Under what conditions will a permanently closed Checkersrallys restaurant (not due to franchisee noncompliance) be considered open for 6 months for the purposes of Section 3(a)?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of the chart in Section 3(a), above, a Restaurant that is permanently closed after having been opened, other than as a result of noncompliance by you with the terms of the applicable Franchise Agreement, shall be deemed open for a period of 6 months after the last day it was open for business, provided that: (i) during such period of time, you continuously and diligently take such actions as may be required to develop and open a substitute Restaurant within the Development Area pursuant to a new Franchise Agreement therefor; and (ii) by the end of such period you have the substitute Restaurant open and operating in compliance with the Franchise Agreement therefor.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a restaurant that has been permanently closed, but not due to the franchisee's noncompliance with the Franchise Agreement, may be considered open for six months after its last day of operation under specific conditions related to developing a substitute restaurant. This allowance impacts calculations related to Section 3(a) of the agreement, which likely concerns development schedules or other performance metrics.
For Checkersrallys to consider the closed restaurant as operational for six months, the franchisee must continuously and diligently work to develop and open a substitute restaurant within the designated Development Area. This involves actively taking the necessary steps to establish a new Checkersrallys location.
Crucially, by the end of this six-month period, the franchisee must have the substitute Checkersrallys restaurant open and operating in compliance with the terms of the Franchise Agreement. This condition ensures that the franchisee is not simply delaying development but is actively working towards maintaining their presence in the Development Area.
This provision offers a limited grace period for franchisees who experience unforeseen closures, allowing them time to re-establish their business without immediately facing penalties related to development schedules, provided they meet the strict requirements of diligently pursuing and opening a replacement Checkersrallys restaurant within the specified timeframe.