Is equity ownership of less than 5% of a publicly traded business entity that meets the definition of a Competitive Business considered a violation of the Competitive Business clause for Checkersrallys?

According to Checkersrallys's 2025 Franchise Disclosure Document, owning less than 5% equity in a publicly traded company that qualifies as a 'Competitive Business' does not violate the competitive business clause. The FDD defines a 'Competitive Business' as any business that operates as a restaurant or food-service provider with over 20% of its revenue from selling hamburgers, cheeseburgers, or hot dogs in a fast-food format, or franchises such businesses.

This exception provides Checkersrallys franchisees with some flexibility to invest in publicly traded restaurant companies without being penalized for violating the franchise agreement. This allowance recognizes that minor investments are unlikely to pose a significant competitive threat or conflict of interest. The stock or ownership interest must be publicly traded on a recognized United States stock exchange to qualify for this exception.

However, it's important to note that this exception is specifically for equity ownership of less than 5%. Any ownership stake of 5% or greater in a Competitive Business could be considered a violation of the franchise agreement. Prospective franchisees should carefully consider these restrictions before making any investments in other restaurant businesses to ensure they remain in compliance with their Checkersrallys franchise agreement.