Under what condition might Checkersrallys require a franchisee to repair or reconstruct a damaged restaurant according to current layout and decor specifications?

According to Checkersrallys's 2025 Franchise Disclosure Document, if a franchised restaurant is damaged or destroyed by fire or other casualty, the franchisee must begin repairs or reconstruction within 30 days to restore it to its original condition. However, Checkersrallys has the right to mandate that the restaurant be repaired or reconstructed to match the current layout and decor specifications for new restaurants if, in Checkersrallys's reasonable judgment, doing so is feasible without incurring substantial additional costs.

This clause in the franchise agreement means that franchisees may be required to invest more in repairs than simply restoring the restaurant to its previous state. If Checkersrallys deems it reasonable and not overly expensive, franchisees could be forced to upgrade the restaurant to the newest brand standards after a damaging event. This could involve significant unexpected costs, especially if the current restaurant design differs greatly from the newer specifications.

For a prospective Checkersrallys franchisee, this highlights the importance of adequate insurance coverage to account for potential upgrades required by Checkersrallys after damage or destruction. It also emphasizes the need to understand Checkersrallys's criteria for determining what constitutes "substantial additional costs" and what factors they consider when deciding whether to enforce the updated specifications. Franchisees should discuss these potential scenarios with Checkersrallys during their due diligence to fully understand the financial implications.