Under the Franchise Agreement, can a Checkersrallys franchisee engage in catering or delivery operations without Checkersrallys' approval?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
starting on the Effective Date (the "Term"). You may not conduct the business of the Franchised Restaurant or use the System at any site other than the Premises, or relocate the Franchised Restaurant, without our prior consent. The Franchised Restaurant may not be used for any purpose other than the operation of a Restaurant in compliance with this Agreement. You may conduct business only with customers at the Franchised Restaurant and may not engage in any catering or delivery businesses without or prior consent which may be withheld for any reason.
Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD pages 65–66)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees are generally prohibited from engaging in catering or delivery businesses without prior consent from Checkersrallys. This restriction is outlined in the grant of rights within the Franchise Agreement, emphasizing that business should only be conducted with customers at the franchised restaurant unless explicit approval is obtained. Checkersrallys retains the right to withhold this consent for any reason. However, franchisees may be allowed to offer certain delivered products if they meet Checkersrallys' requirements and elect to participate in the optional Delivery Program.
This policy ensures that Checkersrallys maintains control over its brand and service standards across all channels, including catering and delivery. By requiring approval, Checkersrallys can ensure that these services align with its operational guidelines and quality expectations. This also allows Checkersrallys to manage potential conflicts or inconsistencies that might arise if franchisees were to independently engage in these activities.
For a prospective franchisee, this means that they cannot assume they can automatically offer catering or delivery services. They must first seek and obtain approval from Checkersrallys, and potentially participate in the Delivery Program if they wish to offer delivery. This requirement underscores the importance of discussing these specific business activities with Checkersrallys during the due diligence process to understand the requirements and potential restrictions involved. Franchisees should inquire about the criteria for approval, the terms of the Delivery Program, and any associated costs or obligations.
It is also important to note that Checkersrallys does not provide exclusivity in Delivery Areas if a franchisee participates in their optional Delivery Program. Checkersrallys, other franchisees, and/or DSPs may provide delivery or catering services from other Checkers and/or Rally's restaurants and advertise under the Marks within and outside of the Delivery Areas, even within a franchisee's Protected Area, if any.