If a Checkers franchisee defaults on another agreement with Checkers, is that considered a default under the franchise agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
h us or our Affiliates such that we or our Affiliates have the right to terminate the Franchise Agreement or such other agreement, whether or not we or they elect to exercise such right of termination; or
- (g) if we determine that any applicable federal or state legislation, regulation or rule, which is enacted, promulgated or amended after the Effective Date, may have an adverse effect on our rights, remedies or discretion in franchising Restaurants.
We have no obligation whatsoever to refund any portion of the development fee upon any termination, except that we will refund the unapplied portion of the development fee paid pursuant to Section 2.01 in the event of a termination pursuant to Section 8.02(g).
8.03 Cross-Default. Any default or breach by you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates) of any other agreement with us or our Affiliate will be considered an event of default under this Agreement, and any default or breach by you (or any of your Owners) of this Agreement will be considered an event of default or breach by you under any and all agreements between us or our Affiliate and you (or any of your Owners) or your Affiliate (or any of your Owner's Affiliates).
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a default by a franchisee (or their owners) on any other agreement with Checkers or its affiliates constitutes an event of default under the franchise agreement. This is known as a cross-default provision. This also applies if the franchisee's affiliate defaults on an agreement with Checkers or its affiliate.
This means that if a Checkers franchisee has multiple agreements with the company, such as a development agreement for multiple locations or a separate supply agreement, a breach of any of those agreements can trigger a default under the primary franchise agreement. Checkers has the right to terminate all agreements between them and the franchisee based on the terms in the franchise agreement.
This cross-default provision is a significant point for prospective franchisees to consider. It broadens the scope of what can be considered a default, potentially increasing the risk of losing the franchise. Franchisees should carefully review all agreements with Checkers and ensure they can comply with all terms to avoid triggering a cross-default. Franchisees should also be aware that Checkers is not obligated to refund any portion of the development fee upon termination.