What is the effect of Checkersrallys being required to engage legal counsel in connection with the franchisee's failure to comply with the agreement?

According to Checkersrallys's 2025 Franchise Disclosure Document, if Checkersrallys has to hire legal counsel because a franchisee failed to comply with the franchise agreement, the franchisee must reimburse Checkersrallys for all attorneys' fees, costs, and expenses that Checkersrallys incurs. This means that franchisees could face significant financial burdens if they violate the terms of their franchise agreement and Checkersrallys decides to take legal action.

This provision is fairly standard in franchise agreements, as it aims to protect the franchisor from bearing the financial brunt of a franchisee's non-compliance. It also serves as a deterrent for franchisees to adhere to the agreement's terms and conditions. The franchisee is responsible for covering Checkersrallys's legal expenses, which can include attorney fees, court costs, and other related expenses.

For a prospective Checkersrallys franchisee, this highlights the importance of fully understanding and adhering to the franchise agreement. Failure to comply can lead to not only potential termination of the agreement but also significant legal costs. Franchisees should ensure they have sufficient capital to cover such potential expenses and should seek legal counsel to fully understand their obligations under the agreement.