To maintain quality standards, is a Checkers franchisee required to purchase goods, services, supplies, fixtures, equipment, and inventory from approved suppliers?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
To ensure that high and uniform standards of quality and service are maintained, you are required to operate your Franchised Restaurant in strict conformity with our methods, standards and specifications and you are required to purchase goods, services, supplies, fixtures, equipment and inventory only from suppliers we have approved. You are not required to purchase or lease anything from us or any of our affiliates; however, we and our affiliates can be approved suppliers for items. Currently, we are not an approved supplier for any items except that we may from time to time sell used modular restaurants and restaurant equipment to Checkers and Rally's franchisees. We estimate the initial cost of all of required purchases and leases of goods, services, supplies, fixtures, equipment and inventory to be in excess of 95% of your total initial investment (see Item 7). We estimate the ongoing cost of these required purchases and leases to be in excess of 95% of your total ongoing operating expenses.
We may formulate and modify, at our sole discretion, specifications and standards we impose on franchisees and suppliers. Specifications and standards are issued to franchisees through the Operations Manual (defined below) and to suppliers by written notice. The "Operations Manual" is our confidential operations manual, as we may amend at any time, which may consist of one or more manuals or communications, containing our mandatory and suggested standards, specifications and operating procedures relating to the development and operation of Restaurants and other information relating to your obligations as a franchisee and operator of a Restaurant. The term "Operations Manual" also includes all instructions or communications we or our representatives may transmit to you or a substantial number of franchisees, whether in writing or through other media, concerning aspects or modifications to the System, standards, specifications and operating procedures, including bulletins, emails, limited access intranet sites, videotapes, audio tapes, or any other electronic medium. We attempt to negotiate purchase arrangements with suppliers (including price terms) for the benefit of all Restaurants, including those owned by franchisees. We do not provide material benefits (e.g., renewal or additional franchises) to a franchisee based on his use of designated or approved suppliers.
There are no franchisee purchasing or distribution cooperatives.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 39–44)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchisees are indeed required to purchase goods, services, supplies, fixtures, equipment, and inventory exclusively from suppliers that Checkers has approved. This requirement is in place to ensure that all Checkers restaurants maintain high and uniform standards of quality and service. While franchisees are not obligated to purchase or lease anything directly from Checkers or its affiliates, these entities can be approved suppliers for various items.
This requirement has significant financial implications for franchisees. Checkers estimates that the initial cost of these required purchases and leases will exceed 95% of the total initial investment. Similarly, the ongoing cost of these purchases and leases is estimated to exceed 95% of the total ongoing operating expenses. These figures underscore the importance of carefully evaluating the approved supplier list and understanding the associated costs before investing in a Checkers franchise.
If a franchisee wishes to use a brand or supplier not already approved by Checkers, they must notify Checkers and submit sufficient information for evaluation. Checkers has the right to charge fees to cover the costs of this evaluation, and they will notify the franchisee of their decision within 60 days. Checkers may also set limits on the number of suppliers or brands for any items and designate required, optional, or test menu items. Checkers will provide its current supplier criteria upon request when evaluating a new supplier, item, or service. Checkers also retains the right to revoke approval of any supplier by providing written notice to both the supplier and the franchisee.
This system is common in franchising, as it allows the franchisor to maintain quality control and brand consistency across all locations. However, it also means that franchisees have limited flexibility in sourcing products and services, and they must be prepared to adhere to Checkers' approved supplier list and standards. Prospective franchisees should carefully review the list of approved suppliers and understand the terms and conditions associated with these relationships.