What are the post-term covenants that a Checkers franchisee must adhere to after the termination or expiration of the franchise agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
9.02 Post-Term Covenants. For a period of 2 years, starting on the effective date of termination or expiration (without renewal or extension of the Term) of this Agreement, you are prohibited from directly or indirectly (such as through an Immediate Family member) owning a legal or beneficial interest in, or render services or give advice to: (a) any Competitive Business operating within the Development Area; (b) any Competitive Business operating within a radius of three (3) miles of any "Checkers" or "Rally's"-branded restaurant in operation or under construction on the effective date of termination or expiration; or (c) any entity which grants franchises, licenses or other interests to others to operate any Competitive Business. You acknowledge that we have a protectable legal interest in the System, customers of Restaurants and the goodwill associated with the Marks and that the non-competition covenants contained in this Section and Section 6.02 are necessary elements to their protection and are an integral part of this Agreement. You and each of your Owners expressly acknowledge the possession of skills and abilities of a general nature and other opportunities for exploiting such skills, so that enforcement of the covenants contained in this Section will not deprive you of your personal goodwill or ability to earn a living. If you fail or refuse to abide by any of the foregoing covenants, and we obtain enforcement in a judicial or arbitration proceeding, the obligations under the breached covenant will be tolled during the period(s) of time that the covenant is breached and/or we seek to enforce it, and will continue in effect for a period of 2 years after the date of order enforcing the covenant.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a franchisee faces certain restrictions following the termination or expiration of their franchise agreement. These post-term covenants primarily involve non-competition clauses that limit the franchisee's ability to engage in similar business ventures.
Specifically, for a period of two years after the agreement's termination or expiration, the franchisee is prohibited from owning, operating, or providing services to any Competitive Business. This restriction applies if the Competitive Business operates within the franchisee's former Development Area or within a three-mile radius of any existing or under-construction Checkers or Rally's restaurant. The covenant also extends to preventing the franchisee from being involved with any entity that franchises or licenses others to operate a Competitive Business.
Checkers emphasizes that these non-competition covenants are essential to protect the Checkers system, its customer base, and the goodwill associated with its trademarks. The agreement also states that the franchisee's skills and abilities are general enough that these restrictions should not prevent them from earning a living. If a franchisee breaches these covenants, the enforcement period will be tolled for the duration of the breach, and the two-year restriction will be extended from the date of the enforcement order.