What are the different due dates for fees payable to Checkers as outlined in Item 6?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
assistance you request. |
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (See Note 1) | |-------------------------------------------------------------|-----------------------------------------------|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Fees to Evaluate and Approve Alternative Suppliers | Currently, only out-of-pocket expenses. | Upon receipt of our bill. | We may impose reasonable inspections and supervision fees to cover our costs in evaluating alternative approved brands or suppliers you suggest. | | Extension Fee | $5,000 | As incurred. | You will pay this amount if we grant you a one-time extension to either locate, secure or develop a site acceptable to us for the Franchised Restaurant. | | Rent | Varies by site being sublet | Monthly | You will only pay this amount if we sublease the Premises of your Franchised Restaurant to you. If we sublease the Premises, you may pay rent directly to the landlord or to us. If you pay rent to us, we may charge an amount that is higher than the rent due under the underlying lease. | | Audit | Cost of audit | Upon receipt of our bill. | Payable only if you fail to furnish required information or if we find an understatement of Net Sales greater than 2%. | | Insurance | Varies, cost of coverage obtained | As incurred | If you fail to obtain the required insurance coverage for the Franchised Restaurant, we may obtain such coverage at your expense. | | Maintenance Costs | Varies, actual costs | As incurred | If you fail or refuse to maintain the Franchised Restaurant as required, we have the right to do so on your behalf and at your expense. |
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (See Note 1) |
|---|---|---|---|
| Attorneys' Fees and other costs | Varies, actual fees and costs incurred | As incurred | Payable if you fail to comply with the Franchise Agreement of if we are joined in a lawsuit that is based on your operation of a restaurant. |
| Indemnification | Varies, actual losses and expenses incurred | As incurred | You must reimburse us for our losses and expenses as a result of third party claims arising from your failures or breaches under the Franchise Agreement, your operation of the Franchised Restaurant, and any unauthorized acts. |
| Early Termination | Varies, see Note 9 for | As incurred | (See Note 9) |
| Damages | calculation | ||
| Costs to De Identify the Premises upon Termination or Expiration | Varies, actual losses and expenses | As incurred | You must reimburse us for our losses and expenses if you fail to de-identify and remove signage from the Franchised Restaurant following the termination or expiration of the Franchise Agreement, and our personnel is required to do so. |
NOTE 1: Except for the minimum advertising requirement and fees payable to the regional or local advertising cooperatives and NPF, all fees are payable to Checkers. All fees are nonrefundable. Except as noted in this Item 6 and fees payable to the NPF, all fees currently are uniformly imposed.
NOTE 2: The term "Net Sales" means all revenue derived from operating the Franchised Restaurant, including the aggregate of all sales amounts from food, beverages and other products sold and services rendered at the Premises or otherwise rendered in connection with your Franchised Restaurant, and all monies derived from sales at or away from the Franchised Restaurant, whether from cash, check, credit or debit card, barter exchange, trade credit, or other credit transactions, but: (1) excluding all federal, state or municipal sales, use or service taxes collected from customers and paid to the appropriate taxing authority; and (2) reduced by the amount of any documented refunds, credits, allowances, adjustments, promotional discounts, and charge-backs the Franchised Restaurant provides to customers in good faith.
2025 Growth Incentive
If you: (i) sign a Franchise Agreement (and pay the standard initial franchise fee) on or before December 30, 2025; (ii) open the Franchised Restaurant to the general public within 18 months of signing the Franchise Agreement; (iii) the Franchised Restaurant complies with the current reimaging requirements; and (iv) you, your owners, or your and their affiliates are Restaurant Net Positive (defined above) at the time the Franchised Restaurant opens, then we will waive the royalty fee payable under the Franchise Agreement until the earlier of: (a) the total value of the royalty fee abatement (calculated based on the standard royalty fee due under the Franchise Agreement) equals $75,000 or (b) the Franchised Restaurant has operated for twenty-four (24) months.
You must remain in full compliance with your Franchise Agreement to be eligible for any of the development incentives listed above. You will provide us any documentation that we may require proving your compliance with the deadlines included above. To receive the benefit of these reduced royalty amounts, you must sign our required form of 2025 Growth Incentive Addendum to the Franchise Agreement (attached as Exhibit B-2 to this Franchise Disclosure Document).
2025 Reimage Incentive
If you meet the following criteria: (i) you are signing a franchise agreement on or before June 30, 2025; (ii) you complete a full scope reimage (as approved in advance by us) that complies with our current reimaging requirements by December 30, 2025; and (iii) you, your owners, and your and their affiliates are in full compliance with the franchise agreement and any other agreement between us and you or them, then from the date the Franchised Restaurant opens following the reimage continuing through until the end of the twelfth month of operation following reopening, your royalty will be 2% of Net Sales. Beginning in the thirteenth month following the reopening and for the remainder of the term of the Franchise Agreement, your royalty will be 4% of Net Sales. To receive the benefit of these reduced royalty amounts, you must sign our required form of 2025 Reimage Incentive Addendum to the Franchise Agreement (attached as Exhibit B-6 to this Franchise Disclosure Document).
