Following termination of a Checkersrallys franchise agreement, within what radius of an existing Checkers or Rally's restaurant are franchisees prohibited from operating a Competitive Business?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
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, for a period of two years after the termination or expiration of the franchise agreement, franchisees are restricted from engaging in competitive business activities. This restriction includes owning or working for a Competitive Business within the Development Area or within a three-mile radius of any operational or under-construction Checkers or Rally's restaurant as of the termination date. This covenant applies to the franchisee directly or indirectly through an Immediate Family member.
Checkersrallys includes these restrictions to protect their interests in the System, customer base, and the goodwill associated with their Marks. The company asserts that these non-competition agreements are essential for safeguarding these interests and are a fundamental part of the franchise agreement.
The agreement also states that Checkersrallys believes franchisees possess general skills and abilities that allow them to pursue other opportunities, ensuring that the enforcement of these covenants does not deprive them of their ability to earn a living. If a franchisee breaches these covenants, the period of the breach will not count towards the two-year restriction, and the restriction will be extended by the length of time the breach continued or was being legally addressed.