Does the Checkersrallys agreement allow the franchisee to represent the relationship as anything other than independent contractors?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
5.01 Independent Contractors. Neither this Agreement nor the dealings of the parties pursuant to this Agreement shall create any fiduciary relationship or any other relationship of trust or confidence. Franchisor and Area Franchisee, as between themselves, are and shall be independent contractors.
We and you acknowledge and agree that this Agreement (and the relationship of the parties which arises from this Agreement) grants us the right to make decisions, take actions and/or refrain from taking actions not inconsistent with your explicit rights and obligations hereunder that may affect favorably or adversely your interests. You understand and agree that we may operate and change the System and our business in any manner that is not expressly and specifically prohibited by this Agreement. Whenever we have reserved in this Agreement a right and/or discretion to take or withhold an action, or to grant or decline to grant you a right to take or withhold an action, except as otherwise expressly and specifically provided in this Agreement, we may make our decision or exercise our right and/or discretion on the basis of our judgment of what is in our best interests, including our judgment of what is in the best interests of our franchise network, at the time our decision is made, without regard to: (a) whether other reasonable or even arguably preferable alternative decisions or actions could have been made by us; (b) whether our decision or the action we take promotes our financial or other individual interest; (c) whether our decision or the action we take applies differently to you and one (1) or more other franchisees; or (d) whether our decision or the exercise of our rights is adverse to your individual interests or the individual interests of any other particular franchisees. We will have no liability to you for any such decision or exercise of our rights.
Nothing contained in this Agreement, or arising from the conduct of the parties hereunder, is intended to make either party a general or special agent, joint venturer, partner or employee of the other for any purpose whatsoever. You must conspicuously identify yourself in all dealings with customers, lessors, contractors, suppliers, public officials, personnel and others as the owner of development rights granted hereunder and must place such other notices of independent ownership on such forms, business cards, stationery, advertising and other materials as we require at any time and from time to time.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to the 2025 Checkersrallys Franchise Disclosure Document, the agreement explicitly states that the relationship between the franchisor and the franchisee is that of independent contractors. This means that franchisees are not considered employees, agents, joint venturers, or partners of Checkersrallys for any purpose. Franchisees must identify themselves as the owners of the development rights in all dealings with customers, lessors, contractors, suppliers, public officials, personnel, and others.
Checkersrallys requires franchisees to place notices of independent ownership on forms, business cards, stationery, advertising, and other materials as the company may require. This reinforces the independent nature of the franchisee's business and helps to avoid any confusion about the relationship with Checkersrallys.
The agreement emphasizes that it does not create any fiduciary relationship or any relationship of trust or confidence between Checkersrallys and the franchisee. While Checkersrallys retains the right to make decisions affecting the franchisee's interests, this is within the bounds of the explicit rights and obligations defined in the agreement. This ensures that Checkersrallys can operate and change the system without being held to a fiduciary standard typically associated with employer-employee or partnership relationships.
This independent contractor status has significant implications for franchisees, affecting their tax obligations, liability, and control over their business operations. Franchisees are responsible for their own business decisions and are not subject to the same level of control as an employee. They also bear the risks and rewards of their business venture, which are largely dependent on their own abilities, efforts, and financial resources.