For Checkers, what is the Area Franchisee required to provide regarding its Owners?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
five percent (5%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- (b) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating;
- (c) divert or attempt to divert any actual or potential business or customer of any Checkers or Rally's-branded restaurant to a Competitive Business; or
- (d) engage in any other activity which, in our sole opinion, might be injurious or prejudicial to the goodwill associated with the Marks or the System.
- 6.03 Procurement of Additional Covenants. You agree to require and obtain the execution of a non-disclosure and non-competition agreement, as we may require at our sole discretion, from all of the following persons:
- (a) Before employment or any promotion, your Operating Partner; and,
- (b) If you are a business entity, all Owners with at least a ten percent (10%) direct or indirect legal or beneficial ownership interest in you; all of your officers, directors and managers; and, all persons possessing equivalent positions in any business entity which directly or indirectly owns and/or controls you. You shall procure all such Nondisclosure and
Non-Competition Agreements no later than ten (10) days following the Effective Date (or, if any individual or entity attains any status identified above after the Effective Date, within ten (10) days after such individual or entity's attains such status) and shall furnish to us copies of all executed Nondisclosure and Non-Competition Agreements within ten (10) days following their execution.
7. AREA FRANCHISEE'S RIGHT TO TRANSFER.
- 7.01 Franchisor's Approval.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, an Area Franchisee must ensure that certain individuals and entities associated with their business sign a non-disclosure and non-competition agreement. Specifically, if the Area Franchisee is a business entity, all Owners with at least a ten percent (10%) direct or indirect legal or beneficial ownership interest, all officers, directors, and managers, and all persons possessing equivalent positions in any business entity which directly or indirectly owns and/or controls the Area Franchisee must sign this agreement.
The Area Franchisee is responsible for obtaining these agreements no later than ten (10) days following the Effective Date of the franchise agreement. If an individual or entity attains any of the aforementioned statuses after the Effective Date, the Area Franchisee has ten (10) days after the individual or entity attains such status to procure the agreement. Furthermore, the Area Franchisee must furnish copies of all executed Non-disclosure and Non-Competition Agreements to Checkers within ten (10) days following their execution.
Additionally, the Area Franchisee must provide a complete and accurate list of all Owners, including their full names, mailing addresses, and a description of the nature and extent of each Owner's interest in the Area Franchisee. The Area Franchisee and each Owner must also represent and warrant that each Owner is the sole and exclusive legal and beneficial owner of their ownership interest, free and clear of all liens, restrictions, agreements, and encumbrances, except as required or permitted by the Area Franchise Agreement. This information ensures Checkers knows who controls and benefits from the Area Franchisee's operations and that those individuals are committed to protecting Checkers' interests.
These requirements ensure that Checkers maintains control over who is involved in its franchise system and that those individuals are bound by agreements protecting Checkers' confidential information and competitive interests. This is a common practice in franchising to protect the brand and maintain consistency across the franchise network.