B58/100FDD 2025
Checkers/Rally's — Litigation & Risk
Food & Beverage - Quick Service · FDD Items 3, 4 & 5
Moderate — Review
3 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
58 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
19
Government-backed loans issued
Default rate
20.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
2 loans
Loans charged off or defaulted
Total loan volume
$16.2M
Avg loan size
$854K
Participating lenders
12
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Florida
State whose law governs disputes — relevant if you're not based there
What drove the 58/100 rating
Risk Score Breakdown
- 01MINORSystem contracting at -3.6% YoY with 761 units indicates declining franchise viability and potential saturation or performance issues
- 02HIGHMultiple active litigation cases including wrongful termination arbitration and data breach settlement suggest operational/legal risk and franchisee relationship problems
- 03MINORWide investment range ($123K-$2.1M) and lack of Item 19 financial disclosure creates opacity around actual unit economics and profitability variability
- 04MINORNet income of $479K on $1.1M revenue (43.6% margin) is exceptionally high and may not be representative or sustainable across all unit types
- 05MINORPending arbitration by Baby Buford, LLC over advertising fund misappropriation raises concerns about franchisor fund management and franchisee grievance handling
Severity inferred from FDD text — not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.