For Checkersrallys, what activities are prohibited for two years following the transfer's effective date, as described in Section 9.02?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
9. EFFECT OF TERMINATION AND EXPIRATION.
- 9.01 Continuing Obligations. All obligations under this Agreement which expressly or by their nature survive the expiration or termination of this Agreement shall continue in full force and effect until they are satisfied in full or by their nature expire.
- 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 Checkersrallys's 2025 Franchise Disclosure Document, Section 9.02 outlines post-term covenants that restrict a franchisee's activities for two years after the termination or expiration of the franchise agreement. Specifically, this section addresses activities prohibited following the transfer's effective date.
During this two-year period, the franchisee is prohibited from directly or indirectly engaging in certain competitive activities. This includes owning a legal or beneficial interest in, rendering services to, or providing advice to any Competitive Business operating within the Development Area. The restriction also extends to any Competitive Business operating within a three-mile radius of any Checkers or Rally's restaurant that is either in operation or under construction at the time of termination or expiration.
Furthermore, Checkersrallys prohibits the franchisee from being involved with any entity that grants franchises, licenses, or other interests to others for the operation of any Competitive Business. The FDD states that these non-competition covenants are deemed necessary to protect Checkersrallys's legal interest in its system, customer base, and the goodwill associated with its trademarks. The agreement emphasizes that these restrictions will not deprive the franchisee of their ability to earn a living, acknowledging their general skills and other opportunities.