factual

What specific interests of the Franchisor is the non-compete agreement for Checkersrallys designed to protect?

Checkersrallys Franchise · 2025 FDD

Answer 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.

I acknowledge that violation of the covenants not to compete contained in this Agreement would result in immediate and irreparable injury to Franchisor and Franchisee, for which no adequate remedy at law will be available. Accordingly, I hereby consent to the entry of an injunction procured by Franchisor or Franchisee (or both), in any appropriate jurisdiction and venue (notwithstanding other references to resolution of actions exclusively in Franchisor's home prohibiting any conduct by me in violation of the terms of those covenants not to compete and/or restrictions on the use of Confidential Information under this Agreement. I expressly agree that it may conclusively be presumed in any legal action that any violation of the terms of these covenants not to compete was accomplished by and through my unlawful utilization of Franchisor's Confidential Information. Further, I expressly agree that any claims I may have against Franchisor will not constitute a defense to Franchisor's enforcement of the covenants not to compete under this Agreement. I further agree to pay all costs and expenses (including reasonable attorneys' and experts' fees) incurred by Franchisor in connection with the enforcement of those covenants not to compete set forth in this Agreement.

Source: Item 22 — CONTRACTS (FDD pages 91–92)

What This Means (2025 FDD)

According to the 2025 Checkersrallys FDD, the non-compete agreement is designed to protect several specific interests of the franchisor. These include preventing direct and indirect competition, such as working for or consulting with competing businesses. The agreement aims to bind anyone with a legal or beneficial interest related to the franchisee, including family members and beneficiaries, to prevent them from aiding competitors.

The non-compete agreement is specifically intended to preserve Checkersrallys's legal interests in its system, customer base, confidential information, and the goodwill associated with its trademarks. This means Checkersrallys wants to ensure that franchisees or related parties do not use the knowledge, resources, and reputation gained from the franchise to benefit a competing business. The agreement acknowledges that individuals have general skills that can be used in other ways besides operating a Checkersrallys restaurant, ensuring that the enforcement of the non-compete does not unduly restrict their ability to earn a living.

Furthermore, the FDD states that violating the non-compete agreement would cause immediate and irreparable harm to Checkersrallys and the franchisee, for which monetary compensation would not be adequate. Therefore, Checkersrallys can seek an injunction to prevent any conduct that violates the non-compete terms or restricts the use of confidential information. The franchisee also agrees to cover all costs and expenses, including attorney's fees, incurred by Checkersrallys in enforcing the non-compete agreement. This highlights the seriousness with which Checkersrallys views the protection of its business interests and confidential information.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.