Is a Checkers franchisee required to participate in local or regional advertising cooperatives?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right to establish local and/or regional advertising cooperatives for Restaurants in your local or regional area, covering such geographic areas as we may designate at any time and from time to time.
You must participate in such advertising cooperative and its programs (other than price advertising, as to which you may choose not to participate) and abide by its by-laws.
You must contribute such amounts to the advertising cooperative(s) as they determine from time to time in accordance with the cooperative's bylaws, provided that: (i) if no cooperative exists in the geographic area of the Franchised Restaurant upon the Effective Date, then your obligation to contribute to any future cooperative that covers the Franchised Restaurant will require you to contribute only fifty percent (50%) of the then current amount that other members in the cooperative (whose Restaurants are not operating, or to be operated, in a Non-Traditional Site) are obligated to contribute; (ii) if a cooperative exists in the market area of the Premises upon the Effective Date, we will exert our best efforts to ensure that such cooperative revises its bylaws to allow, and/or specifically approves, you to pay a reduced contribution level as specified in subpart (i); and (iii) any such reduction in your cooperative contribution level under the preceding subpart (i) will neither apply to your required participation in any special regional promotion (in which promotion you must fully participate as contemplated below in this Section 10.02), nor reduce your minimum total five percent (5%) combined advertising expenditure obligation described above in this Section 10.02.
Any Restaurants owned by us or any of our Affiliates located in such designated local or regional area(s) will contribute to the cooperative(s) on the same basis as the general membership of the cooperative.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to the 2025 Checkers Franchise Disclosure Document, Checkers has the right to establish local and/or regional advertising cooperatives for Checkers restaurants in a franchisee's local or regional area. If Checkers establishes such a cooperative, franchisees must participate in the advertising cooperative and its programs and abide by its by-laws. However, franchisees can choose not to participate in price advertising. Franchisees must contribute to the advertising cooperative(s) as determined by the cooperative, following its by-laws. Any restaurants owned by Checkers or its affiliates in the designated area will contribute to the cooperative on the same basis as other members.
Contributions to these local and regional advertising cooperatives can be credited toward the franchisee's required advertising expenditures. The standard advertising expenditure is 4.5% of Net Sales. However, Checkers can require participation in special regional promotions with 90 days' notice. Franchisees must pay any regional advertising fees assessed for these promotions, which are in addition to the standard 4.5% advertising expenditure.
If a Checkers restaurant is in an area without an advertising cooperative, Checkers has the option to require the franchisee to either (i) spend the difference between the current NPF contribution rate and 4.5% of Net Sales on local marketing, (ii) contribute to an advertising purchasing collective established and controlled by Checkers, or (iii) join a local or regional cooperative created by Checkers in their designated marketing area. If contributing to an advertising purchasing collective, Checkers will provide an accounting of the amount spent in the franchisee's designated marketing area.
For franchisees operating in Non-Traditional Sites, if no cooperative exists in the geographic area of the Franchised Restaurant upon the Effective Date, then the obligation to contribute to any future cooperative that covers the Franchised Restaurant will require a contribution of only fifty percent (50%) of the then current amount that other members in the cooperative are obligated to contribute. If a cooperative exists in the market area of the Premises upon the Effective Date, Checkers will exert its best efforts to ensure that such cooperative revises its bylaws to allow, and/or specifically approves, a reduced contribution level as specified in subpart (i); and any such reduction in the cooperative contribution level will neither apply to the required participation in any special regional promotion, nor reduce the minimum total five percent (5%) combined advertising expenditure obligation.