What is the effect of the engagement of legal counsel in connection with the failure to comply with the Checkersrallys agreement?

According to Checkersrallys's 2025 Franchise Disclosure Document, if Checkersrallys needs to engage legal counsel because a franchisee has failed to comply with the franchise agreement, the franchisee is responsible for reimbursing Checkersrallys for all attorneys' fees, costs, and expenses incurred. This means that in addition to any other penalties or remedies Checkersrallys might pursue for the franchisee's non-compliance, the franchisee will also have to cover Checkersrallys's legal bills.

This provision is fairly standard in franchise agreements. It ensures that Checkersrallys does not have to bear the financial burden of enforcing the agreement when a franchisee is in breach. It also serves as a deterrent to franchisees who might otherwise be tempted to violate the terms of the agreement, as they know they will be responsible for Checkersrallys's legal costs if they are found to be in non-compliance.

For a prospective Checkersrallys franchisee, this underscores the importance of fully understanding and adhering to the franchise agreement. Failure to comply can result not only in potential termination of the franchise but also in significant legal expenses. Franchisees should ensure they have sufficient capital to cover not only the initial investment and ongoing operational costs but also potential legal fees if they fail to meet their obligations under the agreement.