Where in the Checkersrallys franchise agreement can I find details about In-Term Covenants?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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, details regarding In-Term Covenants can be found in Section 7.02 of the franchise agreement. This section outlines the restrictions placed on the franchisee, their owners, and their immediate family members during the term of the franchise.
Specifically, without prior consent from Checkersrallys, franchisees and related parties are prohibited from having ownership in a Competitive Business, performing services for a Competitive Business, diverting business from any Restaurant to a Competitive Business, or engaging in any activity that could harm the goodwill associated with the Marks or the System. An exception exists for owning less than 5% of a publicly traded Competitive Business on a recognized United States stock exchange.
These covenants ensure that franchisees remain committed to the Checkersrallys system and do not use their knowledge or resources to benefit competing businesses during their franchise term. Franchisees should carefully review these restrictions to understand the scope of activities they and their family members are prohibited from undertaking during the term of the franchise agreement.