Where will arbitration occur for Checkersrallys Franchise Agreements and Development Agreements?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Subject to Section 10.05, all controversies, disputes, or claims between us or any of our Affiliates, or any of their respective officers, directors, agents, employees and attorneys and you, any of your Affiliates or any of their respective Owners, arising from or relating, directly or indirectly, to (i) this Agreement or any other agreement between you and us or your or our respective Affiliates, (ii) the scope and validity of any provision of this Agreement or any other agreement between you and us or any provision of such agreements (including the validity of the arbitration obligations under this Section 10.06, which the parties acknowledge is to be determined by an arbitrator and not a court); (iii) our relationship with you, including, without limitation, your application to become a franchisee and/or to acquire the right to operate an additional Restaurant, our decision to award a franchise, approve a site or any other matter related to your franchise application or site selection process for the Restaurants you develop under this Agreement or for an additional Restaurant; or (iv) any of our specifications and standards, shall on demand of either party be submitted for arbitration to the offices of the American Arbitration Association ("AAA") located closest to our corporate headquarters at the time of such demand.
The arbitration shall be governed exclusively by the United States Federal Arbitration Act (9 U.S.C. § 1, et seq.), without reference to any state arbitration statutes.
The parties agree that, in connection with any such arbitration proceeding, each shall submit or file any claim which would constitute a compulsory counterclaim (as defined by Rule 13 of the Federal Rules of Civil Procedures) within the same proceeding as the claim to which it relates.
Any such claim which is not submitted or filed in such proceeding shall be waived and such party will forever be barred from asserting such a claim.
Settlement discussions occurring between the parties in relation to any dispute falling within the scope of this Section 10.06 shall be protected by Federal Rule of Evidence 408 and all other applicable rules limiting and/or precluding disclosure.
The parties further agree that unless otherwise agreed in writing, neither side shall be permitted to disclose any settlement discussions to the arbitrators for any reason and that the arbitrators may not consider any settlement discussions or offers that might have been made by either you or us prior to commencing the arbitration proceeding.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, any disputes requiring arbitration will occur at the American Arbitration Association (AAA) offices closest to Checkersrallys's corporate headquarters at the time of the demand for arbitration. This applies to controversies, disputes, or claims between Checkersrallys and the franchisee, their affiliates, officers, directors, agents, employees, and attorneys. The disputes covered include those arising from or relating to the Franchise Agreement, any other agreements between the franchisee and Checkersrallys, the scope and validity of any agreement provision, the relationship between Checkersrallys and the franchisee, or any of Checkersrallys's specifications and standards.
This means that a Checkersrallys franchisee may be required to travel to the location of the AAA office nearest Checkersrallys's headquarters to resolve disputes through arbitration. As of the FDD date, Checkersrallys's corporate headquarters is in Tampa, Florida, but this location could change. The arbitration will be governed exclusively by the United States Federal Arbitration Act, without reference to any state arbitration statutes. This dictates the procedures and rules that will be followed during the arbitration process.
Furthermore, the franchisee must submit any claim that would constitute a compulsory counterclaim within the same arbitration proceeding as the original claim. Failure to do so results in a waiver of that claim, preventing the franchisee from asserting it in the future. Settlement discussions are protected by Federal Rule of Evidence 408, and neither party can disclose settlement discussions to the arbitrators unless agreed upon in writing. The arbitrators are also prohibited from considering any settlement discussions or offers made before the arbitration proceeding commenced. This encourages open settlement negotiations without fear of prejudice during arbitration.
For franchisees in certain states like California and Illinois, there are specific addenda that may affect the enforceability of the arbitration clause or the location of the arbitration. For example, California law encourages franchisees to seek legal counsel regarding the applicability of California and federal laws to venue restrictions. Illinois law states that while a franchise agreement may provide for arbitration to take place outside of Illinois, any provision designating jurisdiction or venue in a forum outside the state is void. Therefore, prospective franchisees should carefully review any state-specific addenda and consult with legal counsel to understand how these provisions may impact their rights and obligations.