Is the Individual allowed to divert business to competitors of Checkers or its franchisees?
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.
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 Checkers' 2025 Franchise Disclosure Document, an individual is restricted from diverting business to competitors of Checkers or its franchisees. The agreement explicitly states that the individual acknowledges that all items, concepts, and examples constitute confidential information of Checkers, and they will not divert any business to competitors of the franchisee or Checkers.
During the term of employment, service, association, or ownership participation, the individual is prohibited from engaging or participating in any competitive business, which includes businesses that operate as restaurants deriving more than 20% of their revenue from selling hamburgers, cheeseburgers, and hot dogs in a fast-food format, or those that grant franchises to others to operate similar businesses. This restriction is in place to protect Checkers' confidential information, trademarks, and the goodwill and reputation of its restaurants.
However, there is an exception: the 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 allows for minor investment without granting influence over a competing business. Upon termination of employment, association, service, or ownership participation, further restrictions may apply, though the specific details following termination are not provided in this excerpt.