When is the franchise royalties performance obligation satisfied for Checkers franchisees?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- Franchise restaurant royalties are earned as the franchise delivers food to their customer or to a third-party delivery partner. The Company recognizes the royalty revenue in the period in which the franchise sales occur over the contract term of the franchise agreement. The Company generally bills royalties bi-monthly or bi-weekly to franchise customers and the payment is due within 10 days of the billing. See the "accounts and notes receivable" below for additional information on franchise royalty payments. Royalty rates are generally 4% of net sales but the rates may vary based on restaurants qualifying under certain development or reimaging programs.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the franchise royalties performance obligation is satisfied when the franchisee delivers food to their customer or to a third-party delivery partner. Checkers recognizes the royalty revenue in the period in which the franchise sales occur over the contract term of the franchise agreement.
Checkers typically bills royalties either bi-monthly or bi-weekly to its franchisees, with payment due within 10 days of the billing date. The standard royalty rate is generally 4% of net sales, but this rate can vary for restaurants that qualify under specific development or reimaging programs.
Prospective franchisees should understand that royalty payments are tied directly to sales. This means that as sales increase, so do the royalty payments to Checkers. Franchisees should inquire about any specific development or reimaging programs that could affect their royalty rate to fully understand the financial obligations and potential benefits.