Are Checkers and its affiliates obligated to continue contributing to the NPF throughout the franchise term?

According to Checkers' 2025 Franchise Disclosure Document, Checkers and its affiliates are not obligated to contribute to the National Production Fund (NPF) throughout the franchise term. While company-owned Checkers and Rally's Restaurants currently contribute to the NPF on the same basis as franchisees, Checkers and its affiliates are not legally bound to continue doing so. This means that the financial burden of the NPF could potentially shift more towards franchisees if Checkers decides to discontinue its contributions.

The NPF is used for the creation and production of marketing materials and advertising campaigns. Franchisees are required to contribute to the NPF, with contributions currently at 2.65% of Net Sales, but can be increased up to 3.0%. These contributions are payable semi-monthly along with royalty fees. The funds collected are used for various advertising and marketing activities, including digital and social media, research and development, and field marketing activities. For the fiscal year ended December 30, 2024, a significant portion of the NPF was allocated to production (33%) and digital and social media (23%).

This arrangement carries implications for franchisees. If Checkers and its affiliates reduce or cease their contributions, the NPF's total funds could decrease, potentially affecting the scope and quality of advertising and marketing efforts. While the NPF aims to maximize recognition and patronage for all Restaurants, Checkers does not guarantee that any particular Restaurant will directly benefit from advertising placements. Prospective franchisees should consider the potential financial impact of Checkers' discretionary contribution policy on the NPF and, consequently, on the marketing support available to them.