What is the Individual agreeing to in the Checkers Nondisclosure and Non-Competition Agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the Nondisclosure and Non-Competition Agreement outlines specific restrictions and obligations for individuals associated with a Checkers franchise. As part of this agreement, the individual acknowledges that they will not disclose any confidential information related to Checkers' business operations, including concepts and materials, to any unauthorized person. They also agree not to divert any business to competitors of the franchisee or Checkers. This includes refraining from copying, duplicating, or reproducing any confidential information.
During their association with Checkers, the individual is prohibited from engaging or participating in any Competitive Business, which is defined as any business that operates as a restaurant deriving more than 20% of its revenue from selling hamburgers, cheeseburgers, and hot dogs in a fast-food format, or grants franchises to others to operate such a business. This restriction applies whether the individual acts as a proprietor, partner, investor, employee, or consultant. The agreement specifies that engaging in such competitive behavior could harm Checkers' interests in its confidential information, trademarks, and goodwill.
However, the agreement does allow for an exception: an individual can own less than 5% of a publicly traded Competitive Business for investment purposes, provided that neither the individual nor the franchisee controls the company. This exception acknowledges the possibility of passive investments in publicly traded companies without posing a competitive threat to Checkers. These restrictions aim to protect Checkers' business model, trade secrets, and market position by preventing individuals with access to sensitive information from using it to benefit competitors.