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A38/100FDD 2025

Checkers/Rally’s — Litigation & Risk

Food & Beverage - Quick Service · FDD Items 3, 4 & 5

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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
38 / 100
FranchiseVerdict composite
Rating
STRONG
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
94
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted

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 38/100 rating

Risk Score Breakdown

  1. 01MINORUnit count declining 9.7% YoY (761 units) indicates systemwide contraction and potential market saturation or operational challenges
  2. 02HIGHMultiple active litigation matters including pending arbitration with Baby Buford LLC over termination disputes and advertising fund contributions, signaling franchisor-franchisee relationship strain
  3. 03MINORData breach class action settlement (Cotter/Dinh) suggests operational/cybersecurity vulnerabilities and reputational risk to brand
  4. 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
  5. 05HIGHNo going concern notation absent but combined with contracting unit base raises sustainability questions for system profitability and franchisor support
  6. 06MINORFranchisor cross-claim in Southern Shoals foreclosure indicates franchisee financial distress and potential operational disputes over asset recovery

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.