Under what circumstances will the termination of a Checkersrallys Development Agreement NOT result in the termination of the Franchise Agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, if you are operating under a Development Agreement that terminates solely as a result of your failure to comply with the development schedule set forth in that agreement, then such termination of the Development Agreement will not result in a termination (constructive or otherwise) of this Agreement if you have
fully performed and otherwise been in compliance with all of your obligations under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the termination of a Development Agreement will not automatically trigger the termination of the Franchise Agreement under specific conditions. If the Development Agreement terminates solely because the franchisee failed to meet the development schedule outlined in that agreement, the Franchise Agreement remains intact. However, this is contingent on the franchisee having fully performed and remained compliant with all obligations under the Franchise Agreement itself.
This provision offers a degree of protection to Checkersrallys franchisees who may face challenges in meeting their development timelines. It prevents the loss of an already-operating franchise due to development delays, provided the franchisee is otherwise in good standing with Checkersrallys. This clause encourages franchisees to maintain operational compliance even if they are struggling with expansion.
For a prospective Checkersrallys franchisee, this is a crucial point to consider. It highlights the importance of understanding and adhering to both the Development Agreement and the Franchise Agreement. While failure to meet the development schedule has consequences, it does not automatically jeopardize a successful, compliant restaurant operation. Franchisees should carefully review the specific obligations under both agreements to ensure they understand their responsibilities and the conditions under which their franchise can be protected.
It is important for potential Checkersrallys franchisees to seek clarification from the franchisor regarding the specific criteria used to determine 'full performance' and 'compliance' under the Franchise Agreement. Understanding these standards is essential for safeguarding their investment and ensuring the continued operation of their Checkersrallys restaurant, even if development plans encounter setbacks.