After termination of a Checkers franchise, is a franchisee prohibited from owning a Competitive Business through an Immediate Family member?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.03 Post-Term Covenants. For a period of two (2) years, starting on the effective date of termination or expiration (without renewal or extension of the franchise 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 at the Premises or within a three (3)-mile radius of the Premises; (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 7.02 are necessary elements to their protection and are an integral part of this Agreement. You also expressly acknowledge the possession of skills and abilities of a general nature and the opportunity for exploiting such skills in other ways, so that enforcement of the
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a franchisee is restricted from engaging in a Competitive Business either directly or indirectly through an Immediate Family member for a period of two years after the termination or expiration of the franchise agreement.
Specifically, this restriction prevents the franchisee and their Immediate Family (defined as spouse, legally-recognized domestic partner, parents, children, or siblings) from owning a legal or beneficial interest in, or rendering services or giving advice to a Competitive Business. The restrictions apply to any Competitive Business operating at the Premises or within a three-mile radius of the Premises, or within a three-mile radius of any Checkers or Rally's restaurant in operation or under construction at the time of termination or expiration. It also includes any entity that grants franchises, licenses, or other interests to others to operate any Competitive Business.
This post-term covenant is in place to protect Checkers' interests in its System, customer base, and the goodwill associated with its Marks. The agreement acknowledges that the non-competition covenants are essential for this protection and are an integral part of the Franchise Agreement. The franchisee acknowledges their skills and abilities and the opportunity to use them in other ways, indicating that enforcing these covenants is reasonable and not unduly restrictive.