Is owning less than 5% of a publicly traded company that is a Competitive Business considered a violation of Checkers' territorial rights?

According to Checkers' 2025 Franchise Disclosure Document, owning less than 5% of a publicly traded company that is considered a Competitive Business does not violate the franchise agreement. A "Competitive Business" is defined as any business that operates as a restaurant or food-service provider deriving more than 20% of its revenue from selling hamburgers, cheeseburgers, or hot dogs in a fast-food, quick-service, drive-thru, or drive-in format, or that grants franchises or licenses to others to operate such a business.

However, the exception applies only if the stock or ownership interest is publicly traded on a recognized United States stock exchange. This means a Checkers franchisee can invest in a competitor, but only up to a certain limit and only in publicly traded companies. This provision protects Checkers from franchisees gaining significant influence or control over competing businesses while still allowing minor investment opportunities.

This clause is important for prospective franchisees to understand, as it clarifies the boundaries of permissible investment activities. While Checkers restricts involvement in competing businesses, it allows for minor, passive investments in publicly traded companies, providing some flexibility for franchisees to diversify their financial interests without violating the franchise agreement. This is a fairly standard practice in franchising, as franchisors typically want to prevent conflicts of interest and protect their brand and market share.