial or office complexes, hotels, educational facilities (e.g., school, college, and university campuses), casinos, hospitals and related rehabilitation or healthcare facilities, governmental institutions, amusement or recreational facilities (e.g., theme parks, outdoor municipal parks, zoos, or museums), grocery stores or departments stores, mobile-based channels of distribution (e.g., roving food trucks), any co-branding locations or business endeavors where a restaurant's operations are inextricably associated with, or such operations are contained within or sharin
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the Development Rights Agreement does allow for restaurants that are part of another franchise system or chain to operate within the Development Area under specific conditions. Checkers retains the right to purchase restaurants that are part of another franchise system or chain, and these restaurants can continue to operate under their existing trademarks and operating systems or be converted to Checkers or Rally's-branded restaurants. This provides Checkers with flexibility in expanding its presence within a Development Area by acquiring existing businesses rather than solely relying on new franchise locations.
This clause in the Development Rights Agreement allows Checkers to strategically incorporate existing restaurant locations into its network, potentially accelerating market penetration and reducing the time and costs associated with building new restaurants from the ground up. For a prospective franchisee, this could mean encountering established restaurants from other brands within their Development Area that may or may not be converted to Checkers locations.
However, it's important to note that Checkers retains the discretion to decide whether to convert these acquired restaurants to Checkers or Rally's-branded locations or allow them to continue operating under their original branding. This decision would likely depend on factors such as the existing restaurant's performance, brand recognition, and alignment with Checkers's overall market strategy. The franchisee should inquire about Checkers's specific plans for any such acquisitions within their Development Area to understand the potential impact on their franchise operations.