Can Checkersrallys be acquired by a business that operates Competitive Businesses in the Protected Area?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
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 the 2025 Checkersrallys Franchise Disclosure Document, Checkersrallys retains the right to be acquired by a business that provides similar products and services, even if that business operates, franchises, and/or licenses Competitive Businesses in the Protected Area. This means that a competing business already operating within a franchisee's protected territory could potentially acquire Checkersrallys.
This clause protects Checkersrallys's ability to pursue various business strategies, including mergers and acquisitions, without being restricted by the protected territories granted to individual franchisees. It also clarifies that the franchisee's rights are non-exclusive, and they cannot claim damages or prevent Checkersrallys from engaging in such transactions.
For a prospective franchisee, this highlights a potential risk. While a franchisee is granted a protected area, this protection does not extend to preventing an acquisition of Checkersrallys by a competitor. This could lead to a situation where the franchisee finds themselves competing with the parent company of Checkersrallys within their own protected territory if the acquiring company owns similar businesses. Franchisees should consider this possibility and its potential impact on their business when evaluating the franchise opportunity.
It is important for potential franchisees to fully understand the implications of this clause and how it might affect their investment. They should seek clarification from Checkersrallys regarding their long-term business strategies and potential acquisition plans to better assess the risks and opportunities associated with the franchise.