Is a Checkersrallys franchisee's failure to pay an unaffiliated supplier considered a default if the payment is subject to a bona fide dispute?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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;
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a franchisee's failure to make timely payments to unaffiliated suppliers can be considered a default. However, this is with a specific exception. If the payment is subject to a bona fide dispute, it is not considered a default.
If a Checkersrallys franchisee fails to pay an unaffiliated supplier, Checkersrallys will issue a notice of the failure to comply. The franchisee then has thirty days to correct the failure. If the franchisee does not correct the failure within the thirty-day window, it will be considered a default of the franchise agreement.
This clause protects Checkersrallys from potential legal issues arising from a franchisee's debt. It also ensures suppliers are paid in a timely manner. However, the bona fide dispute clause protects franchisees from being penalized for legitimate payment disagreements.