When are Checkers franchisees required to contribute to the NPF?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ith regard to certain subsets of franchisees and not others. You acknowledge that the prices we prescribe or suggest may or may not optimize the revenues or profitability of your Franchised Restaurant and you irrevocably waive any and all claims arising from the establishment or suggestion of your Franchised Restaurant's retail prices.
10. MARKETING AND ADVERTISING.
10.01 National Production Fund. We may, in our sole discretion, establish and administer a National Production Fund ("NPF") for the creation and production of marketing materials and preparation of advertising campaigns. In addition to the Initial Advertising Deposit under Section 3.06, you must contribute to the NPF amounts that we establish at any time and from time to time, not to exceed three percent (3%) of Net Sales, which are payable semi-monthly together with the royalty fees due hereunder. Upon notice from us, you may be required to contribute to the NPF for each Bi-weekly Period, concurrently with the payment of royalty fees on a biweekly basis.
The NPF may be incorporated or operated through a separate entity as we deem appropriate in our sole discretion. Any such entity will have all of the rights and duties as specified in this Section.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchisees must contribute to the National Production Fund (NPF) in two instances. First, if opening a new restaurant, a franchisee must make an initial advertising deposit of $15,000, which is due upon commencing construction at the premises. This initial deposit is used for an advertising and promotional program for the franchised restaurant. Any remaining amount after deducting incurred costs may be credited towards the franchisee's required advertising contributions to the NPF or a local advertising cooperative.
Second, franchisees must make ongoing contributions to the NPF. These contributions are determined by Checkers and cannot exceed 3% of net sales. These payments are made semi-monthly, concurrently with royalty fee payments. Checkers may require these contributions for each bi-weekly period, aligning with the bi-weekly royalty fee payments.
In addition to NPF contributions, Checkers franchisees are required to spend a minimum of 4.5% of net sales on advertising and promoting the franchised restaurant. Contributions to the NPF are credited toward this 4.5% requirement. Franchisees may also be required to participate in local or regional advertising cooperatives, which could increase their total advertising spending beyond the 4.5% minimum. Checkers has the right to use collection agents or legal proceedings to collect NPF contributions at the NPF's expense.
Checkers also has the right to defer, reduce, or suspend NPF contributions and operations, or even terminate the NPF altogether, with thirty days' prior written notice to the franchisee. If the NPF is terminated, any unspent monies will be distributed to Checkers and Rally's franchisees, as well as Checkers and its affiliates, in proportion to their respective NPF contributions during the preceding twelve-month period.