Does Checkers have any obligation or liability to a franchisee if it operates a competing Checkers restaurant?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers retains significant rights regarding the operation and franchising of restaurants, including those that may compete with a franchisee's location. Specifically, Checkers states that it has no obligation or liability to a franchisee if it operates a competing Checkers restaurant.
The FDD outlines that Checkers and its affiliates have the right to operate or franchise Checkers-branded restaurants, even if they directly compete with an existing franchised restaurant. This includes establishing restaurants outside of a franchisee's protected area, without any consideration for potential adverse effects on the franchisee's business. Checkers also reserves the right to operate restaurants at non-traditional sites, sell products through alternative channels, and operate restaurants under different trademarks, all without obligation to the franchisee.
This lack of territorial protection is a notable risk for prospective Checkers franchisees. While some franchise systems offer franchisees exclusive territories, Checkers franchisees must be prepared to compete with other company-owned or franchised locations. The franchisee acknowledges these conditions and waives any claims against Checkers arising from these activities.
In practical terms, a Checkers franchisee could face direct competition from another Checkers restaurant, potentially impacting their revenue and profitability. This underscores the importance of carefully evaluating the location and market conditions before investing in a Checkers franchise.