What are the franchisee's obligations upon termination or nonrenewal of their Checkers franchise agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
| Subject to state law, Florida law applies generally, except for applicable franchise laws of other states (see Exhibits I and J). |
| PROVISION | SECTION IN FRANCHISE OR OTHER AGREEMENT | SUMMARY | |
|---|---|---|---|
| d. | Termination by franchisee | Not applicable | Not applicable |
| e. | Termination by franchisor without cause | Not applicable | Not applicable |
| f. | Termination by franchisor with cause | Section 14 | We can terminate only for specified causes. |
| g. | "Cause" defined: defaults which can be cured | Section 14.02 | You have 24 hours to cure health violation, 10 days to cure failure to pay us and 30 days to cure any other breaches of the Franchise Agreement. |
| h. | "Cause" defined non-curable defaults | Sections 14.01 and 14.02 | Includes insolvency, failure to open or abandonment of business, cancellation of lease, misrepresentations, conviction of a felony, unauthorized transfer, unauthorized disclosure of confidential information, understatement of the Franchised Restaurant's Net Sales 3 times or more during the Term or by more than 5% on any one occasion, and repeated breaches of the Franchise Agreement. |
| i. | Franchisee's obligations on termination/ nonrenewal | Section 16 | Pay amounts owed, discontinue use of Marks and confidential information; return manuals; at our option, sell or lease the Restaurant to us or our designee. |
| j. | Assignment of contract by franchisor | Section 18.08 | No restriction on our right to assign. |
| k. | "Transfer" by franchisee defined | Section 1.04 | Includes transfer of agreement, sale of business and ownership changes. |
| l. | Franchisor's approval of transfer by franchisee | Sections 13.01 and 13.02 | We have the right to approve all transfers but will not unreasonably withhold approval if certain conditions satisfied. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 66–71)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, upon termination or nonrenewal of the franchise agreement, a franchisee has specific obligations as outlined in Section 16 of the agreement. These obligations include paying all outstanding amounts owed to Checkers. Additionally, the franchisee must immediately cease using Checkers's trademarks and confidential information, which is a standard requirement across most franchise systems to protect the brand's intellectual property. The franchisee is also required to return any operations manuals or other proprietary materials provided by Checkers.
Furthermore, Checkers has the option to require the franchisee to either sell or lease the restaurant location to Checkers or to a party designated by Checkers. This provision allows Checkers to maintain control over the location and ensure continued operation of a Checkers restaurant at that site, if desired.
In addition to these obligations, franchisees are subject to a non-compete covenant. This prevents them from engaging in any competing business for a period of 2 years. This restriction applies to the physical premises of the former Checkers restaurant, as well as within a 3-mile radius of that location or any other Checkers or Rally's Restaurant. This non-compete agreement is designed to protect Checkers's market share and brand presence in the area.