NOTE 3: We require you to spend 4.5% of your Net Sales on advertising and marketing your Franchised Restaurant, which includes your NPF contribution, your contribution to a regional or local advertising cooperative, and amounts you spend marketing your Franchised Restaurant in your local market or that we require you to contribute to an advertising purchasing collective that we establish and control. Your advertising expenditures may exceed 4.5% of your Net Sales if you are a member of a regional or local advertising cooperative whose required contribution rate, when added to your NPF contribution rate, exceeds 4.5%. Your advertising expenditures also may exceed 4.5% of your Gross Sales if in addition to your NPF contribution rate and your regional or local advertising cooperative contribution, you elect to spend an additional amount marketing your Franchised Restaurant in your local market.
NOTE 4: The current NPF contribution rate is 2.65% of your Net Sales. As noted in Item 1, the Western Licensees operate under a different form of agreement. The Western License Agreement provides that the Western Licensees must pay a 1% royalty, but each Western Licensee has no obligation to contribute to NPF or to an advertising cooperative. We are not obligated to provide certain advertising and marketing support to Western Licensees.
NOTE 5: Decisions of advertising cooperatives generally are made by majority vote based on one vote per restaurant. Accordingly, we may control the cooperative in certain areas where company-owned Checkers Restaurants or Rally's Restaurants constitute the majority. Typically, however, the by-laws require certain votes (e.g., contribution rate increases) to be based on one vote per entity and not one vote per restaurant. The cooperative contribution rates generally range from 0.5% to 1.85% of Net Sales, but may vary. Cooperatives may purchase any media or advertising of their choosing, including home, linear TV, terrestrial/streaming radio, connected TV, online video, digital display, paid search, programmatic digital, and social media. Rate contributions of advertising cooperatives are established by a majority vote of members.
In addition, if we provide you and any local or regional advertising cooperative with 90 days' notice of a special regional promotion, you must participate in the promotion and pay us any regional advertising fees beginning on the effective date of the notice and continuing until the regional promotion ends. Any special regional advertising fees will be in addition to, and not credited towards, the minimum 4.5% advertising expenditure we currently require you to make.
NOTE 6: If your Franchised Restaurant is located in a geographical area where we have not established an advertising cooperative, then, at our option, you will be required to either (i) spend the difference between the current NPF contribution rate and 4.5% of your Net Sales marketing your Franchised Restaurant in your local market, (ii) contribute the difference between the current NPF contribution rate and 4.5% of your Net Sales to an advertising purchasing collective that we establish and control (which may not be governed by by-laws similar to a typical local or regional advertising cooperative where you will have voting rights), or (iii) join a local or regional cooperative that we create in your designated marketing area (in which case your contribution rate will be determined by the cooperative in accordance with its by-laws).
NOTE 7: We offer an optional Delivery Program that allows you to offer Delivered Products through one or more DSPs to customers within the radii and zones (each a "Delivery Area") and during the hours of operation exclusively established by each DSP. If you are eligible and elect to participate in the Delivery Program, you will be required to pay us the Delivery Administration Fee as outlined in the table above. We negotiate all terms and conditions with DSPs and you must execute and comply with all applicable agreements we negotiate with any DSP.
NOTE 8: We offer an optional Order Ahead Program that allows you to offer Order Ahead Products using our owned channels and website and our proprietary order ahead and pick-up services software. If you are eligible and elect to participate in the Order Ahead Program, you will be required to enter our Order Ahead Program Participation Agreement and pay us the Order Ahead Program Administration Fee as outlined in the table above. We negotiate all terms and conditions with services providers of our Order Ahead Program and you must execute and comply with all applicable agreements we negotiate with any of those service providers.
NOTE 9: If we terminate the Franchise Agreement as a result of your breach, then within 30 days following such termination, you must pay us an amount equal to the average monthly royalty fees and advertising contributions that you owed to us for the past 24 months multiplied by the number of months remaining in the Term ("Early Termination Damages"). If you have not operated the Franchised Restaurant for 24 months prior to the termination of this Agreement, the Early Termination Damages will be calculated by using the average monthly royalties and advertising contributions you owed for the number of months that the Franchised Restaurant operated multiplied by the number of months remaining in the Term.
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Item 6 outlines various fees and their respective due dates. These fees are payable to Checkers unless otherwise noted.
The due dates for these fees vary. Several fees are due "as incurred," including the Extension Fee ($5,000), Insurance costs, Maintenance Costs, Attorneys' Fees and other costs, Indemnification, Early Termination Damages, Costs to De-Identify the Premises upon Termination or Expiration and Late Payment Fee ($250). Other fees are due "upon receipt of our bill," such as Fees to Evaluate and Approve Alternative Suppliers, Audit fees, and Special Assistance fees. Rent is due monthly, while Marketing, Advertising, Promotional and Point-of-Purchase ("POP") Materials are payable monthly. The Local Advertising Fee is due each fiscal quarter. The Firewall Fee and Secure Payment Gateway Fee are due quarterly. The Delivery Administration Fee and Order Ahead Program Administration Fee are due bi-monthly. The Transfer Fee is due upon transferring the Development Agreement. Interest on Late Payments is due immediately.
Understanding these due dates is crucial for prospective Checkers franchisees to manage their cash flow and ensure timely payments to avoid penalties or disruptions in service. Franchisees should note that 'as incurred' fees can be unpredictable and should be budgeted for accordingly. Also, franchisees should be aware of the conditions that trigger certain fees, such as the Audit fee (understatement of Net Sales greater than 2%) or Attorneys' Fees (failure to comply with the Franchise Agreement).