Can Checkersrallys require a franchisee to obtain a non-disclosure and non-competition agreement from their Operating Partner?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to require and obtain the execution of a non-disclosure and non-competition agreement, as we may require at our sole discretion, from all of the following persons:
(a) Before employment or any promotion, your Operating Partner; and,
(b) If you are a business entity, all Owners with at least a ten percent (10%) direct or indirect legal or beneficial ownership interest in you; all of your officers, directors and managers; and, all persons possessing equivalent positions in any business entity which directly or indirectly owns and/or controls you.
You shall procure all such Nondisclosure and
Non-Competition Agreements no later than ten (10) days following the Effective Date (or, if any individual or entity attains any status identified above after the Effective Date, within ten (10) days after such individual or entity's attains such status) and shall furnish to us copies of all executed Nondisclosure and Non-Competition Agreements within ten (10) days following their execution.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys' 2025 Franchise Disclosure Document, Checkersrallys can require franchisees to obtain a non-disclosure and non-competition agreement from their Operating Partner. Checkersrallys has the sole discretion to require these agreements.
The franchisee must ensure that their Operating Partner executes the required agreements before employment or any promotion. If the franchisee is a business entity, similar agreements may be required from owners with at least a 10% direct or indirect legal or beneficial ownership, officers, directors, managers, and individuals in equivalent positions within entities that own or control the franchisee.
The franchisee is responsible for procuring these agreements no later than ten days following the Effective Date of the franchise agreement. If an individual attains a relevant status after the Effective Date, the franchisee has ten days from that date to procure the agreement. Copies of all executed agreements must be furnished to Checkersrallys within ten days of their execution.