After the Checkers franchise agreement terminates, for how long is the franchisee prohibited from engaging in a Competitive Business?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.03 Post-Term Covenants. For a period of two (2) years, starting on the effective date of termination or expiration (without renewal or extension of the franchise term) of this Agreement, you are prohibited from directly or indirectly (such as through an Immediate Family member) 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 "Checkers" or "Rally's"-branded restaurant in operation or under construction on the effective date of termination or expiration; or (c) any entity which grants franchises, licenses or other interests to others to operate any Competitive Business.
You acknowledge that we have a protectable legal interest in the System, customers of Restaurants and the goodwill associated with the Marks and that the non-competition covenants contained in this Section and Section 7.02 are necessary elements to their protection and are an integral part of this Agreement. You also expressly acknowledge the possession of skills and abilities of a general nature and the opportunity for exploiting such skills in other ways, so that enforcement of the
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a franchisee is restricted from engaging in a Competitive Business for a period of two years following the termination or expiration of the franchise agreement. This restriction begins on the effective date of termination or expiration.
The non-compete clause prevents the franchisee from directly or indirectly owning a legal or beneficial interest in, rendering services to, or advising a Competitive Business. This includes actions taken through immediate family members. The restrictions apply to Competitive Businesses operating at the premises, within a three-mile radius of the premises, or within a three-mile radius of any Checkers or Rally's restaurant in operation or under construction at the time of termination or expiration. It also extends to any entity that grants franchises, licenses, or other interests to others to operate any Competitive Business.
Checkers states that these non-competition covenants are necessary to protect its legal interests in the System, customers, and the goodwill associated with its Marks. The agreement recognizes that franchisees possess general skills that can be exploited in other ways, ensuring that the enforcement of these covenants does not deprive them of their ability to earn a living after the termination of their relationship with Checkers.