For how long after termination or expiration of the Checkers franchise agreement is a franchisee prohibited from owning or operating a Competitive Business within a specified radius?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon the expiration or other termination for any reason of my employment, association, service or ownership participation, I agree:
(i) to return immediately to Franchisor or Franchisee, as the case may be, all Confidential Information, and any material(s) containing a subset thereof, in my possession that was utilized, or to which I had access,
- during my employment, association, service or ownership participation;
- (ii) to refrain, beginning upon such expiration or termination and forever thereafter, from any and all contacts with customers of Restaurants for any purpose whatsoever; and
- (iii) for a period of two (2) years, starting on the effective date of termination or expiration of my employment/service/association or ownership participation, to refrain from directly or indirectly (such as through any one or more of my spouse, legally-recognized domestic partner, parents, children or sibling(s) (collectively, "Immediate Family")) owning a legal or beneficial interest in, or render services or give advice to: (a) any Competitive Business operating at the Premises or within a three (3)-mile radius of the Premises; (b) any Competitive Business operating within a radius of three (3) miles of any Restaurant in operation or under construction on the effective date of termination or expiration of my employment/service/association/ ownership participation; or (c) any entity which grants franchises, licenses or other interests to others to operate any Competitive Business.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a franchisee is restricted from engaging in a Competitive Business for a period of two years following the termination or expiration of their franchise agreement. This restriction begins on the effective date of termination or expiration of their involvement with Checkers, whether through employment, service, association, or ownership participation.
During this two-year period, the franchisee is prohibited from directly or indirectly owning a legal or beneficial interest in, or providing services or advice to, a Competitive Business. This includes any Competitive Business operating at the original Checkers location or within a three-mile radius of that location. The restriction also extends to any Competitive Business operating within a three-mile radius of any Checkers or Rally's restaurant that is in operation or under construction at the time of termination or expiration. Furthermore, franchisees are barred from involvement with any entity that grants franchises, licenses, or other interests to others for the operation of a Competitive Business.
For a prospective Checkers franchisee, this non-compete clause is a significant consideration. It limits their ability to immediately enter into a similar business venture after leaving the Checkers system, potentially impacting their future career or investment options. The definition of 'Competitive Business' is also important, as it focuses on fast-food restaurants deriving a significant portion of their revenue from hamburgers, cheeseburgers, and hot dogs, which is very specific to the Checkers model.
This type of post-term non-compete agreement is common in franchising to protect the brand's market share, trade secrets, and customer relationships. Franchisees should carefully evaluate the terms of the non-compete and consider how it might affect their future plans if they decide to leave the Checkers system.