Does the Checkers franchise agreement specify that the franchisee must pay all consequential damages if the agreement is terminated due to the franchisee's default?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ach 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.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 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. This obligation applies regardless of whether these damages were reasonably foreseeable.
The agreement specifies that the franchisee's act of default, rather than Checkers' decision to terminate the agreement, is the direct cause of these damages. This clause emphasizes the franchisee's responsibility for any financial repercussions resulting from their failure to uphold the agreement.
In addition to the above, Checkers can choose to impose Early Termination Damages, calculated based on the average monthly royalty fees and advertising contributions over the past 24 months, multiplied by the remaining months in the franchise term. This serves as a pre-determined estimate of damages, but Checkers can instead pursue other remedies, including actual damages if they can be determined. All remedies available to Checkers are cumulative and non-exclusive.