Is Checkers obligated to establish and administer a National Production Fund (NPF)?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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 will be accounted for separately from our other funds and will not be used to defray any of our general operating expenses, except for reasonable salaries, administrative costs and overhead we may incur in activities related to the administration of the NPF and its programs, including conducting market research, preparing marketing materials and advertising campaigns and collecting and accounting for contributions to the NPF. We will use all interest earned on NPF contributions to pay costs before using the NPF's other assets. We may spend in any fiscal year an amount greater or less than the aggregate contributions of all Restaurants to the NPF in that year, and the NPF may borrow from us or other lenders (paying reasonable interest) to cover deficits in the NPF, or invest any surplus for future use by the NPF. We will prepare annually a statement of monies collected and costs incurred by the NPF and furnish you a copy upon your written request.
We have the right, but no obligation, to use collection agents and institute legal proceedings to collect NPF contributions at the NPF's expense. We also may forgive, waive, settle, and compromise all claims by or against the NPF. Except as otherwise expressly provided in this Section, we assume no direct or indirect liability or obligation with respect to the maintenance, direction or administration of the NPF. We do not act as trustee or in any other fiduciary capacity with respect to the NPF.
We may at any time defer or reduce contributions of a Restaurant and, upon thirty (30) days' prior written notice to you, reduce or suspend NPF contributions and operations for one or more periods of any length and terminate (and, if terminated, reinstate) the NPF. If we terminate the NPF, we will distribute all unspent monies to our "Checkers" and "Rally's" franchisees, and to us and our Affiliates, in proportion to their, and our, respective NPF contributions during the preceding twelve (12) month period, or as otherwise provided by the organizational documents of the NPF.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers has the option, but not the obligation, to establish and administer a National Production Fund (NPF). Specifically, Checkers may, in its sole discretion, establish and administer the NPF for the creation and production of marketing materials and advertising campaigns.
The NPF is intended to maximize recognition of the Checkers brand for the benefit of all restaurants, but Checkers does not guarantee that any particular restaurant will directly benefit from the advertising. The fund may be used for various marketing activities, including preparing materials, employing advertising agencies, and supporting market research.
Checkers retains significant control over the NPF, directing all programs financed by the fund, including creative concepts and media placement. Checkers also has the right to modify or terminate the NPF, including reducing or suspending contributions. 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 contributions over the preceding 12-month period.