What is the implication if a Checkers franchisee's activities extend beyond those necessary for restaurant development, ownership, and operation?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
nt to this Section, we are authorized to amend this Agreement to reflect such modification. You and we hereby agree that upon the amendment of this Agreement by us in accordance with this Section, the particular geographic area identified thereon shall be deemed the Protected Area under this Agreement.
2.03 Our Reservation of Rights. Except as expressly limited by Section 2.02 above, we and our Affiliates (and our respective successors and assigns, by purchase, merger, consolidation or otherwise) retain all rights and discretion with respect to the Marks, the System, the sale of products and services similar or dissimilar to those offered by "Checkers" and "Rally's"-branded restaurants, and the operation or franchising of "Checkers" and "Rally's"-branded restaurants anywhere located or to be located, and may engage in any business activities whatsoever, within or outside the Protected Area, whenever and wherever we desire. Specifically, by way of example and without limitation, we reserve the following rights: (a) to establish and operate, and grant to others the right to operate, "Checkers" and "Rally's"-branded restaurants at locations outside the Protected Area, on such terms and conditions as we deem appropriate (you acknowledge that such "Checkers" and "Rally's"-branded restaurants may be in direct competition with your Franchised Restaurant, without regard to any adverse effects of such activities on your Franchised Restaurant and without any obligation or liability to you); (b) to establish and operate, and grant to others the right to operate, "Checkers" and "Rally's"branded restaurants, or other restaurants using any part or all of the System and/or Marks, that are located at or operated from Non-Traditional Sites within or outside the Protected Area; (c) to sell any products or services under the Marks or under any other trademarks, service marks or trade dress, through alternative channels of distribution, wherever located or operating (including, without limitation, the internet or similar electronic media and supermarkets); (d) to establish and 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 BRAND: "Checkers"/"Rally's" name and mark), pursuant to such terms and conditions as we
deem appropriate and wherever such restaurants are located; (e) to acquire the assets or ownership interests of one or more businesses providing products and services similar or dissimilar to those provided at "Checkers" and "Rally's"-branded restaurants, and to franchise, license or create similar arrangements with respect to these businesses once acquired, and which businesses we may (at our sole discretion, and without obligation) convert, or allow to be converted, to operations as "Checkers" or "Rally's"-branded restaurants using any of the Marks and/or the System, wherever these businesses (or the franchisees or licensees of these businesses) are located or operating (including in the Protected Area, if applicable); and (f) to be acquired (whether through acquisition of assets, ownership interests or otherwise, regardless of the form of transaction), by a business providing products and services similar to those provided at "Checkers" or "Rally's"-branded restaurants, or by another business, even if such business operates, franchises and/or licenses Competitive Businesses in the Protected Area.
You acknowledge and agree that, except as expressly granted to you in Section 2.02 hereof, your rights hereunder are non-exclusive and you have no rights under this Agreement to participate in or benefit from any other business activity we or our Affiliate may undertake, regardless of whether such activity involves the Marks or the System. You waive, to the fullest extent permitted under applicable law, all claims, demands, or causes of action arising from or relating to any of the foregoing activities by us or any of our Affiliates in connection with our reserved rights under this Section 2.03.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, franchisees have limited rights beyond the scope of their specific franchise agreement. Checkers retains significant rights regarding the brand, system, and related business activities.
Specifically, Checkers reserves the right to operate or franchise restaurants that compete directly with a franchisee's location, even if it adversely affects the franchisee's business. They can also operate or franchise Checkers restaurants or other restaurant concepts using the Checkers system and trademarks at non-traditional sites, sell products and services through alternative channels, and engage in any business activities they desire, without obligation to the franchisee.
The franchise agreement specifies that franchisees do not have exclusive rights to participate in or benefit from any other business activity undertaken by Checkers or its affiliates, unless expressly granted in the agreement. Franchisees waive any claims against Checkers or its affiliates related to these reserved rights. This means a Checkers franchisee cannot claim damages or lost profits if Checkers opens a competing location or pursues other business ventures that impact the franchisee's restaurant.
This clause emphasizes that the success of a Checkers franchise is largely dependent on the franchisee's own abilities, efforts, and financial resources, as well as market conditions. Franchisees must acknowledge that the restaurant industry is competitive and that they have not received any guarantees of revenue, profits, or success from Checkers.