Does the Checkersrallys Franchise Agreement grant territorial exclusivity or protection?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 12: TERRITORY]
ITEM 12 TERRITORY
Franchise Agreement
The Franchise Agreement grants you the right to own and operate a Restaurant at a specific location. If we and you have not agreed upon an approved location for the Franchised Restaurant before signing the Franchise Agreement, then you must locate a suitable site within the Designated Area. The Designated Area is appointed for the sole purpose of site selection and does not confer any territorial exclusivity or protection to you. You may not conduct the business of your Franchised Restaurant at any site other than the Premises, or relocate your Franchised Restaurant, without our prior written consent. In deciding whether to consent to a relocation, we may consider such factors as we, in our sole discretion, deem appropriate, including the general location and neighborhood, demographic information, traffic patterns, access, visibility, location of other restaurants and food establishments (including other Restaurants) and size, condition, configuration, appearance and other physical characteristics of the site. The Franchise Agreement does not provide you with any options, rights of first refusal or similar rights to acquire additional franchises.
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands we control. However, you may receive a limited protected area, as follows: we will not operate (directly or through an affiliate), or grant to a third party the right to operate, any Checkers Restaurant or Rally's Restaurant located within the particular geographic area identified in Exhibit B attached to the Franchise Agreement (the "Protected Area"). The Protected Area, as defined by us, will be the lesser of: (i) a one (1) mile radius from the center of the Premises if your Franchised Restaurant is located in a suburban or rural area or (ii) an area immediately surrounding the Premises that encompasses a population of 20,000 residents if your Franchised Restaurant is located in an urban area. We do not provide a Protected Area to franchisees that operate Restaurants from Non-Traditional Sites.
Except for the rights we expressly grant you under the Franchise Agreement, we and all of our affiliates (and our respective successors and assigns, by purchase, merger, consolidation or otherwise) retain all of our rights and discretion with respect to the Marks, the System, Restaurants anywhere in the world, and the right to engage in any business whatsoever (without compensation to you), including the rights to:
We do not provide exclusivity in Delivery Areas if you participate in our optional Delivery Program. We, other franchisees, and/or DSPs may, directly or indirectly: (i) provide delivery or catering services from other Checkers and/or Rally's restaurants and (ii) advertise under the Marks, in each case within and outside of the Delivery Areas and to customers near your Franchised Restaurant, including in your Protected Area, if any.
Continuation of your exclusivity in the Protected Area is not dependent upon your achieving a certain sales volume, market penetration or other contingency. However, we may during the Term, at our sole option and upon providing notice to you, reduce or otherwise modify the size and/or boundaries of the Protected Area to encompass a geographic area immediately surrounding the Premises consisting of a population of 20,000 residents. If at any time during the Term the population in the Protected Area becomes less than 20,000 residents, we have no obligation to expand or modify the size and/or boundaries of the Protected Area to include a greater population.
Source: Item 12 — TERRITORY (FDD pages 57–60)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the Franchise Agreement grants the right to own and operate a restaurant at a specific location. While Checkersrallys does not offer an exclusive territory, franchisees may receive a limited protected area. This protected area is defined as the lesser of a one-mile radius from the restaurant's center in suburban or rural areas, or an area immediately surrounding the premises encompassing a population of 20,000 residents in urban areas. However, Checkersrallys does not provide a protected area to franchisees operating restaurants from Non-Traditional Sites.
Even with a protected area, Checkersrallys retains significant rights. They can operate or franchise restaurants outside the protected area, operate restaurants at Non-Traditional Sites within or outside the protected area, and sell products through alternative channels of distribution like the internet or supermarkets. They can also operate restaurants under different trademarks and acquire businesses that compete with Checkersrallys, even allowing those businesses to convert to Checkersrallys restaurants.
Checkersrallys also does not provide exclusivity in Delivery Areas if a franchisee participates in their optional Delivery Program. Checkersrallys, other franchisees, and/or DSPs may provide delivery or catering services from other Checkers and/or Rally's restaurants and advertise under the Marks within and outside of the Delivery Areas and to customers near a franchisee's restaurant, including in their Protected Area, if any. The continuation of exclusivity in the Protected Area is not dependent upon achieving a certain sales volume, market penetration or other contingency. However, Checkersrallys may reduce or otherwise modify the size and/or boundaries of the Protected Area to encompass a geographic area immediately surrounding the Premises consisting of a population of 20,000 residents. If at any time during the Term the population in the Protected Area becomes less than 20,000 residents, Checkersrallys has no obligation to expand or modify the size and/or boundaries of the Protected Area to include a greater population.
For prospective franchisees, this means that while you may have some limited protection from another Checkersrallys location opening nearby, Checkersrallys retains considerable freedom to operate or franchise other locations and channels that could compete with your restaurant. The protected area can also be modified under certain conditions, such as population changes. The lack of an exclusive territory and the potential for competition from other channels should be carefully considered.