Following termination or expiration of a Checkers franchise, what are the geographic limits of the non-competition covenant?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE OR OTHER AGREEMENT | SUMMARY | |
|---|---|---|---|
| o. | Franchisor's option to purchase developer's development rights | Not applicable | Not applicable |
| p. | Death or disability of developer | Section 7.05 | Franchise must be assigned by estate to approved buyer within nine months. |
| q. | Non-competition covenants during the term of the agreement | Section 6.02 | No involvement in any competing business regardless of its location. |
| r. | Non-competition covenants after the agreement is terminated or expires | Section 9.02 | No competing business for 2 years within your Development Area or within 3 miles of any other Checkers Restaurant or Rally's Restaurant. |
| s. | Modification of the agreement | Section 10.10 | No modifications except by written agreement signed by both parties. |
| t. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 66–71)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, if the franchise agreement is terminated or expires, the franchisee is subject to a non-competition covenant. This means the franchisee cannot engage in any competing business for a period of 2 years. The geographic scope of this restriction depends on whether the franchisee was operating under a Development Agreement or a Franchise Agreement.
For franchisees who signed a Development Agreement, the restriction applies within their Development Area or within 3 miles of any other Checkers or Rally's Restaurant. This prevents former developers from opening a competing restaurant in the area where they previously had development rights or near existing Checkers or Rally's locations.
For franchisees who signed a Franchise Agreement, the non-compete applies at the Premises of the former Franchised Restaurant, or within 3 miles of the former Franchised Restaurant or any other Checkers or Rally's Restaurant. This prevents former franchisees from converting their old Checkers location into a competing restaurant or opening a competing restaurant nearby, which could draw customers away from existing Checkers or Rally's locations.