Does a Checkers franchisee operating at a Non-Traditional Site receive any territorial protection or exclusivity under the Addendum or Franchise Agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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- No Exclusivity or Protected Territory.
Franchisee acknowledges and agrees that it will not receive any territorial protection or exclusivity under this Addendum or the Franchise Agreement when operating the Restaurant at a Non-Traditional Site and that Franchisor and its Affiliates retain all rights and discretion with respect to the Marks, the System, the sale of products and services similar or dissimilar to those offered by "Checkers" and "Rally's"-branded restaurants, and the operation or franchising of "Checkers" and "Rally's"-branded restaurants anywhere located or to be located, and may engage in any business activities whatsoever, whenever and wherever they desire during the Term.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, franchisees operating at Non-Traditional Sites do not receive territorial protection or exclusivity. The agreement explicitly states that Checkers and its affiliates retain all rights and discretion regarding the brand, system, and sale of similar products or services. This includes the operation or franchising of Checkers-branded restaurants anywhere, regardless of the franchisee's location.
This lack of exclusivity means that Checkers can establish other locations, including those directly competing with the franchisee's Non-Traditional Site, without any obligation or liability to the franchisee. Checkers also reserves the right to sell products and services through alternative channels of distribution, such as the internet or supermarkets, which could further impact the franchisee's business.
For a prospective Checkers franchisee considering a Non-Traditional Site, this is a significant risk. The franchisee's success is highly dependent on the specific location's traffic and customer base, as defined in the FDD, and Checkers retains the right to establish competing locations or alternative distribution channels that could draw away customers. It is important for potential franchisees to carefully evaluate the specific Non-Traditional Site and its potential for competition before investing.