For Checkersrallys franchisees, for how long after the termination or expiration of the franchise agreement are post-term covenants in effect?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.02 Post-Term Covenants. 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, franchisees are subject to post-term covenants for a period of two years. This two-year period begins on the effective date of the termination or expiration of the Franchise Agreement, assuming there is no renewal or extension of the term.
During this two-year period, franchisees are prohibited from directly or indirectly engaging in certain activities. Specifically, they cannot own a legal or beneficial interest in, or render services or give advice to, any Competitive Business operating within the Development Area. They are also restricted from involvement with any Competitive Business operating within a three-mile radius of any Checkers or Rally's-branded restaurant that was in operation or under construction on the date of termination or expiration. Furthermore, franchisees are barred from participating in any entity that grants franchises, licenses, or other interests to others for the operation of any Competitive Business.
The FDD states that Checkersrallys has a protectable legal interest in its System, customers, and the goodwill associated with its Marks. The non-competition covenants are deemed necessary to protect these interests and are an integral part of the Franchise Agreement. If a franchisee breaches these covenants, and Checkersrallys successfully enforces them through legal proceedings, the obligations under the breached covenant will be tolled during the period of the breach and enforcement efforts. The covenant will then remain in effect for two years after the date of the order enforcing it.