During the term of the Checkers franchise, what are franchisees, their owners, and their immediate families prohibited from doing without prior consent from Checkers?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.02 In-Term Covenants. You acknowledge that we have granted you the franchise in consideration of, and reliance upon, your agreement to deal exclusively with us. You therefore agree that, during the Term and any successor franchise term, neither you, any of your Owners, nor any of your or your Owners' Immediate Family will (without our prior consent, which consent we may condition or withhold for any or no reason):
- (a) have any direct or indirect controlling or non-controlling ownership interest as an owner whether of record, beneficially, or otherwise in a Competitive Business, wherever located or operating (except that equity ownership of less than five percent (5%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- (b) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating;
- (c) divert or attempt to divert any actual or potential business or customer of any Restaurant to a Competitive Business; or
- (d) engage in any other activity which, in our sole opinion, might be injurious or prejudicial to the goodwill associated with the Marks or the System.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkers Franchise Disclosure Document, during the term of the franchise, franchisees, their owners, and their immediate families are restricted from certain activities without prior consent from Checkers. Specifically, they cannot have any direct or indirect ownership interest in a Competitive Business, whether controlling or non-controlling. An exception exists for equity ownership of less than 5% in a publicly traded Competitive Business.
Additionally, franchisees, their owners, and their immediate families are prohibited from performing services for a Competitive Business in any capacity, including as a director, officer, manager, employee, consultant, representative, or agent. They are also barred from diverting or attempting to divert any actual or potential business or customers from any Checkers restaurant to a Competitive Business.
Finally, franchisees, their owners, and their immediate families cannot engage in any activity that Checkers deems might be injurious or prejudicial to the goodwill associated with the Checkers trademarks or the System. Checkers retains the right to condition or withhold consent for any or no reason, giving them broad discretion over these restrictions.