What are the potential consequences if a Checkers franchisee fails to obtain the required insurance coverage?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (See Note 1) |
|---|---|---|---|
| Insurance | Varies, cost of coverage obtained | As incurred | If you fail to obtain the required insurance coverage for the Franchised Restaurant, we may obtain such coverage at your expense. |
Source: Item 6 — OTHER FEES (FDD pages 21–30)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, if a franchisee fails to obtain the required insurance coverage for their franchised restaurant, Checkers has the right to obtain the necessary coverage on the franchisee's behalf. The franchisee is then responsible for reimbursing Checkers for the cost of this insurance coverage.
This means that a Checkers franchisee cannot operate without the required insurance. If they neglect to secure the necessary insurance, Checkers will step in to ensure the restaurant is covered, but the franchisee will bear the financial burden. This protects both the franchisor and franchisee from potential liabilities and losses.
In practice, this could significantly impact a franchisee's finances, as they would not only have to pay for the original insurance they failed to obtain but also potentially face additional charges or fees incurred by Checkers in securing the coverage. Franchisees should ensure they understand and meet all insurance requirements outlined in the Franchise Agreement to avoid these additional costs and potential breaches of contract.