During the Checkers franchise term, can a franchisee perform services for a Competitive Business?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
(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.
"Competitive Business" – Any business that: (i) operates as a restaurant or similar food-service provider and derives more than twenty percent (20%) of its revenue from selling hamburgers, cheeseburgers and hot dogs in a fast-food, quick-service, drive-thru or drive-in format; or (ii) grants franchises or licenses to others to operate the type of business specified in subparagraph (i) (other than a "Checkers" or "Rally's"-branded restaurant operated under a franchise agreement with us).
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchisees are restricted from engaging with competitive businesses during their franchise term. The FDD defines a "Competitive Business" 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 format, or any entity that franchises or licenses others to operate such a business (excluding other Checkers or Rally's franchises).
Specifically, franchisees are prohibited from performing services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, regardless of its location. This restriction aims to prevent franchisees from diverting business or customers from Checkers to a competing entity. Additionally, franchisees must not engage in any activity that Checkers deems harmful to the goodwill associated with the Checkers and Rally's brands or the overall system.
Checkers also requires franchisees to ensure that their operating partner and any owners with at least a 10% ownership interest, along with their officers, directors, and managers, execute a non-disclosure and non-competition agreement. These agreements must be obtained within ten days of the effective date of the franchise agreement or within ten days of any individual attaining a relevant status, with copies provided to Checkers. These measures are in place to protect Checkers' interests and maintain the integrity of its brand and system by preventing the dissemination of confidential information and limiting involvement with competing businesses.