What obligation does Checkers have to grant franchises within the Development Area, assuming compliance with the Development Agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of the Development Agreement, as long as you and your affiliates are in compliance with the agreement and all other agreements with us or any of our affiliates (including Franchise Agreements signed under the Development Agreement), we will: (a) grant to you, in accordance with Section 3 of the Development Agreement, at least that cumulative number of franchises for Checkers Restaurants or Rally's Restaurants set forth in Exhibit A to the Development Agreement, all of which are to be located within the Development Area (the locations of which we will approve in accordance with our then current criteria for selection of a Checkers Restaurant or Rally's Restaurant site); and (b) not operate (directly or through an affiliate), nor grant the right to operate, any Checkers Restaurants or Rally's Restaurants located within the Development Area, except for: (1) franchises granted pursuant to the Development Agreement; (2) Restaurants open (or under commitment to open) as of the date of the Development Agreement; (3) Checkers Restaurants, Rally's Restaurants or other restaurants using any part or all of the System and/or Marks at Non-Traditional Sites; and (4) restaurants that we purchase (or as to which we purchase the rights as franchisor) that are part of another franchise system or chain, regardless whether such restaurants are converted to operations as Checkers Restaurants or Rally's Restaurants using any of the
Source: Item 12 — TERRITORY (FDD pages 57–61)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, if a franchisee and their affiliates are in compliance with the Development Agreement and all other agreements with Checkers, including Franchise Agreements signed under the Development Agreement, Checkers is obligated to grant at least the cumulative number of franchises for Checkers Restaurants or Rally's Restaurants set forth in Exhibit A of the Development Agreement. These franchises must be located within the Development Area, and their locations will be subject to Checkers' approval based on their then-current site selection criteria. This obligation is tied to the franchisee's adherence to the Development Agreement and other related agreements.
However, this obligation is subject to certain exceptions. Checkers retains the right to operate or grant the right to operate Checkers or Rally's Restaurants within the Development Area under specific circumstances. These circumstances include franchises granted pursuant to the Development Agreement, Restaurants open (or under commitment to open) as of the date of the Development Agreement, Checkers or Rally's Restaurants at Non-Traditional Sites, and restaurants that Checkers purchases (or acquires the franchisor rights to) from another franchise system or chain, regardless of whether they are converted to Checkers or Rally's Restaurants.
It is important to note that the franchisee will not receive an exclusive territory within the Development Area and may face competition from other franchisees, company-owned outlets, or other channels of distribution or competitive brands controlled by Checkers. Furthermore, Checkers has no obligation to extend the Development Schedule under any circumstances, and the franchisee's failure to develop and operate Checkers Restaurants or Rally's Restaurants in accordance with the Development Schedule will be a material breach of the Development Agreement, although Checkers' exclusive remedy for such failure is termination of the Development Agreement.