Under what conditions is Checkersrallys prohibited from operating a Checkers or Rally's-branded restaurant, or granting a third party the right to operate one, within a franchisee's protected area?

According to Checkersrallys's 2025 Franchise Disclosure Document, during the franchise term, Checkersrallys agrees not to operate or grant to a third party the right to operate a Checkers or Rally's-branded restaurant within the franchisee's protected area. This is subject to the conditions outlined in Section 2.03 of the franchise agreement, which reserves specific rights for Checkersrallys.

However, Checkersrallys retains significant rights, including the right to establish and operate Checkers or Rally's-branded restaurants at locations outside the protected area, even if they directly compete with the franchisee's restaurant. Checkersrallys also reserves the right to establish and operate Checkers or Rally's-branded restaurants, or other restaurants using the System or Marks, at Non-Traditional Sites both within and outside the protected area.

Furthermore, Checkersrallys can sell products or services under the Marks through alternative channels of distribution, such as the internet or supermarkets, regardless of location. Checkersrallys also has the right to acquire businesses providing similar products and services and convert them to Checkers or Rally's-branded restaurants, even within the franchisee's protected area. These reserved rights significantly limit the protection a franchisee receives and introduce potential competitive pressures.

Prospective franchisees should carefully consider these reserved rights and their potential impact on their business. While a protected area is granted, Checkersrallys retains considerable latitude to operate or franchise other locations and alternative distribution channels that may compete with the franchisee's restaurant. Understanding these limitations is crucial for assessing the true value and security of the franchise.