Does the Checkers franchise agreement specify that the franchisee must pay all actual, consequential, special, and incidental damages if the agreement is terminated due to the franchisee's default?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ment (except as provided in Section 18.03) or to insist upon exact compliance by the other with its obligations hereunder; any waiver, forbearance, delay, failure or omission by us to exercise any right, whether of the same, similar or different nature, with respect to other Restaurants; or the acceptance by us of any payments due from you after any breach of this Agreement.
18.03 Exercise of Rights. The rights of Franchisor and Franchisee hereunder are cumulative and no exercise or enforcement by Franchisor or Franchisee of any right or remedy hereunder shall preclude the exercise or enforcement by Franchisor or Franchisee of any other right or remedy hereunder which Franchisor or Franchisee is entitled to enforce by law. If Franchisee commits any act of default under this Agreement for which Franchisor exercises its right to terminate this Agreement, Franchisee shall pay to Franchisor all actual, consequential, special and incidental damages Franchisor incurs as a result of the premature termination of this Agreement regardless of whether or not such damages are reasonably foreseeable. Franchisee acknowledges and agrees that the proximate cause of such damages sustained by Franchisor is Franchisee's act of default and not Franchisor's exercise of its right to terminate. Notwithstanding the foregoing, and except as otherwise prohibited or limited by applicable law, any failure, neglect, or delay of a party to assert any breach or violation of any legal or equitable right
arising from or in connection with this Agreement shall constitute a waiver of such right and shall preclude the exercise or enforcement of any legal or equitable remedy arising therefrom, unless written notice specifying such breach or violation is provided to the other party within twelve (12) months after the later of: (a) the date of such breach or violation; or (b) the date of discovery of the facts (or the date the facts could have been discovered, using reasonable diligence) giving rise to such breach or violation.
18.04 Injunctive Relief. We, as an alternative or supplement to arbitration pursuant to Section 18.05, may obtain in any court of competent jurisdiction any injunctive relief, including temporary restraining orders and preliminary injunctions, against conduct or threatened conduct for which no adequate remedy at law may be available or which may cause us irreparable harm. We may seek and obtain such injunctive relief, without bond, but upon notice as required under applicable rules, in addition to such further and other relief as may be available at equity or law, and your sole remedy in the event of the entry of such injunction, shall be its dissolution, if warranted, upon hearing duly had (all claims for damages by reason of the wrongful issuance of any such injunction being expressly waived hereby). You and each of your Owners acknowledge that any violation of Section 7, 13.02(l), 16.02 or 16.03 would result in irreparable injury to us for which no adequate remedy at law may be available. Accordingly, you and each of your Owners consent and agree to the issuance of an injunction prohibiting any conduct in violation of any of those sections and agrees that the existence of any claim you or any of your Owners may have against us, whether or not arising from this Agreement, shall not constitute a defense to the enforcement of any of those Sections.
18.05 Arbitration. Subject to Section 18.04, all controversies, disputes, or claims between us or any of our Affiliates, or any of their respective officers, directors, agents, employees and attorneys and you, any of your Affiliates or any of their respective Owners, arising from or relating, directly or indirectly, to (i) this Agreement or any other agreement between you and us or your or our respective Affiliates, (ii) the scope and validity of any provision of this Agreement or any other agreement between you and us or any provision of such agreements (including the validity of the arbitration obligations under this Section 18.05, which the parties acknowledge is to be determined by an arbitrator and not a court);
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, if a franchisee defaults on the franchise agreement and Checkers terminates the agreement, the franchisee is responsible for paying all actual, consequential, special, and incidental damages that Checkers incurs due to the early termination. The agreement specifies that these damages are the result of the franchisee's default, regardless of foreseeability.
However, the Checkers franchise agreement also includes a section on Early Termination Damages. If Checkers terminates the agreement due to the franchisee's breach, the franchisee must pay an amount equal to the average monthly royalty fees and advertising contributions owed for the past 24 months, multiplied by the number of months remaining in the term. If the restaurant has not been open for 24 months, the calculation will use the average monthly royalties and advertising contributions owed for the number of months the restaurant operated, multiplied by the remaining months in the term. These Early Termination Damages are considered liquidated damages and not a penalty.
The imposition of Early Termination Damages is at Checkers's sole option. Checkers is not required to impose these damages and may instead pursue other remedies available under the agreement, including actual damages if they can be determined. All remedies are cumulative and non-exclusive. Additionally, the agreement states that the franchisee waives the right to recover consequential, special, and incidental damages for any claim arising from or relating to the agreement, except for the obligation to indemnify Checkers for third-party claims, obligations regarding the use of marks, and confidential information.