Under what conditions must a Checkersrallys franchisee reimburse Checkersrallys for attorneys' fees, costs, and expenses?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
ol over the day-to-day operation of the Franchised Restaurant and you agree to never contend otherwise.
12.02 Audits.We have the right at any time during business hours, and without prior notice to you, to inspect, copy and audit the books, records, tax returns and documents relating to the development, ownership, lease, occupancy or operation of the Franchised Restaurant. You must cooperate fully with our representatives and independent accountants conducting such audits. If any inspection or audit discloses an understatement of Net Sales, you must pay us, within 7 days after receipt of the audit report, the royalties and NPF contributions due on the amount of such understatement, plus interest (as provided in Section 6.04) from the date originally due until the date of payment. Further, if such inspection or audit is made necessary by your failure to furnish reports, records or information on a timely basis, or if we determine an understatement of Net Sales for the period of any audit to be greater
than 2%, you must reimburse us for the cost of such audit or inspection, including the charges of any attorneys and independent accountants and the travel expenses, room and board and compensation of our employees.
13. FRANCHISEE'S RIGHT TO TRANSFER.
- 13.01 Franchisor's Approval.The rights and duties created by this Agreement are personal to you or, if you are a business corporation, partnership, limited liability company or other legal entity, your Owners. Accordingly, neither you nor any of your Owners may transfer the Franchise without our approval and without complying with all of the provisions of Section 13. Any transfer without such approval or compliance constitutes a breach of this Agreement and is void and of no force or effect.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a franchisee may be required to reimburse Checkersrallys for costs associated with audits or inspections under specific circumstances. If an audit reveals an understatement of Net Sales, and the audit was necessitated by the franchisee's failure to provide timely reports, records, or information, the franchisee will be responsible for covering the expenses. Similarly, if an audit uncovers an understatement of Net Sales exceeding 2% for the audited period, the franchisee must reimburse Checkersrallys for the audit or inspection costs. These costs include charges from attorneys and independent accountants, as well as travel, lodging, and compensation for Checkersrallys's employees.
Additionally, the Checkersrallys franchisee is responsible for covering all costs and expenses, including reasonable attorney and expert fees, incurred by Checkersrallys when enforcing covenants not to compete as outlined in the Franchise Agreement. This provision underscores the importance Checkersrallys places on protecting its confidential information and market presence.
These stipulations highlight the financial responsibilities a Checkersrallys franchisee assumes beyond initial investments and ongoing fees. Franchisees should maintain meticulous records and adhere to reporting schedules to avoid audit-related expenses. Furthermore, understanding and complying with non-compete agreements is crucial to prevent potential legal conflicts and associated costs.