What is the effect of the covenant not to sue within the Checkersrallys general release?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Consistent with the previous introduction, you, on your own behalf and on behalf of your successors, heirs, executors, administrators, personal representatives, agents, assigns, partners, shareholders, members, directors, officers, principals, employees, and affiliated entities (collectively, the "Releasing Parties"), hereby forever release and discharge us and our current and former officers, directors, shareholders, principals, employees, agents, representatives, affiliated entities, successors, and assigns (collectively, the "Checkers Parties") from any and all claims, damages (known and unknown), demands, causes of action, suits, duties, liabilities, and agreements of any nature and kind (collectively, "Claims") that you and any of the other Releasing Parties now has, ever had, or, but for this document, hereafter would or could have against any of the Checkers Parties (1) arising out of or related to the Checkers Parties' obligations under the Franchise Agreement or (2) otherwise arising from or related to your and the other Releasing Parties' relationship, from the beginning of time to the date of your signature below, with any of the Checkers Parties. You, on your own behalf and on behalf of the other Releasing Parties, further covenant not to sue any of the Checkers Parties on any of the Claims released by this paragraph and represent that you have not assigned any of the Claims released by this paragraph to any individual or entity who is not bound by this paragraph.
We also are entitled to a release and covenant not to sue from your owners. By his, her, or their separate signatures below, your transferring owners likewise grant to us the release and covenant not to sue provided above.
[Signature Page Follows]
Checkers/Rally's April 2025
The following language applies only to transactions governed by the Maryland Franchise Registration and Disclosure Law
The release provided above will not apply to the extent prohibited by the Maryland Franchise Registration and Disclosure Law. Subject to your arbitration obligation under the Franchise Agreement, you may commence a lawsuit against us in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to the 2025 Checkersrallys Franchise Disclosure Document, the covenant not to sue is a legally binding agreement where the franchisee (and related parties) promises not to file lawsuits against Checkersrallys (and related parties) regarding any claims covered by the general release. This release covers all known and unknown claims, damages, demands, causes of action, suits, duties, liabilities, and agreements that the franchisee has or may have against Checkersrallys. This release extends from the beginning of time until the date the franchisee signs the agreement. The franchisee also confirms that they have not assigned any of these claims to another party not bound by this agreement.
Checkersrallys also requires a similar release and covenant not to sue from the franchisee's owners. This ensures that all relevant parties associated with the franchise are prevented from pursuing legal action against Checkersrallys for covered claims. This is a condition for Checkersrallys taking a specific action or agreeing to a franchisee's request, such as in renewal or transfer situations. The franchisee's agreement to this release and covenant not to sue serves as partial consideration for Checkersrallys's willingness to proceed with the requested action or agreement.
However, the FDD notes an important exception: the release does not apply to the extent prohibited by the Maryland Franchise Registration and Disclosure Law. In Maryland, a franchisee retains the right to commence a lawsuit against Checkersrallys for claims arising under this specific law, subject to the arbitration obligations outlined in the Franchise Agreement. This exception ensures compliance with Maryland law and protects the franchisee's rights under that law. Also, the release does not require a waiver of reliance on any representation Checkersrallys made in their Franchise Disclosure Document.