What constitutes an unauthorized use or disclosure of Confidential Information regarding the Checkersrallys franchise, according to the franchise agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
f Two Hundred Fifty Dollars ($250). If there are insufficient funds in your bank account, or if your check is returned for insufficient funds, then we may require you to make all subsequent payments to us by certified check. However, your failure to pay all amounts when due constitutes grounds for termination of this Agreement, as provided in Section 14.
7. RESTRICTIVE COVENANTS.
7.01 Confidential Information.We will disclose parts of our Confidential Information to you solely for your use in the operation of the Franchised Restaurant. The Confidential Information is proprietary and includes our trade secrets. During and after the Term: (a) you may not use the Confidential Information in any other business or capacity (as you hereby acknowledge that such prohibited use would be an unfair method of competition); (b) you must exert your best efforts to maintain the
confidentiality of the Confidential Information, regardless of its format or medium of transmission to you; (c) you may not make unauthorized copies of any portion of the Confidential Information; and (d) you must implement all commercially reasonable procedures we prescribe at any time and from time to time to prevent unauthorized use or disclosure of the Confidential Information, including requiring any of your personnel who attends training or who has the ability to access our Confidential Information, to sign nondisclosure agreements in a form we prescribe or approve and delivering those agreements to us.
- 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 Checkersrallys's 2025 Franchise Disclosure Document, several actions constitute unauthorized use or disclosure of confidential information. During and after the franchise term, a franchisee cannot use the confidential information in any business other than their Checkersrallys restaurant. They must also make their best effort to keep the information confidential, regardless of how it was transmitted to them.
Specifically, franchisees cannot make unauthorized copies of confidential information. They must also follow all procedures Checkersrallys puts in place to prevent unauthorized use or disclosure. This includes having personnel who attend training or have access to confidential information sign non-disclosure agreements.
The agreement defines confidential information as, but not limited to: ingredients, recipes, preparation methods, site selection criteria, sales and marketing programs, supplier identities, operating results, inventory control methods, computer systems, software, and any other information Checkersrallys designates as proprietary. Franchisees also cannot store confidential information in a computer retrieval system or database, or make it available to any unauthorized person. Any violation of these stipulations could result in legal action against the franchisee.