Does the Checkers FDD specify any financial thresholds related to the contract?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
l documents of the NPF.
Notwithstanding anything to the contrary contained herein, the NPF may be used to promote other restaurant concepts that we or any of our Affiliates own or franchise (including [INSERT OPPOSITE BRAND: "Checkers"/"Rally's")]. We shall have no liability for the allocation of funds of NPF to any such other restaurant concepts.
10.02 Your Advertising. You agree to spend on advertising and promoting the Franchised Restaurant such amounts as we establish at any time and from time to time. We require you to spend a minimum of four and one-half percent (4.5%) of
Net Sales during each of your fiscal quarters on advertising and promoting the Franchised Restaurant, however, your advertising spending could exceed this amount if you are a member of a local or regional advertising cooperative whose required contribution rate, when added to your required advertising spending obligations (including contributions to the NPF), exceeds four and one-half percent For these purposes, we will credit the following types of (4.5%) of Net Sales. advertising expenditures toward this requirement: (a) amounts contributed to the NPF (other than the Initial Advertising Deposit); (b) amounts contributed to an advertising cooperative or an advertising purchasing collective; and (c) amounts spent for advertising and promoting your Franchised Restaurant media, such as television, radio, newspaper, billboards, posters, direct mail, yellow pages, collateral promotional and novelty items (e.g. Checkers taxicabs), advertising on public vehicles, such as cabs and buses, and, if not provided by us, the cost of producing approved materials necessary to participate in these media.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkers FDD, franchisees are required to spend a minimum of 4.5% of Net Sales during each fiscal quarter on advertising and promoting their franchised restaurant. This advertising spending could potentially exceed 4.5% of Net Sales if the franchisee is a member of a local or regional advertising cooperative.
Expenditures that count toward this advertising requirement include contributions to the National Promotion Fund (NPF), contributions to an advertising cooperative or purchasing collective, and amounts spent on approved advertising media. However, Checkers retains the right to deem certain expenditures as inappropriate for meeting the minimum advertising requirement. These excluded expenditures include permanent on-premises signs and menu boards, lighting, menus, vehicle maintenance, premiums, discounts, free offers, and employee incentive programs.
Prospective franchisees should carefully consider this advertising requirement and factor it into their financial projections. They should also seek clarification from Checkers regarding what specific advertising expenditures will be approved to meet the minimum spending threshold. Understanding these requirements is crucial for managing the financial obligations associated with the franchise agreement.