Following termination or expiration of a Checkers franchise agreement, is a franchisee prohibited from being involved with a Competitive Business that grants franchises to others, and if so, for how long?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon the expiration or other termination for any reason of my employment, association, service or ownership participation, I agree:
(i) to return immediately to Franchisor or Franchisee, as the case may be, all Confidential Information, and any material(s) containing a subset thereof, in my possession that was utilized, or to which I had access,
- during my employment, association, service or ownership participation;
- (ii) to refrain, beginning upon such expiration or termination and forever thereafter, from any and all contacts with customers of Restaurants for any purpose whatsoever; and
- (iii) for a period of two (2) years, starting on the effective date of termination or expiration of my employment/service/association or ownership participation, to refrain from directly or indirectly (such as through any one or more of my spouse, legally-recognized domestic partner, parents, children or sibling(s) (collectively, "Immediate Family")) owning a legal or beneficial interest in, or render services or give advice to: (a) any Competitive Business operating at the Premises or within a three (3)-mile radius of the Premises; (b) any Competitive Business operating within a radius of three (3) miles of any Restaurant in operation or under construction on the effective date of termination or expiration of my employment/service/association/ ownership participation; or (c) any entity which grants franchises, licenses or other interests to others to operate any Competitive Business.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkers Franchise Disclosure Document, a franchisee is restricted from involvement with a Competitive Business that grants franchises to others for a period of two years after the termination or expiration of their franchise agreement. Specifically, the franchisee is prohibited from owning an interest in, rendering services to, or giving advice to any entity that grants franchises or licenses to others to operate any Competitive Business.
A "Competitive Business" is defined as any business that operates as a restaurant or food-service provider deriving more than 20% of its revenue from selling hamburgers, cheeseburgers, and hot dogs in a fast-food, quick-service, drive-thru, or drive-in format, or any business that grants franchises or licenses to others to operate such a business. This restriction is in place to protect Checkers' confidential information, trademarks, and goodwill.
This post-term covenant applies not only to the former franchisee but also extends to their immediate family members, including spouses, legally recognized domestic partners, parents, children, and siblings. The restriction covers a broad range of activities, including direct or indirect ownership, rendering services, or providing advice to a Competitive Business. The geographic scope includes any entity which grants franchises, licenses or other interests to others to operate any Competitive Business, regardless of location.
The FDD states that if a franchisee fails to abide by these obligations, the restrictions will be tolled during the period of the breach and will continue for two years from the date of the order enforcing the covenant. This ensures that Checkers' interests are protected even if a franchisee attempts to circumvent the non-compete agreement.