Does the definition of 'Competitive Business' for Checkersrallys exclude Checkers Restaurants or Rally's Restaurants operated under a franchise agreement with Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
A "Competitive Business" means any business that: (i) operates as a restaurant or similar food-service provider and derives more than 20% of its revenue from selling hamburgers, cheeseburgers, or hot dogs in a fast-food, quick-service, drive-thru or drive-in format; or (ii) grants franchises or licenses to others to operate the type of business specified in subparagraph (i) (other than a Checkers Restaurant or Rally's Restaurant operated under a franchise agreement with us); but excludes equity ownership of less than 5% of a business entity meeting this description 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.
Source: Item 12 — TERRITORY (FDD pages 57–60)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the definition of a 'Competitive Business' specifically excludes Checkers Restaurants or Rally's Restaurants that are operated under a franchise agreement with Checkersrallys. This means that for the purposes of territory and competitive restrictions, another Checkersrallys franchisee is not considered a competitive business.
This exclusion is important for prospective franchisees as it clarifies the competitive landscape they will be operating in. While Checkersrallys franchisees may face competition from other franchisees, company-owned outlets, or other brands, the definition ensures that internal competition from fellow Checkersrallys franchisees is not considered a violation of competitive restrictions outlined in the franchise agreement. This provides a degree of assurance that Checkersrallys will not enforce competitive restrictions against its own franchisees operating under valid agreements.
However, it is important to note that this exclusion applies only to Checkers Restaurants or Rally's Restaurants operated under a franchise agreement with Checkersrallys. Any other business that meets the criteria of a 'Competitive Business' as defined in the FDD, such as a fast-food restaurant deriving more than 20% of its revenue from selling hamburgers, cheeseburgers, or hot dogs, would still be considered a competitive business, even if it is owned or operated by an entity affiliated with Checkersrallys but not under a franchise agreement.