Under what circumstances can the Checkers franchise agreement be immediately terminated?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
- (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause. Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
Based on the 2025 Checkers Franchise Disclosure Document, the franchise agreement can be terminated prior to its expiration only for good cause. Good cause includes the failure of the franchisee to comply with any lawful provision of the franchise agreement and failure to cure such non-compliance after written notice and a reasonable opportunity to cure, which in no event needs to be more than 30 days.
This means that Checkers cannot terminate a franchise agreement without demonstrating a legitimate reason and providing the franchisee with a chance to rectify the issue. The cure period, during which the franchisee can correct the non-compliance, must be reasonable but is not required to exceed 30 days. This provision aims to protect franchisees from arbitrary termination by the franchisor.
However, the FDD also includes addenda for Maryland and Wisconsin that may affect termination. In Maryland, the Franchise Agreement provides for termination upon bankruptcy, but this provision may not be enforceable under federal bankruptcy law. The Wisconsin Fair Dealership Law may also affect the conditions under which the Franchise Agreement can be terminated or not renewed. Therefore, franchisees in those states should pay close attention to those addenda.