What is a Checkers franchisee required to disclose regarding any interest in a Competitive Business?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
this Agreement and recognize that the restaurant industry is highly competitive, with constantly changing market conditions. You recognize that the nature of Restaurants may change over time, that an investment in Restaurants involves business risks and that the success of the venture is largely dependent on your own business abilities, efforts and financial resources. You have not received or relied on: (a) any guaranty or assurance, express or implied, as to the revenues, profits or success of the business venture contemplated by this Agreement; or (b) any promises that any parent company or Affiliate will back us up financially or otherwise guarantee our performance.
- 1.03 Your Representations. You and your Owners, if applicable, represent and warrant to us that: (a) neither you nor any of your Owners have made any untrue statement of any material fact or have omitted to state any material fact in obtaining the rights granted hereunder; (b) neither you nor any of your Owners have any direct or indirect legal or beneficial interest in any business that may be deemed a Competitive Business, except as otherwise fully and accurately disclosed in your franchise application submitted to us; and (c) the execution and performance of this Agreement will not violate any other agreement to which you or any of your Owners may be bound. You recognize that we have approved your franchise application in reliance on all of the statements you and your Owners have made in connection therewith.
- 1.04 Certain Definitions. The terms listed below have the meanings which follow them and include the plural as well as the singular. Other terms are defined elsewhere in this Agreement in the context in which they arise.
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Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a prospective franchisee and their owners must disclose any direct or indirect legal or beneficial interest in any business that may be deemed a Competitive Business in their franchise application. This disclosure must be full and accurate. This means the franchisee must reveal any ownership, investment, or other financial stake they or their owners have in competing businesses before being granted a Checkers franchise.
During the term of the franchise agreement, Checkers franchisees, their owners, and their immediate family members are restricted from having any direct or indirect ownership interest in a Competitive Business, regardless of location. An exception exists for equity ownership of less than 5% in a Competitive Business if its stock is publicly traded on a recognized United States stock exchange. Franchisees are also prohibited from acting as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business.
These restrictions and disclosure requirements are in place to protect Checkers' interests and prevent conflicts of interest. By requiring franchisees to disclose any existing involvement with competitors, Checkers aims to ensure that franchisees are fully committed to the success of their Checkers franchise and are not using their position to benefit a competing business. This also helps maintain the integrity of the Checkers system and protect its market position.