Under what circumstances does the Checkers Franchise Agreement provide for termination, and what potential legal limitation exists regarding this provision?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the requirements of the Illinois Franchise Disclosure Act and the rules and regulations promulgated thereunder, the Franchise Agreement shall be modified by this document (the "Rider") as follows:
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- Background. Franchisor and Franchisee are parties to that certain Franchise 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 Franchised Restaurant to be operated by Franchisee pursuant to the Agreement will be located in the state of Illinois and/or because 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.
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- Initial Franchise Fee. Section 6.01 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 Franchisee to Franchisor under this Agreement until Franchisor has completed all of its pre-opening obligations under this Agreement and the Franchisee has commenced doing business. This deferral requirement has been imposed by the Illinois Attorney General's Office based on the Franchisor's audited financial statements.
- Arbitration; Jurisdiction and Venue. Sections 18.05 and 18.07 of the Agreement shall be amended by adding the following:
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
Based on the 2025 Checkers Franchise Disclosure Document, the agreement includes provisions related to termination and potential legal limitations, particularly within the state of Illinois.
Specifically, the Illinois Rider to the Franchise Agreement addresses certain legal requirements within Illinois. It stipulates that Checkers will defer collection of initial franchise fees until it has completed all pre-opening obligations and the franchisee has commenced business. This deferral requirement is imposed by the Illinois Attorney General's Office based on Checkers' audited financial statements. This indicates a legal limitation or modification to the standard agreement terms to comply with Illinois franchise law.
Additionally, the Illinois Rider modifies sections of the Franchise Agreement related to arbitration, jurisdiction, and venue. This suggests that while the standard agreement may specify certain dispute resolution processes and locations, these are subject to change within Illinois to align with state-specific regulations. Prospective franchisees in Illinois should pay close attention to this rider, as it alters key aspects of the franchise agreement and their rights within the state.