What is the effect of Checkersrallys filing a claim in a judicial or arbitration proceeding for amounts owed?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, if Checkersrallys files a claim against a franchisee or their owners in a judicial or arbitration proceeding for amounts owed, and Checkersrallys prevails, the franchisee must reimburse Checkersrallys for all costs and expenses. These costs include reasonable accounting, paralegal, expert witness, and attorneys' fees. This condition applies if Checkersrallys seeks to enforce the franchise agreement in such a proceeding and wins.
This provision means that a Checkersrallys franchisee could face significant financial burdens beyond the original debt if Checkersrallys successfully pursues legal action to recover owed amounts. The franchisee's responsibility extends to covering Checkersrallys's legal and professional fees, which can quickly escalate depending on the complexity and duration of the proceedings.
It is important for prospective Checkersrallys franchisees to understand this clause, as it highlights the potential financial risks associated with non-compliance or disputes leading to legal action. Franchisees should ensure they have sufficient financial resources to cover not only their operational costs but also potential legal expenses if a dispute arises with Checkersrallys. This clause is fairly standard in franchise agreements, as it aims to protect the franchisor's financial interests in the event of franchisee default or breach of contract.