After termination or expiration of a Checkersrallys franchise agreement, how long does the post-term covenant restricting competitive business activities last?
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.
You acknowledge that we have a protectable legal interest in the System, customers of Restaurants and the goodwill associated with the Marks and that the non-competition covenants contained in this Section and Section 7.02 are necessary elements to their protection and are an integral part of this Agreement. You also expressly acknowledge the possession of skills and abilities of a general nature and the opportunity for exploiting such skills in other ways, so that enforcement of the
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees are subject to a post-term covenant restricting competitive business activities for a period of two years. This two-year period begins on the effective date of the termination or expiration of the franchise agreement, assuming there is no renewal or extension of the franchise term.
During this two-year period, the franchisee is prohibited from directly or indirectly owning a legal or beneficial interest in, or rendering services or giving advice to, any Competitive Business. This restriction applies if the Competitive Business operates at the former franchise premises or within a three-mile radius of those premises. It also applies to any Competitive Business operating within a three-mile radius of any Checkers or Rally's restaurant in operation or under construction at the time of termination or expiration. Furthermore, the restriction extends to any entity that grants franchises, licenses, or other interests to others to operate any Competitive Business.
This non-compete agreement acknowledges Checkersrallys's protectable legal interest in its system, customer base, and the goodwill associated with its trademarks. The document states that these non-competition covenants are necessary to protect those interests and are an integral part of the franchise agreement. The agreement also acknowledges that the franchisee possesses general skills and abilities that can be exploited in other ways, ensuring that the enforcement of these covenants does not deprive them of their ability to earn a living after the franchise relationship ends.