What is the relationship between the Illinois Rider and the Checkers Development Agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ILLINOIS RIDER TO THE DEVELOPMENT AGREEMENT
In recognition of the requirements of the Illinois Franchise Disclosure Act and the rules and regulations promulgated thereunder, the Development Agreement shall be modified by this document (the "Rider") as follows:
-
- Background. Franchisor and Area Franchisee are parties to that certain Development Agreement dated , ("Agreement") that has been entered into concurrently with the entering of this Rider. This Rider is annexed to and forms part of the Agreement. This Rider is being executed because the Restaurant(s) to be developed by Area Franchisee pursuant to the Agreement will be located in the state of Illinois and/or because Area Franchisee is a resident of the state of Illinois. This Rider shall be of no force and effect unless the jurisdictional requirements of the Illinois Franchise Disclosure Act and any regulations thereunder are met independently without reference to this Rider.
-
- Development Fee. Section 2.01 of the Agreement shall be amended by adding the following:
Despite the payment provisions above, Franchisor will defer collection of all initial fees owed by Area Franchisee to Franchisor under this Agreement until Franchisor has completed all of its pre-opening obligations under the first franchise agreement entered into pursuant to this Agreement and Area Franchisee has commenced doing business under the first franchise agreement. This deferral requirement has been imposed by the Illinois Attorney General's Office based on the Franchisor's financial condition.
- Arbitration; Jurisdiction and Venue. Sections 10.06 and 10.07 of the Agreement shall be amended by adding the following:
Despite the provision above, Franchisor and Area Franchisee agree that any action brought by one of them against the other must be instituted in a state or federal court located in the State of Illinois.
- Governing Law. Section 10.07 of the Agreement shall be amended further by adding the following:
Despite the provision above, Franchisor and Franchisee agree that Illinois law will govern this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the Illinois Rider modifies the Development Agreement to comply with the Illinois Franchise Disclosure Act. The Rider is attached to and becomes part of the Development Agreement. The Rider applies when restaurants developed under the Development Agreement will be located in Illinois or when the franchisee is an Illinois resident. However, the Rider is only effective if the requirements of the Illinois Franchise Disclosure Act are met independently, without relying on the Rider itself.
Several sections of the Development Agreement are specifically amended by the Illinois Rider. For instance, the Rider stipulates that any legal actions must be instituted in Illinois state or federal courts, regardless of what the original agreement states. It also specifies that Illinois law governs the agreement, overriding any conflicting provisions in the original agreement. Furthermore, the Rider ensures that franchisees cannot waive compliance with the Illinois Franchise Disclosure Act and that disclaimers cannot waive claims of fraud.
Notably, the Illinois Rider addresses the collection of initial fees. It states that Checkers will defer collecting initial fees from the franchisee until Checkers has fulfilled its pre-opening obligations for the first franchise agreement and the franchisee has started business operations. This deferral requirement was imposed by the Illinois Attorney General's Office due to Checkers' financial condition. This modification provides added protection to franchisees in Illinois, ensuring that they are not required to pay fees before Checkers fulfills its obligations.