What rights does Checkers reserve regarding the Marks, the System, and the operation of Checkers-branded restaurants outside the Protected Area?
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
deem appropriate and wherever such restaurants are located; (e) to acquire the assets or ownership interests of one or more businesses providing products and services similar or dissimilar to those provided at "Checkers" and "Rally's"-branded 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" or "Rally's"-branded 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 (f) to be acquired (whether through acquisition of assets, ownership interests or otherwise, regardless of the form of transaction), by a business providing products and services similar to those provided at "Checkers" or "Rally's"-branded restaurants, or by another business, even if such business operates, franchises and/or licenses Competitive Businesses in the Protected Area.
You acknowledge and agree that, except as expressly granted to you in Section 2.02 hereof, your rights hereunder are non-exclusive and you have no rights under this Agreement to participate in or benefit from any other business activity we or our Affiliate may undertake, regardless of whether such activity involves the Marks or the System. You waive, to the fullest extent permitted under applicable law, all claims, demands, or causes of action arising from or relating to any of the foregoing activities by us or any of our Affiliates in connection with our reserved rights under this Section 2.03.
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 Marks, the System, and the operation of Checkers-branded restaurants, especially outside a franchisee's protected area. Except as expressly limited within the franchise agreement, Checkers and its affiliates have full discretion over the Marks, the System, and the sale of similar or dissimilar products and services. This extends to operating or franchising Checkers and Rally's restaurants anywhere, without regard to any adverse effects on a franchisee's restaurant and without any obligation to the franchisee. This broad reservation of rights is a standard practice in franchising, allowing the franchisor to adapt and expand the brand as they see fit.
Checkers specifically reserves the right to establish and operate Checkers or Rally's restaurants outside the protected area, under any terms and conditions they deem appropriate. These restaurants may directly compete with a franchisee's location. Checkers can also establish restaurants at non-traditional sites, such as airports or universities, both within and outside the protected area, and can sell products or services under the Marks through alternative channels of distribution like the internet or supermarkets.
Furthermore, Checkers reserves the right to operate restaurants under different trademarks, acquire businesses providing similar products or services, and even be acquired by a business that operates competitive businesses in the franchisee's protected area. The agreement explicitly states that the franchisee's rights are non-exclusive, and they have no rights to benefit from any other business activity Checkers or its affiliates undertake using the Marks or the System. The franchisee also waives any claims arising from these activities, within legal limits.
For a prospective Checkers franchisee, this means that while they may be granted a protected area, Checkers retains considerable freedom to operate and expand its brand in various ways, potentially including direct competition. It is crucial for franchisees to understand these reserved rights and assess the potential impact on their investment. Franchisees should inquire about Checkers's strategic plans for expansion and alternative distribution channels to fully understand the competitive landscape they may face.