Does Checkersrallys offer new or additional Western License Agreements as part of this Franchise Disclosure Document?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
In 1997, in response to certain issues raised by several Rally's franchisees in California and Arizona, and in a mutual effort to avoid a protracted dispute, we agreed to a material modification of the franchise agreements with the affected California and Arizona Rally's franchisees. The Rally's franchisees are referred to as the "Western Licensees," and they have agreed to execute license agreements to replace their franchise agreements. Under the "Western License Agreement," the Western Licensees will pay a reduced royalty (1% of Net Sales), and we have agreed that the services that we are obligated to provide to them will be materially different from, and will be substantially less than, the services that we provide to franchisees under the Franchise Agreement. Under the Western License Agreement, those Rally's franchisees who elect to obtain advertising material from our advertising agency will pay a license fee of 2% of Net Sales. We do not offer new or additional Western License Agreements as part of this Franchise Disclosure Document.
Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 9–14)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, new or additional Western License Agreements are not offered as part of the document. The Western License Agreements originated in 1997 as a resolution to issues raised by Rally's franchisees in California and Arizona.
These agreements involved a material modification of the franchise agreements with the affected franchisees, who are referred to as "Western Licensees." Under the Western License Agreement, these licensees pay a reduced royalty of 1% of Net Sales. In exchange for the reduced royalty, Checkersrallys provides materially different and substantially fewer services to these franchisees compared to standard franchise agreements.
Additionally, Rally's franchisees under the Western License Agreement who choose to obtain advertising material from Checkersrallys' advertising agency are required to pay a license fee of 2% of Net Sales. This arrangement is specific to the Western Licensees and is not a standard offering for new franchisees.