Are Checkersrallys franchisor and franchisee considered independent contractors?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
5.01 Independent Contractors. Neither this Agreement nor the dealings of the parties pursuant to this Agreement shall create any fiduciary relationship or any other relationship of trust or confidence. Franchisor and Area Franchisee, as between themselves, are and shall be independent contractors.
We and you acknowledge and agree that this Agreement (and the relationship of the parties which arises from this Agreement) grants us the right to make decisions, take actions and/or refrain from taking actions not inconsistent with your explicit rights and obligations hereunder that may affect favorably or adversely your interests. You understand and agree that we may operate and change the System and our business in any manner that is not expressly and specifically prohibited by this Agreement. Whenever we have reserved in this Agreement a right and/or discretion to take or withhold an action, or to grant or decline to grant you a right to take or withhold an action, except as otherwise expressly and specifically provided in this Agreement, we may make our decision or exercise our right and/or discretion on the basis of our judgment of what is in our best interests, including our judgment of what is in the best interests of our franchise network, at the time our decision is made, without regard to: (a) whether other reasonable or even arguably preferable alternative decisions or actions could have been made by us; (b) whether our decision or the action we take promotes our financial or other individual interest; (c) whether our decision or the action we take applies differently to you and one (1) or more other franchisees; or (d) whether our decision or the exercise of our rights is adverse to your individual interests or the individual interests of any other particular franchisees. We will have no liability to you for any such decision or exercise of our rights.
Nothing contained in this Agreement, or arising from the conduct of the parties hereunder, is intended to make either party a general or special agent, joint venturer, partner or employee of the other for any purpose whatsoever. You must conspicuously identify yourself in all dealings with customers, lessors, contractors, suppliers, public officials, personnel and others as the owner of development rights granted hereunder and must place such other notices of independent ownership on such forms, business cards, stationery, advertising and other materials as we require at any time and from time to time.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the agreement explicitly states that the relationship between Checkersrallys and its franchisees is that of independent contractors. This means that neither party is considered an agent, partner, joint venturer, or employee of the other for any purpose. This distinction is crucial as it defines the legal and financial responsibilities of each party.
As independent contractors, Checkersrallys franchisees are responsible for their own business operations, including hiring and managing employees, and ensuring compliance with all applicable laws and regulations. They also bear the financial risks and rewards associated with running their franchise. Checkersrallys, as the franchisor, provides the brand, system, and support, but does not directly control the day-to-day operations of the franchise.
The franchise agreement also requires franchisees to clearly identify themselves as the owners of their franchise in all dealings with customers, lessors, contractors, suppliers, public officials, and personnel. This reinforces the independent nature of the relationship and ensures that third parties understand that the franchisee is operating their own business under the Checkersrallys brand. This independence also extends to decisions Checkersrallys makes that may affect the franchisee's interests, as long as those decisions are not expressly prohibited by the agreement.
This independent contractor relationship has several implications for prospective Checkersrallys franchisees. It means they have greater autonomy in running their business, but also greater responsibility for its success. They should carefully consider the legal and financial implications of this arrangement and seek professional advice to ensure they understand their rights and obligations under the franchise agreement.