What is the duration of the franchise term granted to a Checkersrallys franchisee, starting from the Effective Date?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
2.01 Grant of Franchise.You have applied for a franchise to own and operate a Restaurant at a location we approve, which will be identified on Exhibit B (the "Premises"). Subject to the terms of this Agreement, we grant to you the right, and you assume the obligation, to operate a Restaurant at the Premises and to use the System solely in connection therewith, for a term of twenty (20) years, starting on the Effective Date (the "Term"). You may not conduct the business of the Franchised Restaurant or use the System at any site other than the Premises, or relocate the Franchised Restaurant, without our prior consent. The Franchised Restaurant may not be used for any purpose other than the operation of a Restaurant in compliance with this Agreement. You may conduct business only with customers at the Franchised Restaurant and may not engage in any catering or delivery businesses without or prior consent which may be withheld for any reason.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the franchise agreement grants the franchisee the right and obligation to operate a restaurant at an approved location for a term of twenty (20) years, beginning on the Effective Date. This "Term" defines the period during which the franchisee can operate under the Checkersrallys system at the specified premises.
This means that a new Checkersrallys franchisee can expect to operate their restaurant for two decades from the date the franchise agreement takes effect. The franchisee is bound to operate the restaurant only at the approved location and must adhere to the Checkersrallys system throughout this term. Any deviation from the approved location or the Checkersrallys system would require prior consent from the franchisor.
At the end of the initial 20-year term, Checkersrallys offers an opportunity to acquire a successor franchise agreement for another term of either ten (10) or twenty (20) years. This is contingent upon the franchisee providing written notice of their desire to acquire a successor franchise at least 180 days before the expiration of the current agreement. Checkersrallys will then notify the franchisee of their decision within 60 days of receiving the notice. The franchisee must also execute general releases of any claims against Checkersrallys and its affiliates.
It is important to note that the terms and conditions of the successor franchise agreement, including royalty fees, may differ materially from the original agreement. Additionally, the franchisee will be required to pay a successor franchise fee, which is a percentage of the then-current initial franchise fee for new restaurants, depending on the length of the successor term. Specifically, it is one half (50%) of the initial fee for a twenty-year term or one-third (33.33%) for a ten-year term.