Is the Illinois Rider annexed to and part of the Checkers Development Agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the requirements of the Illinois Franchise Disclosure Act and the rules and regulations promulgated thereunder, the Development Agreement shall be modified by this document (the "Rider") as follows:
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- Background. Franchisor and Area Franchisee are parties to that certain Development Agreement dated , ("Agreement") that has been entered into concurrently with the entering of this Rider. This Rider is annexed to and forms part of the Agreement. This Rider is being executed because the Restaurant(s) to be developed by Area Franchisee pursuant to the Agreement will be located in the state of Illinois and/or because Area Franchisee is a resident of the state of Illinois. This Rider shall be of no force and effect unless the jurisdictional requirements of the Illinois Franchise Disclosure Act and any regulations thereunder are met independently without reference to this Rider.
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- Development Fee. Section 2.01 of the Agreement shall be amended by adding the following:
Despite the payment provisions above, Franchisor will defer collection of all initial fees owed by Area Franchisee to Franchisor under this Agreement until Franchisor has completed all of its pre-opening obligations under the first franchise agreement entered into pursuant to this Agreement and Area Franchisee has commenced doing business under the first franchise agreement. This deferral requirement has been imposed by the Illinois Attorney General's Office based on the Franchisor's financial condition.
- Arbitration; Jurisdiction and Venue. Sections 10.06 and 10.07 of the Agreement shall be amended by adding the following:
Despite the provision above, Franchisor and Area Franchisee agree that any action brought by one of them against the other must be instituted in a state or federal court located in the State of Illinois.
- Governing Law. Section 10.07 of the Agreement shall be amended further by adding the following:
Despite the provision above, Franchisor and Franchisee agree that Illinois law will govern this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the Illinois Rider is indeed annexed to and forms a part of the Development Agreement. This is explicitly stated in the Rider's background section. The Rider is executed because the restaurants to be developed under the agreement will be located in Illinois, or because the franchisee is an Illinois resident. However, the Rider is only effective if the Illinois Franchise Disclosure Act's jurisdictional requirements are met independently, without relying on the Rider itself. This means that Checkers must still comply with Illinois franchise laws regardless of the Rider's existence.
Several sections of the Development Agreement are modified by the Illinois Rider. Specifically, the Rider addresses the development fee, stipulating that Checkers will defer collecting initial fees until it completes its pre-opening obligations for the first franchise agreement and the franchisee has commenced business. This deferral is mandated by the Illinois Attorney General's Office due to Checkers' financial condition. Additionally, the Rider amends the sections regarding arbitration, jurisdiction, and governing law, requiring any legal actions to be instituted in Illinois courts and governed by Illinois law.
For a prospective Checkers franchisee in Illinois, this Rider provides additional protections and clarifications under Illinois law. The deferral of initial fees offers a financial benefit, as the franchisee doesn't have to pay these fees until Checkers fulfills its pre-opening obligations and the franchisee starts operating. The requirement for legal actions to be held in Illinois courts and governed by Illinois law ensures that franchisees have access to a local legal system and are protected by Illinois-specific franchise laws. These modifications aim to provide a fairer and more transparent franchise relationship within the state of Illinois, in accordance with the Illinois Franchise Disclosure Act.