What protectable legal interests of the Checkersrallys Franchisor are intended to be preserved through the franchise 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)
According to the 2025 Checkersrallys Franchise Disclosure Document, the franchise agreement is structured to protect several key legal interests of the franchisor. These include the Checkersrallys system, customers of restaurants, confidential information, and the goodwill associated with the brand's trademarks. The agreement aims to prevent both direct and indirect competition, such as franchisees consulting for or assisting competitive businesses. This protection extends to anyone with a legal or beneficial interest in the franchisee, including family members and business partners.
Checkersrallys ensures that franchisees acknowledge their existing skills and opportunities to use them outside of the Checkersrallys system or competitive businesses. This acknowledgement is intended to prevent franchisees from claiming that the enforcement of the agreement deprives them of their ability to earn a living. The agreement specifies that if a franchisee breaches the non-compete clause and Checkersrallys pursues legal action, the restrictions are paused during the breach and enforcement period, then continue for two years after the enforcement order.
Furthermore, the lease agreements for restaurant premises are designed to protect Checkersrallys' interests. Landlords must provide Checkersrallys with copies of default notices, proposed lease renewals, and sales information. Checkersrallys has the option to cure any default by the tenant and, if it chooses, can take over the lease. Upon termination or expiration of the franchise agreement, Checkersrallys has the right to enter the premises, make necessary modifications to protect its intellectual property, and remove any items bearing its trademarks. These measures ensure that Checkersrallys can maintain control over its brand and system, even if a franchisee's operation ceases.