Does failure to pay all amounts when due constitute grounds for termination of the Checkersrallys franchise agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
failure within ten (10) days after we deliver written notice of that failure to you;
fail or refuse to comply with any mandatory specification, standard or operating procedure prescribed by us in this Agreement or in Operations Manual relating to the cleanliness or sanitation of the Franchised Restaurant or violate any health, safety or sanitation law, ordinance or regulation and do not correct such failure or refusal within twenty-four (24) hours after written notice thereof is delivered to you;
- (l) fail to report accurately Net Sales or to make payment of any amounts due us or any of our Affiliates, and do not correct such failure within ten (10) days after written notice of such failure is delivered to you;
- (m) understate the Franchised Restaurant's Net Sales three (3) times or more during the Term or by more than five percent (5%) on any one occasion;
- (n) fail to make a timely payment of any amount due to a supplier unaffiliated with us (other than payments which are subject to bona fide dispute), and do not correct such failure within thirty (30) days after we deliver to you notice of such failure to comply;
- (o) fail to comply with any other provision of this Agreement or any mandatory specification, standard or operating procedure prescribed by us in this Agreement or in Operations Manual and do not correct such failure within thirty (30) days after notice of such failure to comply is delivered to you;
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, failure to make payments can lead to the termination of the franchise agreement. Specifically, if a franchisee fails to accurately report net sales or make payments to Checkersrallys or its affiliates, and does not correct this within ten days of written notice, it can be grounds for termination. Additionally, understating the franchised restaurant's net sales three or more times during the term, or by more than 5% on any single occasion, also constitutes grounds for termination.
Furthermore, failure to make timely payments to unaffiliated suppliers, if not corrected within 30 days after notice, can also lead to termination. Even if a franchisee complies with most provisions, repeated failures to submit reports or pay royalties, advertising contributions, or other payments on time within a 12-month period, regardless of whether the failures are corrected after notice, can result in termination.
Checkersrallys also has a cross-default clause, meaning that any default or breach by the franchisee (or their owners) under any agreement with Checkersrallys or its affiliates can be considered a default under the franchise agreement, and vice versa. This implies that financial obligations across all agreements with Checkersrallys must be met to avoid triggering a termination.
These provisions highlight the importance of maintaining accurate financial records and adhering to payment schedules to remain in good standing with Checkersrallys. A prospective franchisee should ensure they have sufficient capital and a robust accounting system to meet all financial obligations and avoid potential termination of their franchise agreement.