A38/100FDD 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
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
- 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 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.