According to Checkersrallys's 2025 Franchise Disclosure Document, in the case of Southern Shoals, LLC v. 2-32C Wheeler Road, Inc. et al., Checkersrallys is seeking indemnification from the franchisee. The litigation, pending in the Supreme Court of New York, County of Suffolk, involves Southern Shoals, LLC alleging assignment of a Loan and Security Agreement that allows them to foreclose on collateral at three franchised Checkers Restaurants. Checkersrallys was initially named as a defendant in the case.

Indemnification, in this context, means that Checkersrallys wants the franchisee to cover any losses or damages that Checkersrallys might incur as a result of the lawsuit. This is a common legal strategy in franchise agreements, where the franchisee is often responsible for liabilities arising from the operation of their specific franchise location.

For a prospective Checkersrallys franchisee, this highlights the importance of understanding the indemnification clauses in the franchise agreement. It means that if a franchisee's actions or financial issues lead to a lawsuit that also names Checkersrallys, the franchisee could be responsible for covering Checkersrallys's legal costs and any resulting damages. This underscores the need for franchisees to operate responsibly and maintain adequate insurance coverage.