If the Checkers franchisee is a business entity, from which owners must a non-disclosure and non-competition agreement be obtained?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, if a franchisee is a business entity, Checkers requires non-disclosure and non-competition agreements from specific individuals and entities associated with the franchisee. This requirement ensures that confidential information is protected and that those closely tied to the franchise operation do not engage in competitive activities that could harm the Checkers brand.
Specifically, Checkers requires these agreements from all owners with at least a ten percent (10%) direct or indirect legal or beneficial ownership interest in the franchisee business entity. Additionally, all officers, directors, and managers of the franchisee must sign these agreements. The requirement extends further to include all persons possessing equivalent positions in any business entity that directly or indirectly owns and/or controls the franchisee.
Checkers mandates that these agreements be procured no later than ten (10) days following the Effective Date of the franchise agreement. If an individual or entity attains any of the aforementioned statuses after the Effective Date, the franchisee must obtain the agreement within ten (10) days of that individual or entity attaining such status. Furthermore, the franchisee is obligated to furnish copies of all executed Non-disclosure and Non-Competition Agreements to Checkers within ten (10) days following their execution. This ensures Checkers has a record of compliance and can enforce the agreements if necessary.
This requirement is typical in franchising to protect the franchisor's business model, trade secrets, and market position. Prospective Checkers franchisees should be aware of these obligations and ensure they can comply with the requirements to avoid potential breaches of the franchise agreement.