Does the Checkers franchise agreement require Checkers to consider whether its decision is adverse to the franchisee's individual interests when exercising its rights?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
We and you acknowledge and agree that this Agreement (and the relationship of the parties which arises from this Agreement) grants us the right to make decisions, take actions and/or refrain from taking actions not inconsistent with your explicit rights and obligations hereunder that may affect favorably or adversely your interests. You understand and agree that we may operate and change the System and our business in any manner that is not expressly and specifically prohibited by this Agreement. Whenever we have reserved in this Agreement a right and/or discretion to take or withhold an action, or to grant or decline to grant you a right to take or withhold an action, except as otherwise expressly and specifically provided in this Agreement, we may make our decision or exercise our right and/or discretion on the basis of our judgment of what is in our best interests, including our judgment of what is in the best interests of our franchise network, at the time our decision is made, without regard to: (a) whether other reasonable or even arguably preferable alternative decisions or actions could have been made by us; (b) whether our decision or the action we take promotes our financial or other individual interest; (c) whether our decision or the action we take applies differently to you and one (1) or more other franchisees; or (d) whether our decision or the exercise of our rights is adverse to your individual interests or the individual interests of any other particular franchisees. We will have no liability to you for any such decision or exercise of our rights.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the franchise agreement does not require Checkers to consider whether its decisions are adverse to the franchisee's individual interests when exercising its rights. The agreement explicitly states that Checkers may make decisions based on its best interests, including the interests of its franchise network, without regard to whether such decisions are adverse to individual franchisees.
This means that Checkers has the right to operate and change its business system in any manner not expressly prohibited by the franchise agreement, and it can exercise its rights and discretion based on its own judgment. This includes decisions that may affect a franchisee's interests, even negatively. Checkers is not obligated to prioritize the individual interests of franchisees when making business decisions.
This aspect of the franchise agreement highlights the importance of a prospective franchisee understanding the power dynamic in the relationship. Checkers retains significant control over the system and its evolution, and franchisees must be prepared to adapt to changes that may not always align with their individual preferences or financial interests. Franchisees should carefully consider this when evaluating the franchise opportunity and seek legal counsel to fully understand the implications of this provision.