After the Checkersrallys franchise agreement is terminated, what geographic areas are covered by the non-compete clause?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.03 Post-Term Covenants.For a period of two (2) years, starting on the effective date of termination or expiration (without renewal or extension of the franchise 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 at the Premises or within a three (3)-mile radius of the Premises; (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 7.02 are necessary elements to their protection and are an integral part of this Agreement. You also expressly acknowledge the possession of skills and abilities of a general nature and the opportunity for exploiting such skills in other ways, so that enforcement of the
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkersrallys Franchise Disclosure Document, after the franchise agreement is terminated or expires, the franchisee is restricted from involvement with competitive businesses for two years. This restriction applies to three specific geographic areas.
First, the franchisee cannot own or work for a competitive business operating at the original Checkersrallys premises. Second, they are prohibited from involvement with a competitive business within a three-mile radius of the original Checkersrallys location. Finally, the non-compete extends to any competitive business operating within a three-mile radius of any other existing or under-construction Checkersrallys restaurant at the time of termination or expiration.
This post-term covenant aims to protect Checkersrallys's interests in its system, customer base, and brand goodwill. The agreement explicitly states that Checkersrallys recognizes the franchisee's general skills and opportunities to use those skills in other ventures, suggesting the non-compete is designed to be reasonably enforceable while safeguarding Checkersrallys's business.