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 2.4 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
$1.8M
on $9.2M purchase
Total debt
$7.4M
SBA $4.6M + senior + seller note
Overview
About
Checkers/Rally's franchisees operate dual-branded or single-branded fast-service drive-thru burger and hot dog restaurants. Day-to-day operations include managing kitchen production, drive-thru service windows, staffing, inventory control, food cost management, and local marketing to drive customer traffic. Franchisees bear responsibility for rent, labor, utilities, and operational costs while paying 4% royalties on net sales to the franchisor.
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 · 9 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 high-risk profile: shrinking franchise base (-9.7% YoY), active litigation over termination and fees, data breach history, and substantial capital requirements relative to declining unit economics.
Score breakdown · what drove the 47 / 100 rating
- 01MINORUnit count declining 9.7% YoY (761 units) indicates systemwide contraction and potential market saturation or operational challenges
- 02HIGHMultiple active litigation matters including pending arbitration with Baby Buford LLC over termination disputes and advertising fund contributions, signaling franchisor-franchisee relationship strain
- 03MINORData breach class action settlement (Cotter/Dinh) suggests operational/cybersecurity vulnerabilities and reputational risk to brand
- 04MINORHigh investment range ($123K–$2.1M) with 4% royalty creates significant capital requirement relative to average net income of $479K, yielding potentially thin margins post-royalty
- 05HIGHNo going concern notation absent but combined with contracting unit base raises sustainability questions for system profitability and franchisor support
- 06MINORFranchisor cross-claim in Southern Shoals foreclosure indicates franchisee financial distress and potential operational disputes over asset recovery
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
81 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Checkers/Rally’s · FDD (2025) PDF