Can the Checkersrallys Franchisor engage in any business activities whatsoever during the Term when a franchisee operates at a Non-Traditional Site?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges and agrees that it will not receive any territorial protection or exclusivity under this Addendum or the Franchise Agreement when operating the Restaurant at a Non-Traditional Site and that Franchisor and its Affiliates retain all rights and discretion with respect to the Marks, the System, the sale of products and services similar or dissimilar to those offered by "Checkers" and "Rally's"-branded restaurants, and the operation or franchising of "Checkers" and "Rally's"-branded restaurants anywhere located or to be located, and may engage in any business activities whatsoever, whenever and wherever they desire during the Term.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, if a franchisee operates a restaurant at a non-traditional site, they will not receive any territorial protection or exclusivity. Checkersrallys retains all rights and discretion regarding the use of their trademarks, the system, and the sale of similar or dissimilar products and services. They also maintain the right to operate or franchise Checkersrallys-branded restaurants anywhere they desire during the term of the franchise agreement. This means Checkersrallys can engage in any business activities, whenever and wherever they choose, even if it directly competes with a franchisee's non-traditional site.
This lack of exclusivity is a significant consideration for prospective franchisees. Non-traditional sites are defined as locations that generate customer traffic independently of the surrounding area, such as military bases, airports, big-box retail outlets, and entertainment venues. Franchisees operating in these locations should be aware that Checkersrallys could open another restaurant nearby, even within the same venue, or pursue other business ventures that directly compete with their franchise.
The FDD emphasizes that franchisees operating at non-traditional sites have no territorial protections. This differs significantly from standard franchise agreements, which often include a protected area where the franchisor agrees not to open competing locations. The absence of this protection means that franchisees at non-traditional sites face a higher risk of competition from Checkersrallys itself or other franchisees.
Therefore, prospective Checkersrallys franchisees considering a non-traditional site should carefully evaluate the potential for competition and the impact it could have on their restaurant's profitability. They should also seek clarification from Checkersrallys regarding their specific plans for expansion and other business activities in the area surrounding the proposed non-traditional site.