Is Checkers obligated to convert acquired businesses to Checkers restaurants?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
(e) acquire the assets or ownership interests of one or more businesses providing products and services similar or dissimilar to those provided at 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 Restaurants or Rally's 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
Source: Item 12 — TERRITORY (FDD pages 57–61)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, Checkers has no obligation to convert acquired businesses into Checkers or Rally's restaurants. Checkers retains the right to acquire businesses providing similar or dissimilar products and services to those offered at Checkers restaurants. After acquiring these businesses, Checkers has the sole discretion, without any obligation, to convert them into Checkers or Rally's restaurants, utilizing the Marks and/or the System. This applies regardless of where these acquired businesses (or their franchisees or licensees) are located, including within a franchisee's Protected Area.
This means that a Checkers franchisee cannot rely on Checkers to convert acquired businesses into Checkers franchises, even if those businesses are within the franchisee's protected area. Checkers maintains full control over the decision to convert or not convert acquired businesses. This clause protects Checkers's strategic flexibility but introduces uncertainty for franchisees, as Checkers could acquire a competing business within their territory and choose not to convert it, potentially intensifying competition without the benefits of the Checkers brand and system.
This policy is fairly typical in franchising, where franchisors retain broad discretion over business decisions to optimize the overall network. However, it's crucial for prospective franchisees to understand that acquisitions by Checkers do not automatically translate into new Checkers outlets that benefit the existing franchisees. Franchisees should inquire about Checkers's acquisition strategy and its potential impact on their territories during their due diligence process.