If Checkersrallys files a claim for amounts owed, what is the franchisee obligated to do if Checkersrallys prevails?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
10.04 Costs of Enforcement. If we file a claim in a judicial or arbitration proceeding for amounts you or any of your Owners owe us or any of our Affiliates, or if we enforce this Agreement in a judicial or arbitration proceeding, and we prevail in any such proceeding, you agree to reimburse us for all of our costs and expenses, including reasonable accounting, paralegal, expert witness and attorneys' fees. If we are required to engage legal counsel in connection with your failure to comply with this Agreement, you must reimburse us for any attorneys' fees, costs and expenses we incur.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys' 2025 Franchise Disclosure Document, if Checkersrallys files a claim against a franchisee or their owners in a judicial or arbitration proceeding for amounts owed to Checkersrallys or its affiliates, and Checkersrallys prevails, the franchisee must reimburse Checkersrallys for all costs and expenses. These costs include reasonable accounting, paralegal, expert witness, and attorneys' fees.
This provision means that franchisees could face significant financial burdens beyond the original debt if Checkersrallys wins the legal action. The franchisee's obligation extends to covering Checkersrallys' legal and professional service expenses, which can quickly accumulate during litigation or arbitration. This creates a considerable risk for franchisees, as they may be responsible for substantial costs even if the initial amount owed is relatively small.
It is important for prospective Checkersrallys franchisees to understand the potential financial implications of this clause. Franchisees should factor in the possibility of covering Checkersrallys' legal costs when assessing the overall financial risks of the franchise. Furthermore, franchisees should ensure they have a clear understanding of their obligations and maintain meticulous financial records to minimize the risk of disputes with Checkersrallys. Franchisees should seek legal counsel to fully understand their obligations under the franchise agreement.