Does the non-compete agreement for Checkers preclude indirect competition, such as consulting for competitive businesses?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
I acknowledge and understand that the provisions of this Agreement, including my representations, covenants, and warranties (as applicable) given hereunder, are necessary and integral to this Agreement and to Franchisor's and Franchisee's interests under the Franchise Agreement, and are intended to:
- (i) preclude not only direct competition, but also all forms of indirect competition, such as consultation for Competitive Businesses, service as an independent contractor for Competitive Businesses, or any assistance or transmission of information of any kind which would be of any material assistance to a competitor;
- (ii) bind any person or entity having any legal or beneficial interest in me, or traceable to, down or through me, including (without limitation) any of member of my Immediate Family, any direct or indirect beneficiary, any partner (general or limited) or proprietor of mine, and any other such related person or entity, regardless of how many levels or tiers there may be between any such described person or entity and me; and
- (iii) identify for me, toward the goal of preserving through this Agreement, Franchisor's protectable legal interests in the System, customers of Restaurants, the Confidential Information, and the goodwill associated with the Marks.
I also expressly acknowledge my possession of skills and abilities of a general nature, and the opportunity for exploiting such skills in other ways than the operation or involvement in the activities of a Restaurant or a Competitive
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkers Franchise Disclosure Document, the non-disclosure and non-competition agreement aims to prevent both direct and indirect competition. It specifically identifies that indirect competition, such as consulting for competitive businesses, is not allowed. This agreement is designed to protect Checkers' interests in its system, customer base, confidential information, and brand goodwill.
The agreement extends beyond just preventing direct competition. It also encompasses various forms of indirect competition, including serving as an independent contractor for a competing business or providing any assistance or information that could materially benefit a competitor. This broad scope ensures that individuals associated with a Checkers franchise cannot leverage their knowledge or resources to aid rival businesses.
The document also states that the franchisee acknowledges possessing general skills and abilities that can be used in ways other than operating or being involved in a Checkers restaurant or a competitive business. This suggests that the non-compete agreement is not intended to deprive the franchisee of their ability to earn a living. If a franchisee breaches the non-compete agreement, the obligations under the breached covenant will be suspended during the period of the breach and while Checkers seeks enforcement, and will continue for two years from the date of the enforcement order.