Can Checkersrallys operate restaurants with different trademarks within my Checkersrallys Development Area?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of the Development Agreement, as long as you and your affiliates are in compliance with the agreement and all other agreements with us or any of our affiliates (including Franchise Agreements signed under the Development Agreement), we will: (a) grant to you, in accordance with Section 3 of the Development Agreement, at least that cumulative number of franchises for Checkers Restaurants or Rally's Restaurants set forth in Exhibit A to the Development Agreement, all of which are to be located within the Development Area (the locations of which we will approve in accordance with our then current criteria for selection of a Checkers Restaurant or Rally's Restaurant site); and (b) not operate (directly or through an affiliate), nor grant the right to operate, any Checkers Restaurants or Rally's Restaurants located within the Development Area, except for: (1) franchises granted pursuant to the Development Agreement; (2) Restaurants open (or under commitment to open) as of the date of the Development Agreement; (3) Checkers Restaurants, Rally's Restaurants or other restaurants using any part or all of the System and/or Marks at Non-Traditional Sites; and (4) restaurants that we purchase (or as to which we purchase the rights as franchisor) that are part of another franchise system or chain, regardless whether such restaurants are converted to operations as Checkers Restaurants or Rally's Restaurants using any of the
Marks and/or the System or whether such restaurants operate under other trademarks, service marks or trade dress and/or use other operating systems.
Except as otherwise expressly provided in the Development Agreement, we and all of our affiliates (and our or their respective successors and assigns, by purchase, merger, consolidation or otherwise) retain all of our rights and discretion with respect to the Marks, the System and Restaurants anywhere in the world, and the right to engage in any business whatsoever (without compensation to you), including the right to: (a) operate, and grant to others the right to operate, Restaurants at such locations and on such terms and conditions as we deem appropriate; (b) sell any products or services under the Marks, or under other trademarks, service marks or trade dress, through alternative channels of distribution (including the internet or similar electronic media and supermarkets); (c) operate, and grant to others the right to operate, restaurants identified by trademarks, service marks or trade dress, other than the Marks, under the terms and conditions we deem appropriate; and (d) be acquired (whether through acquisition of assets, ownership interests or otherwise, regardless of the form of transaction), by a business providing products and services similar to those provided at Checkers Restaurants or Rally's Restaurants, or by another business, even if such business operates, franchises and/or licenses Competitive Businesses in the Development Area.
Source: Item 12 — TERRITORY (FDD pages 57–60)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Checkersrallys retains the right to operate restaurants with different trademarks, service marks, or trade dress within a franchisee's Development Area. Specifically, Checkersrallys can purchase restaurants that are part of another franchise system or chain and operate them under different trademarks, regardless of whether they are converted to Checkersrallys restaurants. This means that even within a franchisee's designated area, Checkersrallys could introduce other restaurant brands or concepts.
This clause has significant implications for prospective franchisees. While franchisees are granted a Development Area for Checkersrallys restaurants, this area is not protected from other restaurant brands that Checkersrallys might introduce or acquire. This could lead to direct competition within the franchisee's territory from businesses under the control of Checkersrallys but operating under different names and systems. The franchisee's success is therefore not solely dependent on the Checkersrallys brand's performance but also on Checkersrallys's decisions regarding other brands.
Furthermore, Checkersrallys retains the right to sell products or services under other trademarks through alternative channels of distribution, such as the internet or supermarkets, within the Development Area. This broad reservation of rights underscores that the franchisee's rights are limited to operating Checkersrallys restaurants and do not extend to preventing Checkersrallys from engaging in other business activities, even if those activities compete with the franchisee's business. Prospective franchisees should carefully consider these factors and evaluate the potential impact of such competition on their investment.
In summary, while Checkersrallys grants development rights for Checkersrallys restaurants within a specific area, it retains considerable freedom to operate or introduce other restaurant brands and distribution channels within that same area. This lack of exclusivity beyond the Checkersrallys brand itself is a critical point for potential franchisees to understand and assess when evaluating the franchise opportunity.