If a Checkers franchisee signs a Franchise Agreement in connection with a Development Agreement, how does this affect the initial franchise fee?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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Development Agreement
If we agree to grant you development rights, you and we will enter into a Development Agreement, which requires you to pay a development fee of $10,000 per restaurant to be developed. The number of restaurants to be developed pursuant to a Development Agreement varies depending upon a variety of factors, including (1) existing population and anticipated population growth within the Development Area; (2) competition within the Development Area; and (3) the number of Checkers Restaurants or Rally's Restaurants we estimate can be developed within the Development Area.
Under the Development Agreement, you are required to pay the then-current standard initial franchise fee for each Restaurant you are required to develop under a Development Agreement; however, $10,000 of the development fee is credited to the initial franchise fee payable for each Restaurant you are required to open under the Development Agreement until the development fee is credited in full. The development fee is not refundable, in whole or in part, except if we terminate the Development Agreement as a result of adverse franchise legislation. In this event, we will r
Source: Item 5 — INITIAL FEES (FDD pages 17–21)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, signing a Franchise Agreement in connection with a Development Agreement affects the initial franchise fee. The standard initial franchise fee for a Checkers restaurant is $30,000. When a franchisee enters into a Development Agreement with Checkers, they must pay a development fee of $10,000 per restaurant to be developed. The number of restaurants to be developed is based on factors such as population and competition within the designated Development Area.
Under the Development Agreement, the franchisee is required to pay the then-current standard initial franchise fee for each restaurant they are obligated to develop. However, $10,000 of the development fee is credited towards the initial franchise fee payable for each restaurant required to be opened under the Development Agreement. This credit continues until the entire development fee has been credited.
It is important to note that the development fee is generally non-refundable, except in the specific case where Checkers terminates the Development Agreement due to adverse franchise legislation. In such an event, Checkers will refund the uncredited portion of the development fee. This arrangement effectively reduces the upfront initial franchise fee by the amount already paid towards the development fee, easing the financial burden on franchisees committed to developing multiple locations.