What is the effect of the enforcement of the Checkersrallys agreement in a judicial or arbitration proceeding?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
nably foreseeable. Area Franchisee acknowledges and agrees that the proximate cause of such damages sustained by Franchisor is Area Franchisee's act of default and not Franchisor's exercise of its right to terminate. Notwithstanding the foregoing, and except as otherwise prohibited or limited by applicable law, any failure, neglect, or delay of a party to assert any breach or violation of any legal or equitable right arising from or in connection with this Agreement, shall constitute a waiver of such right and shall preclude the exercise or enforcement of any legal or equitable remedy arising therefrom, unless written notice specifying such breach or violation is provided to the other party within 12 months after the later of: (a) the date of such breach or violation; or (b) the date of discovery of the facts (or the date the facts could have been discovered, using reasonable diligence) giving rise to such breach or violation.
10.04 Costs of Enforcement. If we file a claim in a judicial or arbitration proceeding for amounts you or any of your Owners owe us or any of our Affiliates, or if we enforce this Agreement in a judicial or arbitration proceeding, and we prevail in any such proceeding, you agree to reimburse us for all of our costs and expenses, including reasonable accounting, paralegal, expert witness and attorneys' fees. If we are required to engage legal counsel in connection with your failure to comply with this Agreement, you must reimburse us for any attorneys' fees, costs and expenses we incur.
10.05 Injunctive Relief. We, as an alternative or supplement to arbitration pursuant to Section 10.06, may obtain in any court of competent jurisdiction any injunctive relief, including temporary restraining orders and preliminary injunctions, against conduct or threatened conduct for which no adequate remedy at law may be available or which may cause us irreparable harm.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to the 2025 Checkersrallys Franchise Disclosure Document, if Checkersrallys files a claim against a franchisee or their owners in a judicial or arbitration proceeding and prevails, the franchisee must reimburse Checkersrallys for all costs and expenses. These costs include reasonable accounting, paralegal, expert witness, and attorneys' fees. Furthermore, if Checkersrallys needs to engage legal counsel due to a franchisee's failure to comply with the agreement, the franchisee is responsible for reimbursing Checkersrallys for all incurred attorneys' fees, costs, and expenses.
Additionally, if a franchisee fails to abide by non-compete covenants and Checkersrallys seeks enforcement in a judicial or arbitration proceeding, the obligations under the breached covenant will be suspended during the period of the breach and/or enforcement efforts. The covenant will then continue for two years after the date of the order enforcing it. This means that any violation of the non-compete agreement can result in extended restrictions and legal costs for the franchisee.
Checkersrallys also has the option to seek injunctive relief in court against conduct that may cause irreparable harm, as an alternative or supplement to arbitration. If Checkersrallys obtains such injunctive relief, the franchisee's sole remedy is to seek its dissolution, and they waive any claims for damages resulting from the injunction's issuance. This highlights the potential for Checkersrallys to quickly and decisively address actions that could harm the brand, with the franchisee bearing the burden of challenging the injunction.