What is the effect of the Illinois Rider on the payment provisions in Section 6.01 of the Checkers Franchise Agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- Initial Franchise Fee. Section 6.01 of the Agreement shall be amended by adding the following:
Despite the payment provisions above, Franchisor will defer collection of all initial fees owed by Franchisee to Franchisor under this Agreement until Franchisor has completed all of its pre-opening obligations under this Agreement and the Franchisee has commenced doing business. This deferral requirement has been imposed by the Illinois Attorney General's Office based on the Franchisor's audited financial statements.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the Illinois Rider modifies Section 6.01 of the Franchise Agreement regarding the initial franchise fee. Specifically, it addresses the timing of when Checkers can collect initial fees from franchisees in Illinois.
The Illinois Rider stipulates that Checkers will defer collecting initial fees from the franchisee until Checkers has fulfilled all its pre-opening obligations outlined in the Franchise Agreement. Furthermore, the franchisee must have commenced business operations before Checkers can collect these fees. This deferral is a requirement imposed by the Illinois Attorney General's Office, based on a review of Checkers's audited financial statements.
This modification provides a benefit to Checkers franchisees in Illinois, as it reduces their upfront financial burden. Franchisees are not required to pay the initial franchise fee until Checkers has completed its pre-opening responsibilities and the franchisee has started operating the business. This arrangement potentially lowers the financial risk for new franchisees and ensures that Checkers is invested in supporting the franchisee's launch before receiving the initial fee.