How does Checkers account for advertising co-ops that it controls?

According to Checkers' 2025 Franchise Disclosure Document, the company consolidates advertising co-ops for which it determines it has control based on voting interests. This means that Checkers includes the financial results of these controlled co-ops within its own consolidated financial statements. For advertising co-ops that Checkers does not control, they are accounted for similarly to the Checkers/Rally's National Production Fund (NPF).

In practical terms, this means that if Checkers has sufficient voting power to direct the activities of an advertising co-op, the revenues and expenses of that co-op will be reflected in Checkers' overall financial performance. This consolidation provides a more comprehensive view of Checkers' financial position, including the impact of advertising initiatives managed through controlled co-ops. The FDD also notes that contributions to the National Production Fund represent 0.5% of net restaurant sales, while contributions to advertising co-ops range from 0.5% to 4.25% of net restaurant sales.

For a prospective franchisee, it's important to understand whether participation in advertising co-ops is mandatory and, if so, the level of contribution required. Furthermore, it would be prudent to inquire about the criteria Checkers uses to determine control over an advertising co-op, as this could impact the franchisee's financial obligations and the overall transparency of advertising fund management. Understanding the structure and governance of these co-ops is essential for making informed investment decisions.