What is the franchisee expected to have done regarding the Checkersrallys business opportunity before signing the agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
I acknowledge and understand that the provisions of this Agreement, including my representations, covenants, and warranties (as applicable) given hereunder, are necessary and integral to this Agreement and to Franchisor's and Franchisee's interests under the Franchise Agreement, and are intended to:
- (i) preclude not only direct competition, but also all forms of indirect competition, such as consultation for Competitive Businesses, service as an independent contractor for Competitive Businesses, or any assistance or transmission of information of any kind which would be of any material assistance to a competitor;
- (ii) bind any person or entity having any legal or beneficial interest in me, or traceable to, down or through me, including (without limitation) any of member of my Immediate Family, any direct or indirect beneficiary, any partner (general or limited) or proprietor of mine, and any other such related person or entity, regardless of how many levels or tiers there may be between any such described person or entity and me; and
- (iii) identify for me, toward the goal of preserving through this Agreement, Franchisor's protectable legal interests in the System, customers of Restaurants, the Confidential Information, and the goodwill associated with the Marks.
I also expressly acknowledge my possession of skills and abilities of a general nature, and the opportunity for exploiting such skills in other ways than the operation or involvement in the activities of a Restaurant or a Competitive
Business, so that enforcement of my covenants made in this Agreement will not deprive me of my personal goodwill or ability to earn a living after the effective date of expiration or termination of my relationship with Franchisee, the Franchised Restaurant, or Restaurants generally. If I fail or refuse to abide by any of my foregoing obligations or promises made under this Agreement, and Franchisor or Franchisee obtains enforcement in a judicial or arbitration proceeding, then my obligations and responsibilities specified under the breached covenant will be tolled during the period(s) of time that the covenant is breached and/or Franchisor or Franchisee seeks to enforce it, and will continue for two (2) years starting from the effective date of the order enforcing the covenant.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
Based on the 2025 Checkersrallys Franchise Disclosure Document, before signing the Franchise Agreement, the franchisee needs to acknowledge and understand that the provisions of the agreement are necessary and integral to both Checkersrallys's and the franchisee's interests. These provisions aim to preclude direct and indirect competition, such as consulting for competitive businesses or assisting competitors in any material way. The franchisee must also acknowledge that these restrictions bind any person or entity with a legal or beneficial interest in them, including family members and beneficiaries.
Furthermore, the franchisee must acknowledge their existing skills and abilities and the opportunity to use them in ways other than operating a Checkersrallys restaurant or being involved in a competitive business. This acknowledgment ensures that the enforcement of the covenants in the agreement will not deprive the franchisee of their personal goodwill or ability to earn a living after the franchise relationship ends. If the franchisee fails to meet these obligations, and Checkersrallys seeks enforcement through legal proceedings, the franchisee's responsibilities will be suspended during the breach and enforcement period, and will then continue for two years from the date of the enforcement order.
In addition, if the franchisee requests a transfer before opening the franchised restaurant and Checkersrallys approves it, the franchisee must pay the full standard amount of the initial franchise fee that was reduced or waived, in addition to any transfer fee payable, as a pre-closing condition of the transfer. This condition ensures that Checkersrallys receives the full initial franchise fee if the franchisee decides to transfer the franchise before it becomes operational. The franchisee should carefully review these conditions and obligations to fully understand their commitments before signing the Franchise Agreement.