Can a Checkersrallys franchisee participate in a class action lawsuit against the franchisor?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree that, for our System to function properly, we should not be burdened with the costs of litigating system-wide disputes. Accordingly, any disagreement between you (and your Owners) and us shall be considered unique as to its facts and shall not be brought as a class action, and you (and each of your Owners) waive any right to proceed against us or any of our shareholders, members, Affiliates, officers, directors, employees, agents, successors and assigns by way of class action, or by way of a multi-plaintiff, consolidated or collective action. In any legal action between the parties, the court shall not be precluded from making its own independent determination of the issues in question, notwithstanding the similarity of issues in any other legal action involving us and any other franchisee, and each party waives the right to claim that a prior disposition of the same or similar issues precludes such independent determination.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees and their owners waive the right to participate in class action lawsuits against Checkersrallys. The FDD states that any disagreement between the franchisee (and their owners) and Checkersrallys will be considered unique to its facts and cannot be brought as a class action. This waiver extends to any of Checkersrallys's shareholders, members, affiliates, officers, directors, employees, agents, successors, and assigns.
This waiver means that a Checkersrallys franchisee cannot join with other franchisees to sue Checkersrallys as a group. Each franchisee must pursue any legal claims individually. This can be a significant disadvantage, as class action lawsuits allow plaintiffs to pool resources and share the costs of litigation. It also prevents franchisees from collectively addressing systemic issues within the franchise system.
The FDD also specifies that in any legal action between the parties, the court is not precluded from making its own independent determination of the issues, regardless of the similarity of issues in any other legal action involving Checkersrallys and any other franchisee. Each party waives the right to claim that a prior disposition of the same or similar issues precludes such independent determination. This clause reinforces the individualized nature of any legal disputes between a franchisee and Checkersrallys.
This type of clause is increasingly common in franchise agreements. Prospective franchisees should carefully consider the implications of waiving their right to participate in a class action, as it can significantly impact their ability to seek legal recourse against the franchisor.