What constitutes a breach of the Checkersrallys franchise agreement regarding the Marks?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
5. TRADEMARKS.
5.01 Ownership of the Marks.You acknowledge that we own the Marks. Your right to use the Marks is derived solely from this Agreement and is limited to conducting business pursuant to and in compliance with this Agreement. Your unauthorized use of any of the Marks constitutes a breach of this Agreement and an infringement of our rights to the Marks. This Agreement does not confer on you any goodwill or other interests in the Marks. Your use of the Marks and any goodwill established thereby inures to our exclusive benefit. All provisions of this Agreement applicable to the Marks apply to any additional or substitute trademarks, service marks and trade dress we authorize you to use. You may not at any time during or after the Term contest, or assist any other person in contesting, the validity or ownership of any of the Marks.
5.02 Use of the Marks.You agree to use the Marks as the sole identification of the Franchised Restaurant, provided you identify yourself as the independent owner thereof in the manner we prescribe. You agree to use the Marks as we prescribe in connection with the sale of authorized food products, beverages and services. You may not use any Mark (or any abbreviation, modification or colorable imitation) as part of any corporate or legal business name or in any other manner (including as an electronic media identifier, such as a website, web page or domain name) not expressly authorized by us in writing.
5.03 Discontinuance of Use of Marks.If it becomes advisable at any time for us and/or you to modify or discontinue use of any Mark and/or use one or more additional or substitute trademarks, service marks or trade dress, you agree to comply with our directions within a reasonable time after we provide notice to you.
We will have no liability or obligation whatsoever with respect to any such required modification or discontinuance of any Mark or the promotion of a substitute trademark, service mark or trade dress.
- 5.04 Notification of Infringements and Claims.You must notify us immediately of any apparent infringement of or challenge to your use of any Mark, or any claim by another person of any rights in any Mark.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a franchisee's unauthorized use of the Marks constitutes a breach of the franchise agreement and an infringement of Checkersrallys's rights to the Marks. The franchisee's right to use the Marks is solely derived from the franchise agreement and is limited to conducting business in compliance with the agreement. The agreement does not confer any goodwill or other interests in the Marks to the franchisee, and any goodwill established through the franchisee's use of the Marks inures to the exclusive benefit of Checkersrallys.
The franchisee must use the Marks as the sole identification of the Franchised Restaurant and identify themselves as the independent owner in the manner prescribed by Checkersrallys. The Marks must be used as prescribed in connection with the sale of authorized food products, beverages, and services. The franchisee is prohibited from using any Mark (or any abbreviation, modification, or colorable imitation) as part of any corporate or legal business name or in any other manner not expressly authorized in writing by Checkersrallys, including as an electronic media identifier, such as a website, web page, or domain name.
If Checkersrallys deems it advisable to modify or discontinue the use of any Mark, the franchisee must comply with Checkersrallys's directions within a reasonable time after receiving notice. Checkersrallys will not have any liability or obligation regarding any required modification or discontinuance of any Mark or the promotion of a substitute trademark, service mark, or trade dress. The franchisee is obligated to notify Checkersrallys immediately of any apparent infringement of or challenge to the use of any Mark, or any claim by another person of any rights in any Mark.
These stipulations are typical in franchise agreements, as franchisors like Checkersrallys need to protect their brand identity and ensure consistent use of their trademarks across all franchise locations. Failure to comply with these trademark usage guidelines can lead to termination of the franchise agreement and legal action for trademark infringement. Prospective franchisees should carefully review these terms and ensure they understand the limitations and obligations regarding the use of Checkersrallys's Marks.