Could pending litigation have a material impact on Checkersrallys' consolidated results of operations in any particular annual period?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
From time to time, we are involved in legal proceedings arising in the ordinary course of business relating to matters including, but not limited to, disputes with franchisees, suppliers, employees (including pursuant to employment discrimination and wage and hour laws) and customers, as well as disputes over intellectual property. We do not expect the outcome of pending litigation to have a material impact on our business or consolidated financial position, although it may have a material impact on our consolidated results of operations in any particular annual period.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Checkersrallys states that it is involved in legal proceedings that arise in the ordinary course of business. These proceedings include disputes with franchisees, suppliers, employees, and customers, and also disputes over intellectual property.
While Checkersrallys does not anticipate that the outcome of any pending litigation will have a material impact on its overall business or consolidated financial position, there is a possibility that such litigation could materially impact the consolidated results of its operations in any specific annual period. This means that while the company doesn't expect any single lawsuit to bankrupt them, a large settlement or adverse judgment in a particular year could significantly affect their profitability for that year.
For a prospective franchisee, this highlights the importance of understanding the types of legal risks Checkersrallys faces. It would be prudent to inquire about the nature and history of legal disputes involving Checkersrallys, as well as any ongoing litigation that could potentially affect the company's financial performance. Understanding these potential risks can help a franchisee assess the stability and predictability of their investment.