conditional

Under what circumstances is the Rider annexed to the Development Agreement for a Checkers franchise?

Checkers Franchise · 2025 FDD

Answer from 2025 FDD Document

inconsistent term of any document executed in connection with the franchise.

CHECKERS DRIVE-IN RESTAURANTS, INC. A Delaware Corporation FRANCHISEE
By: By:
Title: Title:

MINNESOTA RIDER TO THE DEVELOPMENT AGREEMENT

In recognition of the requirements of the Minnesota Franchise Law and the rules and regulations promulgated thereunder, the Development Agreement shall be modified by this document (the "Rider") as follows:

1. 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 Minnesota and/or because Franchisee is a resident of the State of Minnesota. This
Rider shall be of no force and effect unless the jurisdictional requirements of the
Minnesota Franchise Law and any regulations thereunder are met independently
without reference to this Rider.
  1. Area Franchisee's Right to Transfer. Section 7.02 is amended by the inclusion of the following:

Under Minn. Rule 2860.4400D, we are prohibited from requiring you to sign a general release.

  1. Termination of Agreement. Sections 8.01 and 8.02 shall be amended by adding the following:

"With respect to franchises governed by Minnesota law, the franchisor will comply with Minn. Stat. Sec. 80C.,14 Subds. 3, 4, and 5 which require, except in certain specified cases, that a franchisee be given 90 days notice of termination (with 60 days to cure) and 180 days notice for non-renewal of the franchise agreement.

  1. Miscellaneous. Sections 10.05 and 10.09 are amended by the inclusion of the following:

Under Minn. Rule 2860.4400J, a franchisee cannot waive any rights, and the franchisee cannot consent to the franchisor obtaining injunctive relief, although the franchisor may seek injunctive relief. The court will also determine whether a bond is required.

  1. Miscellaneous. Sections 10.06 and 10.07 shall be amended by adding the following:

"Pursuant to Minn. Stat. Sec. 80C.21 and Minn. Rule Part 2860.4400J, this section shall not in any way abrogate or reduce any rights of the franchisee as provided for in Minnesota Statutes, Chapter 80C."

  1. Miscellaneous. Section 10.06 is amended further by the inclusion of the following:

Minnesota Rule 2860.4400J prohibits the waiver of a jury trial.

Checkers/Rally's April 2025

  1. No disclaimer, questionnaire, clause, or statement signed by a franchisee in connection with the commencement of the franchise relationship shall be construed or interpreted as waiving any claim of fraud in the inducement, whether common law or statutory, or as disclaiming reliance on or the right to rely upon any statement made or information provided by any franchisor, broker or other person acting on behalf of the franchisor that was a material inducement to a franchisee's investment. This provision supersedes any other or inconsistent term of any document executed in connection with the franchise.
CHECKERS DRIVE-IN RESTAURANTS, INC. A Delaware Corporation AREA FRANCHISEE
By: By:
Title: Title:

NEW YORK RIDER TO THE FRANCHISE AGREEMENT

In recognition of the requirements of the New York General Business Law and the rules and regulations promulgated thereunder, the Franchise Agreement shall be modified by this document (the "Rider") as follows:

    1. 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 New York and/or because Franchisee is a resident of the State of New York. This Rider shall be of no force and effect unless the jurisdictional requirements of the New York General Business and any regulations thereunder are met independently without reference to this Rider.
    1. Releases. Sections 13.02(i) and 15.03 are amended by the inclusion of the following:
    • ", provided, however, that to the extent required by Article 33 of the General Business Law of the State of New York, all rights Franchisee enjoys and any causes of action arising in Franchisee's favor from the provisions of Article 33 of the General Business Law of the State of New York and the regulations issued thereunder shall remain in force; it being the intent of the proviso that the non-waiver provisions of GBL 687 and 687.5 be satisfied."
    1. Franchisor's Right to Transfer. The following is added as a new Section 13.08:
    • "However, to the extent required by applicable law, no assignment will be made except to an assignee who, in Franchisor's good faith judgment, is willing and able to assume Franchisor's obligations under this Agreement."
    1. Termination of Agreement. Sections 14.01 and 14.02 shall be amended by adding the following:
    • "Franchisee may terminate this Agreement on any grounds available by law under the provisions of Article 33 of the General Business Law of the State of New York."
    1. Governing Law. Sections 18.05 and 18.07 shall be amended by adding the following:
    • "However, to the extent required by Article 33 of the General Business Law of the State of New York, this Section shall not be considered a waiver of any right conferred upon Franchisee by the provisions of Article 33 of the General Business Law of the State of New York and the regulations issued thereunder."

Checkers/Rally's April 2025

  1. Limitations on Legal Actions. Sections 18.03 and 18.10 shall be amended by adding the following:

"To the extent required by Article 33 of the General Business Law of the State of New York, all rights and any causes of action arising in Franchisee's favor from the provisions of Article 33 of the General Business Law of the State of New York and the regulations issued thereunder shall remain in force; it being the intent of this provision that the non-waiver provisions of GBL Sections 687.4 and 687.5 be satisfied."

    1. Application of Rider.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

What This Means (2025 FDD)

According to Checkers's 2025 Franchise Disclosure Document, a Rider is annexed to the Development Agreement under specific circumstances, primarily related to the location of the restaurants being developed or the franchisee's residency. For instance, if the restaurants are to be developed in Illinois, Maryland, Minnesota, or Virginia, a specific rider is added to the Development Agreement. This is also the case if the Area Franchisee or Franchisee is a resident of one of those states.

The purpose of these Riders is to address the franchise disclosure laws and regulations of the specific states. The Riders ensure that the Development Agreement complies with state-specific requirements, such as those outlined in the Illinois Franchise Disclosure Act or the Virginia Retail Franchising Act. However, the Rider is only effective if the jurisdictional requirements of the relevant state's franchise law are met independently, without relying on the Rider itself.

These Riders often include modifications to certain sections of the Development Agreement. For example, the Illinois Rider may defer the collection of initial fees until Checkers has completed its pre-opening obligations and the franchisee has commenced business. Similarly, the Virginia Rider may defer payment of the development fee until Checkers has fulfilled its pre-opening obligations under the first franchise agreement. Additionally, Riders may address issues such as arbitration, jurisdiction, venue, and governing law to align with state regulations, as seen in the Illinois Rider.

For a prospective Checkers area franchisee, it is crucial to understand which Rider applies to their Development Agreement based on the states in which they plan to develop restaurants or their state of residency. Franchisees should carefully review the Rider and ensure they understand any modifications to the standard Development Agreement, particularly those related to fees, legal jurisdiction, and compliance with state laws. Consulting with a franchise attorney is advisable to fully grasp the implications of these Riders.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.