If Checkers withholds an action, can they do so based on their judgment of what is in their best interests?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
2.04 Reservation of Rights. Except as expressly provided in this Agreement, we and all of our Affiliates (and our respective successors and assigns, by purchase, merger, consolidation or otherwise) retain all of our rights and discretion with respect to the Marks, the System and Restaurants anywhere in the world, and the right to engage in any business whatsoever, including the right to: (a) operate, and grant to others the right to operate, "Checkers" and "Rally's"-branded restaurants at such locations and on such terms and conditions as we deem appropriate; (b) sell any products or services under the Marks or under any other trademarks, service marks or trade dress, through alternative channels of distribution, including without limitation, the internet or similar electronic media and supermarkets; (c) operate, and grant to others the right to operate, restaurants identified by trademarks, service marks or trade dress, other than the Marks, (including the [INSERT
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers retains rights and discretion regarding the Marks, the System, and Restaurants. Checkers has the right to operate and grant others the right to operate Checkers and Rally's-branded restaurants at locations and on terms they deem appropriate. They can also sell products or services under the Marks through alternative channels of distribution, such as the internet or supermarkets. Furthermore, Checkers can operate or franchise restaurants with different trademarks than the Checkers/Rally's brand under terms they consider appropriate. They also have the right to be acquired by a business providing similar products or services, even if that business operates competitive businesses in the franchisee's development area.
This reservation of rights means that Checkers has broad authority to make decisions that could impact a franchisee's business. For example, Checkers could open a new corporate-owned store near a franchise location or sell Checkers-branded products through a supermarket in the franchisee's territory. While these actions could potentially affect the franchisee's revenue, Checkers retains the discretion to pursue these opportunities if they believe it is in the company's best interest.
Prospective franchisees should carefully consider the implications of these reserved rights. While Checkers' decisions may be intended to benefit the overall brand, they could also create competition or market saturation in a franchisee's area. It is important to discuss these potential scenarios with Checkers during the due diligence process to understand how they balance the interests of the company with the success of individual franchisees.