Checkers / Rally’s
Bottom line
- Total investment $124K – $2.1M including a $30K franchise fee, 4.0% ongoing royalty.
- Average unit revenue of $1.1M/year (median $1.1M). Estimated payback in 7.3 years.
- Rated STRONG with a risk score of 47/100. SBA loan default rate of 0.0% across 94 loans (below the industry average).
- System contracting at -8.1% CAGR over 3 years. Investigate whether closures are franchisor-driven (consolidation) or franchisee-driven (economics).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Checkers / Rally’s unit return on the cash you put in?
Unlevered ROIC · per unit
14%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Checkers / Rally’s units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$1.9M
on $9.3M purchase
Total debt
$7.4M
SBA $4.6M + senior + seller note
Overview
About
Franchisees operate fast-casual drive-thru hamburger restaurants specializing in double cheeseburgers and hot dogs, managing 24/7 drive-thru operations, food preparation, inventory, staffing, and customer service. Day-to-day responsibilities include labor scheduling, food cost management, drive-thru efficiency optimization, and local marketing within their protected territory.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 7 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Checkers/Rally's presents elevated risk due to contracting unit count, material litigation disputes, thin profit margins, and lack of transparent financial disclosure—unsuitable for risk-averse investors despite protected territory.
Score breakdown · what drove the 47 / 100 rating
- 01MINORUnit count declining 3.6% YoY (761 units) signals system contraction and potential market saturation
- 02HIGHMultiple active litigation matters including wrongful termination claims, data breach settlement, and franchisor indemnification disputes indicate operational and legal instability
- 03MEDNet income of $154,055 on $1.1M revenue (14% margin) is thin for QSR with 4% royalty obligation, leaving limited buffer for underperformers
- 04MINORHigh investment ceiling ($2.1M+) combined with declining unit count creates elevated risk of poor ROI and difficulty exiting
- 05MINORAbsence of Item 19 financial performance data prevents independent verification of average revenue/income claims
- 06HIGHProtected territory insufficient offset given brand momentum is negative and litigation suggests franchisor-franchisee relationship strain
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
100 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Checkers / Rally’s · FDD (2025) PDF