After termination of a Checkers franchise, is a franchisee prohibited from providing services or advice to a Competitive Business?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon the expiration or other termination for any reason of my employment, association, service or ownership participation, I agree:
(i) to return immediately to Franchisor or Franchisee, as the case may be, all Confidential Information, and any material(s) containing a subset thereof, in my possession that was utilized, or to which I had access,
- during my employment, association, service or ownership participation;
- (ii) to refrain, beginning upon such expiration or termination and forever thereafter, from any and all contacts with customers of Restaurants for any purpose whatsoever; and
- (iii) for a period of two (2) years, starting on the effective date of termination or expiration of my employment/service/association or ownership participation, to refrain from directly or indirectly (such as through any one or more of my spouse, legally-recognized domestic partner, parents, children or sibling(s) (collectively, "Immediate Family")) 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 Restaurant in operation or under construction on the effective date of termination or expiration of my employment/service/association/ ownership participation; or (c) any entity which grants franchises, licenses or other interests to others to operate any Competitive Business.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, a franchisee is restricted from providing services or advice to a Competitive Business for a period of two years after the termination or expiration of their franchise agreement. This restriction begins on the effective date of the termination or expiration of the franchisee's employment, service, association, or ownership participation.
The restriction prevents the franchisee from directly or indirectly owning a legal or beneficial interest in, or rendering services or giving advice to a Competitive Business. This includes actions through immediate family members such as a spouse, legally-recognized domestic partner, parents, children, or siblings. 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 on the termination date. It also applies to any entity that grants franchises, licenses, or other interests to others to operate any Competitive Business.
A "Competitive Business" is defined as any business that operates as a restaurant or similar food-service provider deriving more than 20% of its revenue from selling hamburgers, cheeseburgers, and hot dogs in a fast-food, quick-service, drive-thru, or drive-in format. It also includes businesses that grant franchises or licenses to others to operate such restaurants, excluding Checkers or Rally's branded restaurants operated under a franchise agreement with Checkers. This non-compete clause is designed to protect Checkers's interests in its system, customer base, and brand goodwill.