factual

Is a Checkers franchisee required to obtain non-disclosure and non-competition agreements from certain individuals?

Checkers Franchise · 2025 FDD

Answer from 2025 FDD Document

THIS NONDISCLOSURE AND NON-COMPETITION AGREEMENT
(this "Agreement") is made as of the day of, 201, is by and
between ("Individual," "me," or "I") and
CHECKERS DRIVE-IN RESTAURANTS, INC., a Delaware corporation
("Franchisor").
("Franchisee") is a franchisee of Franchison
pursuant to a franchise agreement entered into by those parties concerning a
franchised restaurant operating, or to be operated, under the Marks at
(the "Franchise Agreement"). The franchised
restaurant authorized by Franchisor under the Franchise Agreement is known as
the "Franchised Restaurant," which Franchised Restaurant is one among all
restaurants that Franchisor owns, operates, or franchises under the Marks. I agree
that, unless otherwise specified, all capitalized terms in this Agreement have those
meanings ascribed to them in the Franchise Agreement.

I specifically understand that, without limitation, all the above items, concepts, and/or examples contained in the preceding paragraph constitute Confidential Information of Franchisor, and I will not divert any business to competitors of Franchisee and/or Franchisor. I will at no time copy, duplicate, record or otherwise reproduce any of the Confidential Information or material containing it, in whole or in part, store them in a computer retrieval or database, nor otherwise make the them available to any unauthorized person.

I further agree that, during the term of my employment/service/association or ownership participation, I will not, directly or indirectly, engage or participate in any Competitive Business (defined below in this paragraph), any of which such prohibited behavior I understand and hereby explicitly acknowledge would or could be injurious to, or (in Franchisor's sole judgment) have an adverse effect upon, Franchisor's protectable interests in the Confidential Information, the "Checkers" trademark, or the goodwill and/or reputation of Restaurants generally. I agree that I am prohibited from engaging in any Competitive Business as a proprietor, partner, investor, shareholder, director, officer, employee, principal, agent, advisor, or consultant. For purposes of this Agreement, a "Competitive Business" means 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 the preceding subparagraph (i) (other than a "Checkers" or "Rally's"branded restaurant operated under a franchise agreement with Franchisor). Despite the foregoing definition of a Competitive Business, nothing under this Agreement or the Franchise Agreement will prevent Individual from owning for investment purposes less than five percent (5%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange, and so long as neither Individual nor Franchisee controls the company in question.

Upon the expiration or other termination for any reason of my employment, association, service or ownership participation, I agree:

Source: Item 22 — CONTRACTS (FDD pages 91–92)

What This Means (2025 FDD)

According to the 2025 Checkers Franchise Disclosure Document, individuals associated with a Checkers franchisee are required to sign a Non-Disclosure and Non-Competition Agreement. This agreement is between the individual and Checkers Drive-In Restaurants, Inc., and it acknowledges that the franchisee is operating under a franchise agreement with Checkers. The agreement covers anyone involved with the franchise, including employees, service providers, or owners.

The agreement ensures that individuals understand and agree to protect Checkers' confidential information. This includes not diverting business to competitors or reproducing any confidential information. The agreement also restricts individuals from participating in any competitive business during their association with the Checkers franchise. A competitive business is defined as any food-service provider deriving more than 20% of its revenue from selling hamburgers, cheeseburgers, and hot dogs in a fast-food format, or franchising similar businesses, but excludes owning less than 5% of a publicly traded competitor for investment purposes.

Upon termination of employment, service, association, or ownership, the individual continues to be bound by certain restrictions. This agreement aims to protect Checkers' interests in its confidential information, trademarks, and the goodwill of its restaurants. Prospective franchisees should carefully review the terms of this agreement and ensure that all individuals associated with their franchise understand and comply with these obligations.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.