Under what conditions can Checkers exercise its rights or discretion regarding franchisee actions?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
nt to this Section, we are authorized to amend this Agreement to reflect such modification. You and we hereby agree that upon the amendment of this Agreement by us in accordance with this Section, the particular geographic area identified thereon shall be deemed the Protected Area under this Agreement.
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.
3. DEVELOPMENT OF THE FRANCHISED RESTAURANT.
3.01 Site Acceptance Disclaimer. You acknowledge and agree that, if we suggest, approve, or give you information regarding a site for the Premises, our action is not a representation or warranty of any kind, express or implied, of the site's suitability for a Restaurant or any other purpose. We do not represent that we, or any of our Affiliates, owners, employees or agents, have special expertise in selecting sites. Our action indicates only that we believe that the site meets our then acceptable criteria and not that the Franchised Restaurant will be profitable or successful at the Premises. Applying criteria that have appeared effective with other sites and premises might not accurately reflect the potential for all sites and premises, and demographic and/or other factors included in or excluded from our criteria could change, altering the potential of a site and premises. The uncertainty and instability of these criteria are beyond our control, and we are not responsible if a site and premises we suggest or approve for the location of a Restaurant fails to meet your expectations. Accordingly, you acknowledge and agree that your acceptance of the franchise for a Restaurant pursuant to this Agreement is based on your own independent investigation of the site's suitability for the Premises.
In consideration of our acceptance of the Premises, you and your Owners release us, and our Affiliates, officers, directors, employees and agents from any and all loss, damage and liability arising from or in connection with the selection and/or acceptance of the Premises for development as a Restaurant.
Selection of Premises.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers retains significant rights and discretion regarding franchisee actions, as outlined in Section 2.03. Except when expressly limited, Checkers and its affiliates maintain all rights and discretion concerning the Marks, the System, the sale of similar or dissimilar products and services, and the operation or franchising of Checkers and Rally's restaurants. This discretion applies regardless of location and allows Checkers to engage in any business activities they desire.
Specifically, Checkers reserves the right to establish and operate Checkers or Rally's restaurants outside the franchisee's protected area, even if these restaurants directly compete with the franchisee's location. They can also establish restaurants at non-traditional sites, sell products or services through alternative channels of distribution (like the internet or supermarkets), and operate restaurants under different trademarks. Checkers can also acquire businesses providing similar services and convert them into Checkers or Rally's restaurants, even within a franchisee's protected area, and be acquired by a business that operates competitive businesses in the Protected Area.
The agreement explicitly states that the franchisee's rights are non-exclusive, and they cannot participate in or benefit from any other business activity Checkers undertakes unless expressly granted in the agreement. Franchisees waive any claims arising from Checkers' activities related to these reserved rights. Furthermore, Checkers retains the right to make decisions and take actions that may affect a franchisee's interests, provided these actions are not inconsistent with the franchisee's explicit rights and obligations. Checkers can operate and change the System and its business in any manner not expressly prohibited by the agreement.
Whenever Checkers has reserved a right or discretion, they may exercise it based on their judgment of what is in their best interests, including the interests of the franchise network. This decision-making process does not require Checkers to consider whether alternative decisions could have been made, whether the decision promotes their financial interests, whether the decision applies differently to franchisees, or whether the decision is adverse to a franchisee's individual interests. Checkers will not be liable to the franchisee for any such decision or exercise of their rights. This broad reservation of rights and discretion gives Checkers substantial control over the brand and its development, which may impact individual franchisees positively or negatively.