Does the Illinois Rider to the Checkers Development Agreement affect pre-opening obligations?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the Illinois Rider to the Development Agreement does affect pre-opening obligations. Specifically, it addresses the deferral of initial fees until Checkers has completed its pre-opening obligations for the first franchise agreement under the Development Agreement, and the Area Franchisee has commenced business. This deferral is mandated by the Illinois Attorney General's Office due to Checkers' financial condition.
This means that for franchisees developing restaurants in Illinois, or who are residents of Illinois, Checkers will not collect initial fees until it has fulfilled its pre-opening responsibilities for the first restaurant developed under the agreement. This could ease the initial financial burden on the franchisee, allowing them to allocate resources to other aspects of starting the business.
However, it's important to note that this deferral is contingent on Checkers completing its pre-opening obligations. Prospective franchisees should clarify what these obligations entail and the expected timeline for their completion. Additionally, the rider specifies that any legal action must be instituted in Illinois, and Illinois law will govern the agreement, which may have implications for dispute resolution.