What obligations does a Checkers developer have upon termination or nonrenewal of the franchise agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE OR OTHER AGREEMENT | SUMMARY | |
|---|---|---|---|
| i. | Developer's obligations on termination/ nonrenewal | Section 9 | Comply with covenant not to compete |
| q. | Non-competition covenants during the term of the agreement | Section 6.02 | No involvement in any competing business regardless of its location. |
| r. | Non-competition covenants after the agreement is terminated or expires | Section 9.02 | No competing business for 2 years within your Development Area or within 3 miles of any other Checkers Restaurant or Rally's Restaurant. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 66–71)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, a developer's primary obligation upon termination or nonrenewal is to comply with the covenant not to compete, as detailed in Section 9 of the agreement. This non-compete clause restricts involvement in any competing business for a period of 2 years within the developer's designated Development Area or within 3 miles of any Checkers or Rally's Restaurant.
This restriction is a standard practice in franchising to protect the brand and market share of Checkers. It prevents former developers from leveraging their knowledge and experience gained while operating a Checkers franchise to directly compete against the system. The geographic scope of the non-compete (within the Development Area or 3 miles of any Checkers or Rally's) is designed to minimize the impact on the franchisee's ability to earn a living while still safeguarding Checkers's interests.
Prospective Checkers developers should carefully review Section 9.02 of the Development Agreement to fully understand the specific terms and limitations of the non-compete covenant. They should consider how this restriction might affect their future business opportunities should the Development Agreement be terminated or not renewed. It is also important to note that the non-compete applies to any competing business, regardless of its location, during the term of the agreement as stated in Section 6.02.