Does the Checkers franchise agreement specify that the franchisee must pay all 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.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkers 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. This obligation exists regardless of whether these damages were reasonably foreseeable at the time of the default. The agreement specifies that the franchisee's act of default is the direct cause of these damages, not Checkers' decision to terminate the agreement. This clause aims to ensure that Checkers is fully compensated for losses resulting from the franchisee's failure to uphold their contractual obligations.
In addition to the above damages, Checkers may also impose Early Termination Damages. These damages are calculated based on the average monthly royalty fees and advertising contributions owed by the franchisee over the past 24 months, multiplied by the number of months remaining in the franchise term. If the restaurant has been operating for less than 24 months, the calculation uses the average monthly royalties and advertising contributions owed for the actual number of months the restaurant operated. These Early Termination Damages are considered liquidated damages and are not construed as a penalty. They represent a reasonable estimate of the damages Checkers would incur due to the early termination of the agreement.
However, the imposition of Early Termination Damages is at Checkers' sole option. Checkers is not obligated to impose these damages and may instead pursue other remedies available under the franchise agreement, in equity, or at law, including actual damages if they can be ascertained. All such remedies are cumulative and non-exclusive, meaning Checkers can pursue multiple avenues of compensation simultaneously. Furthermore, all obligations under the agreement that are meant to survive termination will remain in effect until fully satisfied or naturally expired.