Can Checkersrallys purchase restaurant chains and convert them to Checkersrallys restaurants within my 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.
Source: Item 12 — TERRITORY (FDD pages 57–60)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Checkersrallys has the right to purchase restaurant chains and convert them to Checkersrallys restaurants, even within a franchisee's Development Area. Specifically, Checkersrallys can purchase restaurants that are part of another franchise system or chain. These restaurants may or may not be converted to Checkersrallys restaurants using the Checkersrallys system or operate under other trademarks.
This means that even if a franchisee is granted a Development Area, Checkersrallys retains the right to acquire existing restaurant chains within that area and either convert them to Checkersrallys restaurants or operate them under a different brand. This could increase competition within the Development Area, as Checkersrallys could introduce more locations, either as Checkersrallys or under another brand, without it counting against the franchisee's development schedule.
This clause protects Checkersrallys's ability to grow and adapt its business model, but it also introduces a degree of uncertainty for franchisees. While franchisees are expected to develop a certain number of Checkersrallys restaurants within their Development Area, Checkersrallys is not restricted from independently expanding its presence through acquisitions. Prospective franchisees should consider this potential for increased competition when evaluating the franchise opportunity and negotiating the terms of their Development Agreement.