exception

Under the Checkersrallys Development Agreement, what are the exceptions to the restriction on operating or granting franchises within the Development Area?

Checkersrallys Franchise · 2025 FDD

Answer from 2025 FDD Document

During the term of the Development Agreement, as long as you and your affiliates are in compliance with the agreement and all other agreements with us or any of our affiliates (including Franchise Agreements signed under the Development Agreement), we will: (a) grant to you, in accordance with Section 3 of the Development Agreement, at least that cumulative number of franchises for Checkers Restaurants or Rally's Restaurants set forth in Exhibit A to the Development Agreement, all of which are to be located within the Development Area (the locations of which we will approve in accordance with our then current criteria for selection of a Checkers Restaurant or Rally's Restaurant site); and (b) not operate (directly or through an affiliate), nor grant the right to operate, any Checkers Restaurants or Rally's Restaurants located within the Development Area, except for: (1) franchises granted pursuant to the Development Agreement; (2) Restaurants open (or under commitment to open) as of the date of the Development Agreement; (3) Checkers Restaurants, Rally's Restaurants or other restaurants using any part or all of the System and/or Marks at Non-Traditional Sites; and (4) restaurants that we purchase (or as to which we purchase the rights as franchisor) that are part of another franchise system or chain, regardless whether such restaurants are converted to operations as Checkers Restaurants or Rally's Restaurants using any of the

Marks and/or the System or whether such restaurants operate under other trademarks, service marks or trade dress and/or use other operating systems.

Source: Item 12 — TERRITORY (FDD pages 57–60)

What This Means (2025 FDD)

According to the 2025 Checkersrallys Franchise Disclosure Document, while the Development Agreement grants the developer the right to open a certain number of Checkers or Rally's restaurants within a defined Development Area, Checkersrallys retains some exceptions to the restriction of operating or granting franchises to others within that area.

Specifically, Checkersrallys is not restricted from the following: franchises granted pursuant to the Development Agreement itself, restaurants already open or under commitment to open as of the Development Agreement date, Checkers or Rally's restaurants (or other restaurants using the Checkersrallys system or marks) at Non-Traditional Sites, and restaurants that Checkersrallys purchases (or acquires the franchisor rights to) that are part of another franchise system or chain. This last exception applies regardless of whether these acquired restaurants are converted to Checkers or Rally's or continue operating under their original branding and systems.

These exceptions mean that a Checkersrallys developer's area is not completely exclusive. Checkersrallys can still operate or franchise other units within the Development Area under the specified conditions. This is a fairly common practice in franchising, as franchisors often want to maintain flexibility for strategic growth and acquisitions. Prospective developers should carefully consider these exceptions and their potential impact on the developer's business when evaluating the Development Agreement.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.