What are some of the obligations of a Checkersrallys franchisee upon termination or nonrenewal of the franchise agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE OR OTHER AGREEMENT | SUMMARY | |
|---|---|---|---|
| i. | Developer's obligations on termination/ nonrenewal | Section 9 | Comply with covenant not to compete |
| r. | Non-competition covenants after the agreement is terminated or expires | Section 9.02 | No competing business for 2 years within your Development Area or within 3 miles of any other Checkers Restaurant or Rally's Restaurant. |
| i. | Franchisee's obligations on termination/ nonrenewal | Section 16 | |
| r. | Non-competition covenants after the franchise is terminated or expires | Section 16.03 | No competing business for 2 years at the Premises of your Franchised Restaurant, or within 3 miles of your Franchised Restaurant or any other Checkers Restaurant or Rally's Restaurant. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 66–71)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, both franchisees and developers have obligations upon termination or non-renewal of their respective agreements. For franchisees, a significant obligation involves adhering to non-competition covenants. Specifically, for two years after termination or expiration, franchisees cannot engage in any competing business at the premises of their former Checkersrallys restaurant or within a three-mile radius of that restaurant or any other Checkersrallys location. This restriction is detailed in Section 16.03 of the Franchise Agreement.
For developers, the primary obligation upon termination or non-renewal is to comply with the covenant not to compete, as outlined in Section 9 of the Development Agreement. This is further specified in Section 9.02, which states that developers cannot engage in any competing business for two years within their Development Area or within three miles of any Checkersrallys Restaurant.
These non-compete clauses are typical in franchising to protect the brand and market share of Checkersrallys. Prospective franchisees and developers should carefully consider the implications of these restrictions, as they could significantly limit their business opportunities after the franchise or development agreement ends. It is important to note that these obligations are in addition to any other requirements specified in Section 16 of the Franchise Agreement or Section 9 of the Development Agreement, which franchisees and developers should review in detail.