Does Checkers intend to profit from revenues collected from franchisee and company-owned restaurant purchases of products and services?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
nusual personal gain.
Items We Supply or Derive Revenue From
We and our affiliates may receive revenues from required purchases and leases of products and services by franchisees. The revenues are collected by approved suppliers or distribution centers on behalf of the system and are paid to us. Our total revenues for the fiscal year which ended December 30, 2024 were $300,381,238 of which $6,189,551 or 2.1% were revenues from required purchases and leases of products and services by franchisees. Our total revenue from franchisee purchases includes $2,225,520 in gross revenue from subleases with franchisees. We generally collect rent as a pass through for landlords on the underlying lease but may earn a profit. We did not earn any profit from subleases during our 2024 fiscal year. Our intention is not to earn a profit, but instead to use all revenues collected from franchisee and company-owned restaurant purchases of products and services to offset expenses we incur in administering system-wide programs such as people, guest and operations programs, insurance procurement, promotional and price management tools, supply chain programs, brand protection (including quality assurance and food safety) programs and research and development. However, we may earn a profit from franchisees' required purchases and leases of products and services.
Our affiliate, CDSI, also earned $7,890,469.14 in gross revenue from required purchases and leases of products and services by franchisees during our 2024 fiscal year.
Other than CDSI, none of our affiliates derived any revenue or other material considerations from required franchisee purchases or leases during the fiscal year ended December 30, 2024.
Suppliers may pay us rebates or allowances based on purchases by Checkers and Rally's franchisees and by us for our company-owned Checkers Restaurants and Rally's Restaurants. The payments may vary from supplier to supplier, and in some cases, the basis for the payment varies over time with respect to the same supplier. Suppliers who exhibit at our conventions contribute to the cost of the conventions.
In the fiscal year ended December 30, 2024, one supplier provided allowances directly to Checkers Restaurants and Rally's Restaurants, their affiliates, as well as the NPF, based in large part on the amount of sales to all Checkers Restaurants and Rally's Restaurants. For each participating Checkers Restaurant and Rally's Restaurant (whether companyowned or franchised), the supplier paid a fixed dollar amount per gallon of beverage syrup directly to each participating restaurant, and
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 39–44)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers and its affiliates may receive revenues from required purchases and leases of products and services by franchisees. For the fiscal year ending December 30, 2024, Checkers' total revenues were $300,381,238, with $6,189,551 (2.1%) coming from franchisee purchases and leases. This includes $2,225,520 in gross revenue from subleases with franchisees, although Checkers states it did not earn a profit from subleases during that year.
Checkers states that its intention is to use these revenues to offset expenses related to system-wide programs such as people, guest, and operations programs, insurance procurement, promotional and price management tools, supply chain programs, brand protection programs, and research and development. However, the disclosure indicates that Checkers may still earn a profit from these franchisee purchases and leases. Additionally, Checkers' affiliate, CDSI, earned $7,890,469.14 in gross revenue from required purchases and leases of products and services by franchisees during the same fiscal year.
Suppliers may also pay Checkers rebates or allowances based on purchases by both franchisees and company-owned restaurants. These payments can vary and may change over time with respect to the same supplier. One supplier provided allowances directly to Checkers Restaurants and Rally's Restaurants, their affiliates, as well as the NPF, based in large part on the amount of sales to all Checkers Restaurants and Rally's Restaurants. For each participating Checkers Restaurant and Rally's Restaurant (whether company-owned or franchised), the supplier paid a fixed dollar amount per gallon of beverage syrup directly to each participating restaurant, and paid a fixed dollar amount per gallon of beverage syrup to the NPF.
This arrangement means that while Checkers aims to offset system-wide expenses with the revenue from franchisee purchases, the potential for profit exists. Furthermore, franchisees should be aware that they are required to purchase or lease goods, services, supplies, fixtures, equipment, and inventory only from approved suppliers, which may include Checkers and its affiliates. The FDD estimates that these required purchases and leases account for over 95% of both the total initial investment and ongoing operating expenses, highlighting the importance of understanding these costs.