Under the Checkersrallys franchise agreement, what happens to obligations that survive the termination or expiration of the agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.01 Continuing Obligations. All obligations under this Agreement which expressly or by their nature survive the expiration or termination of this Agreement shall continue in full force and effect until they are satisfied in full or by their nature expire.
- 9.02 Post-Term Covenants. For a period of 2 years, starting on the effective date of termination or expiration (without renewal or extension of the 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 within the Development Area; (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 6.02 are necessary elements to their protection and are an integral part of this Agreement. You and each of your Owners expressly acknowledge the possession of skills and abilities of a general nature and other opportunities for exploiting such skills, so that enforcement of the covenants contained in this Section will not deprive you of your personal goodwill or ability to earn a living. If you fail or refuse to abide by any of the foregoing covenants, and we obtain enforcement in a judicial or arbitration proceeding, the obligations under the breached covenant will be tolled during the period(s) of time that the covenant is breached and/or we seek to enforce it, and will continue in effect for a period of 2 years after the date of order enforcing the covenant.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, any obligations that expressly or by their nature are meant to survive the termination or expiration of the franchise agreement will remain in full effect. These obligations will continue until they are either completely fulfilled or naturally expire.
One significant example of a surviving obligation is the post-term covenant, which restricts a franchisee's activities after the agreement ends. For a period of two years following the termination or expiration of the agreement, the franchisee is prohibited from being involved with any Competitive Business within the Development Area or within a three-mile radius of any Checkers or Rally's restaurant. This restriction includes owning an interest in, providing services to, or advising any Competitive Business, or being involved with any entity that franchises or licenses a Competitive Business.
Checkersrallys emphasizes that these non-competition covenants are essential to protect their legal interests in the System, customer relationships, and the goodwill associated with their Marks. The agreement also states that the franchisee possesses general skills and abilities that will allow them to earn a living even with these restrictions in place. If a franchisee breaches these covenants, the obligations will be tolled during the period of the breach and any enforcement efforts, and will continue for two years after an order enforcing the covenant is issued.