Risk Score
Pending analysis
Investment Range
$123,630 - $2,132,493
Min Cash Required
$50,000
Total US Locations
762
Business Summary
Checkers Drive-In Restaurants, Inc., operating under the Checkers and Rally's brands, offers a limited menu of hamburgers, cheeseburgers, hot dogs, and other food items. These quick-service restaurants are known for their differentiated, made-to-order menu, value pricing, and a distinctive dual drive-thru format, with a focus on late-night service. They also introduce innovative menu products like layered sundaes, milkshakes, and funnel cake fries.
Corporate History
Checkers Drive-In Restaurants, Inc. was incorporated in Delaware in September 1991, and has operated and franchised Checkers Restaurants since that year. The company merged with Rally's Hamburgers, Inc. in August 1999, which itself had been operating since 1985 and franchising Rally's Restaurants since 1986. This merger brought both brands under the Checkers Drive-In Restaurants, Inc. umbrella. In June 2023, its former parent company underwent a recapitalization, transferring control to a new parent entity.
Financial Overview
Investment Range
$123,630 - $2,132,493
Franchise Fee (High)
$30,000
Minimum Cash Required
$50,000
Royalty %
4%
Marketing %
2.65%
Equipment Costs (Low)
$25,000
Equipment Costs (High)
$352,000
Working Capital
$85,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The FDD's 'Special Risks' section explicitly states that Checkers Drive-In Restaurants, Inc.'s financial condition, as shown in its financial statements, raises questions about its ability to provide services and support to franchisees. The financial statements indicate that, after a recapitalization in June 2023, management believes a portion of the company's deferred tax assets will likely not be realized, leading to an adjustment in the valuation allowance. This suggests ongoing financial challenges for Checkers Drive-In Restaurants, Inc.
Financing Details
Checkers Drive-In Restaurants, Inc. does not offer any direct or indirect financing to franchisees. The company also does not guarantee any notes, leases, or other financial obligations for franchisees.
Performance Metrics
Total US Locations
762
Franchised Units
532
Corporate Units
230
Avg Square Footage
1,008
Franchising Since
1991
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
4
Litigation Summary
Checkers Drive-In Restaurants, Inc. is currently involved in a pending litigation from 2020 with former franchisees, Baby Buford, LLC, et al., who allege wrongful termination and misappropriation of advertising funds. Additionally, Checkers initiated a pending claim for indemnification in 2023 against Southern Shoals, LLC, due to a loan default. In past litigation, the company settled two class-action complaints in 2021 (Cotter and Dinh) related to alleged failures in securing customer credit card data, which resulted in reimbursements or restaurant vouchers for affected class members.
Bankruptcy History
Checkers Drive-In Restaurants, Inc. has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Term
10 years
Renewal Conditions
To renew, Checkers Drive-In Restaurants, Inc. franchisees must be in full compliance with all agreements and have been in substantial compliance throughout the term. They must maintain possession of the premises for the new term, agree to remodel the restaurant to current specifications, give 180 days prior written notice of their intent to renew, and sign a new franchise agreement (which may have materially different terms) and a general release of claims. The renewal fee will be either one-third or one-half of the then-current initial franchise fee, depending on whether the successor term is 10 or 20 years.
Training & Support Program
Franchisor Assistance
Checkers Drive-In Restaurants, Inc. provides comprehensive assistance, starting with guidance in site selection and development, including standard criteria and on-site evaluations. Before opening, franchisees receive initial training for themselves (or an Operating Partner) and their manager, access to a confidential Operations Manual, and mandatory specifications for restaurant design, equipment, and suppliers. For new restaurants, Checkers also offers up to 10 days of on-site pre-opening and opening support from its personnel. Ongoing assistance includes periodic guidance on the System, updates to the Operations Manual, issuance of new standards and procedures, and administration of a National Production Fund for advertising and marketing. The company may also establish local or regional advertising cooperatives and offers optional Delivery and Order Ahead programs.
Initial Training Hours
179
Training Location
Tampa, or other location we designate or via virtual session
Ongoing Support
After opening, Checkers Drive-In Restaurants, Inc. provides periodic guidance on the System, including improvements and changes, and regularly updates the Operations Manual with new standards and operating procedures. The company administers a National Production Fund for advertising and marketing, which franchisees contribute to. Checkers may also establish local or regional advertising cooperatives. The company offers optional Delivery and Order Ahead programs for franchisees and may require mandatory or optional additional training programs for franchisees and their managers, for which additional fees may apply.
Franchise Requirements
Industry Experience Required
Yes
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
full-time
Territory Type
Protected
Territory Size Requirements
Checkers Drive-In Restaurants, Inc. defines its Protected Area for franchisees as the lesser of a one-mile radius from the restaurant's center in suburban or rural areas, or an area encompassing a population of 20,000 residents in urban areas. Checkers reserves the right to reduce or modify the Protected Area's size and/or boundaries to encompass a geographic area immediately surrounding the premises consisting of 20,000 residents.
Staffing Notes
Checkers Drive-In Restaurants, Inc. requires that the franchised restaurant is always under the direct, on-premises supervision of the franchisee (or an Operating Partner) or an approved manager-level employee. This individual must have sufficient experience in quick-service restaurant operations and have successfully completed the company's initial training program. The franchisee (or Operating Partner) is responsible for all employment decisions, including hiring, firing, and training, while Checkers' specifications and standards may regulate staffing levels, employee qualifications, training, dress, and appearance. Franchisees are prohibited from recruiting management-level employees from Checkers or other franchised restaurants without consent.