If Checkers prevails in a legal proceeding against a franchisee, what costs is the franchisee obligated to reimburse?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
10.04 Costs of Enforcement. If we file a claim in a judicial or arbitration proceeding for amounts you or any of your Owners owe us or any of our Affiliates, or if we enforce this Agreement in a judicial or arbitration proceeding, and we prevail in any such proceeding, you agree to reimburse us for all of our costs and expenses, including reasonable accounting, paralegal, expert witness and attorneys' fees. If we are required to engage legal counsel in connection with your failure to comply with this Agreement, you must reimburse us for any attorneys' fees, costs and expenses we incur.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, if Checkers files a claim against a franchisee or their owners for amounts owed or to enforce the Franchise Agreement, and Checkers prevails, the franchisee must reimburse Checkers for all costs and expenses. These costs include reasonable accounting, paralegal, expert witness, and attorneys' fees.
This provision means that a Checkers franchisee could face significant financial burdens beyond the original dispute if they lose in court or arbitration. The franchisee's financial responsibility extends to covering Checkers' legal and professional expenses, which can quickly escalate depending on the complexity and duration of the proceedings. This creates a considerable financial risk for franchisees who may find themselves in a legal disagreement with Checkers.
Many franchise agreements contain similar clauses requiring the franchisee to cover the franchisor's legal costs if the franchisor prevails. Prospective franchisees should carefully evaluate this potential financial exposure and factor it into their risk assessment before investing in a Checkers franchise. Understanding the full scope of potential liabilities is crucial for making an informed decision.