What is the effect of the determination of invalidity of a part of the Checkersrallys agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
10. MISCELLANEOUS.
10.01 Severability and Substitution of Provisions. Every part of this Agreement shall be considered severable. If for any reason any part of this Agreement is held to be invalid, that determination shall not impair the other parts of this Agreement. If any covenant herein which restricts competitive activity is deemed unenforceable by virtue of its scope in terms of geographical area, type of business activity prohibited and/or length of time, but could be
rendered enforceable by reducing any part or all of it, you and we agree that it will be enforced to the fullest extent permissible under applicable law and public policy.
If any applicable law requires a greater prior notice of the termination than is required hereunder, a different standard of "good cause" to terminate this Agreement or the taking of some other action not required hereunder, the prior notice, the "good cause" standard and/or the other action required by such law shall be substituted for the comparable provisions hereof.
10.02 Waiver of Obligations.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the agreement is designed to remain in effect even if some parts are deemed invalid. The principle of severability ensures that if a specific clause is found unenforceable, the rest of the agreement still holds. This is a common practice in franchising to maintain the overall integrity of the contract.
Specifically, if a covenant restricting competitive activity is considered too broad, Checkersrallys states that the covenant will be enforced to the fullest extent permissible under applicable law. This means a court might narrow the scope of the restriction (geographical area, type of business, or time period) to make it enforceable rather than striking it down completely. This protects Checkersrallys's interests while ensuring the franchisee isn't unduly restricted.
However, there is an exception regarding the arbitration clause. If the clause that prevents multi-plaintiff, consolidated, or class-wide arbitration is deemed invalid, then the entire arbitration agreement is voided. This means that disputes would then be resolved in court rather than through arbitration. This specific clause regarding class-wide arbitration is considered integral and non-severable.