Under what circumstances must a Checkersrallys franchisee pay attorneys' fees and other costs?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
higher than the rent due under the underlying lease. | | Audit | Cost of audit | Upon receipt of our bill. | Payable only if you fail to furnish required information or if we find an understatement of Net Sales greater than 2%. | | Insurance | Varies, cost of coverage obtained | As incurred | If you fail to obtain the required insurance coverage for the Franchised Restaurant, we may obtain such coverage at your expense. | | Maintenance Costs | Varies, actual costs | As incurred | If you fail or refuse to maintain the Franchised Restaurant as required, we have the right to do so on your behalf and at your expense. | | TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (See Note 1) | |------------------------------------------------------------------------------|------------------------------------------------|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Attorneys' Fees and other costs | Varies, actual fees and costs incurred | As incurred | Payable if you fail to comply with the Franchise Agreement of if we are joined in a lawsuit that is based on your operation of a restaurant. | | Indemnification | Varies, actual losses and expenses incurred | As incurred | You must reimburse us for our losses and expenses as a result of third party claims arising from your failures or breaches under the Franchise Agreement, your operation of the Franchised Restaurant, and any unauthorized acts. | | Early Termination | Varies, see Note 9 for | As incurred | (See Note 9) | | Damages | calculation | | | | Costs to De Identify the Premises upon Termination or Expiration | Varies, actual losses and expenses | As incurred | You must reimburse us for our losses and expenses if you fail to de-identify and remove signage from the Franchised Restaurant following the termination or expiration of the Franchise Agreement, and our personnel is required to do so. |
NOTE 1: Except for the minimum advertising requirement and fees payable to the regional or local advertising cooperatives and NPF, all fees are payable to Checkers.
Source: Item 6 — OTHER FEES (FDD pages 21–29)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a franchisee may incur various fees and costs under specific circumstances. If Checkersrallys terminates the Franchise Agreement due to the franchisee's breach, the franchisee must pay Early Termination Damages within 30 days. This amount is equal to the average monthly royalty fees and advertising contributions owed for the past 24 months, multiplied by the number of months remaining in the term. If the restaurant has not operated for 24 months, the calculation uses the average monthly royalties and advertising contributions owed for the number of months the restaurant operated, multiplied by the remaining months in the term.
Additionally, if a Checkersrallys franchisee fails to furnish required information or if an audit reveals an understatement of Net Sales greater than 2%, the franchisee is responsible for covering the cost of the audit. If the franchisee fails to obtain the required insurance coverage for the Franchised Restaurant, Checkersrallys may obtain such coverage at the franchisee's expense. Similarly, if the franchisee fails or refuses to maintain the Franchised Restaurant as required, Checkersrallys has the right to perform the maintenance on the franchisee's behalf and at their expense.
Furthermore, Checkersrallys may impose fees to cover their costs in evaluating alternative approved brands or suppliers suggested by the franchisee. These fees are currently limited to out-of-pocket expenses and are due upon receipt of a bill from Checkersrallys. Franchisees may also incur costs for special assistance requested from Checkersrallys, which are currently limited to out-of-pocket expenses and are billed upon receipt. These various fees and potential costs highlight the importance of compliance with the Franchise Agreement and maintaining accurate financial records to avoid additional expenses.