What is the geographic scope of the post-term covenant restricting a former Checkersrallys franchisee from operating a Competitive Business near other Checkers or Rally's restaurants?
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.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a former franchisee is restricted from operating a Competitive Business within a specific geographic area after the termination or expiration of their franchise agreement. This post-term covenant lasts for two years.
The geographic scope of this restriction includes three distinct areas. First, a franchisee cannot operate a Competitive Business at the physical location (Premises) of their former Checkersrallys restaurant. Second, they are prohibited from operating a Competitive Business within a three-mile radius of that former restaurant location. Finally, the restriction extends to a three-mile radius around any existing or under-construction Checkers or Rally's restaurant at the time of the franchise termination or expiration.
This means that a former Checkersrallys franchisee is significantly limited in their ability to open a competing business near their old location or any other existing Checkersrallys location for a period of two years. This restriction aims to protect Checkersrallys's market share and brand recognition by preventing former franchisees from directly competing in close proximity to existing restaurants.