What is the purpose of the National Production Fund (NPF) for Checkers franchisees?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
for products and services (Franchise Agreement Section 9.11).
Advertising
National Production Fund
We have established and administer the NPF for the creation and production of marketing materials and preparation of advertising campaigns. The NPF is currently incorporated and operated through NPF Inc. NPF Inc. has all of the rights and duties described here. In addition to the Initial Advertising Deposit described in Item 5, you must contribute to the NPF amounts that are established by us from time to time, not to exceed 3% of Net Sales, which are payable semi-monthly at the same time as the royalty fees due under the Franchise Agreement. As of the issuance date of this Franchise Disclosure Document, you must contribute a monthly advertising fee (currently, 2.65%, but can be increased up to 3.0% of your Net Sales) to the NPF depending on the geographical area where your Franchised Restaurant is located (See Note 5 in Item 6). Other domestic franchisees contribute on the same basis to the NPF, except for certain operators of Rally's Restaurants operating under older forms of agreement. The NPF receives and administers monies from operators of Restaurants. All company-owned Checkers Restaurants and Rally's Restaurants also currently contribute on the same basis as franchisees to the NPF, but we and our affiliates are not obligated to do so (or to continue doing so throughout your franchise term). Some third party vendors also contribute to the NPF. The NPF does not spend any money on advertising that is principally a solicitation for the sale of new franchises. Neither we nor NPF, Inc. are required to spend any amount on advertising in your market area.
Neither we nor NPF, Inc. have created an advisory council and we and NPF, Inc. are not obligated to seek the advice of owners of Restaurants, including franchisees, by formal (e.g., advisory council or other representative body) or informal means with respect to the creative concepts and media used for programs financed by the NPF. However, because we value input from the franchise network, we (and/or NPF, Inc.) may choose to seek such advice from operators of Restaurants, and so have established a Franchisee Advisory Council that includes a marketing subcommittee. We appoint the members of the Franchisee Advisory Council, which includes both "Checkers" and "Rally's" franchisees. We have the right to change or dissolve these groups.
Currently, NPF, Inc. directs all programs that the NPF finances, including the creative concepts, materials, and endorsements used and their geographic, market, and media placement and allocation. The NPF may pay for preparing and producing video, audio, and written materials and electronic media; developing, implementing, and maintaining an electronic commerce website and/or related strategies; administering regional and multi-regional marketing and advertising programs, including, purchasing trade journal, direct mail, and other media advertising and using advertising, promotion, and marketing agencies and other advisors to provide assistance; and supporting public relations, market research, and other advertising, promotion, and marketing activities.
Although the NPF is intended to maximize general recognition and patronage of the Marks for the benefit of all Restaurants, neither we nor NPF, Inc. can assure you that any particular Restaurant will benefit directly or pro-rata from the placement of advertising. The NPF may be used to pay for the cost of preparing and producing materials and programs we provide, including video, audio and written advertising and POP materials, and for the cost of employing advertising agencies and in house staff and supporting market research activities. Some of the same advertising materials created for or used by Checkers Restaurants may also be used by Rally's Restaurants. The NPF may furnish you with marketing, advertising and promotional materials (including POP materials) at cost, plus any related taxes and administrative, shipping, handling and storage charges.
The NPF for Restaurants 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 or NPF, Inc.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 46–57)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the National Production Fund (NPF) is established and administered by Checkers for the creation and production of marketing materials and the preparation of advertising campaigns. The NPF is incorporated and operated through NPF Inc., which manages the funds collected from franchisees and company-owned restaurants. Franchisees are required to contribute to the NPF, with the amount determined by Checkers, but not exceeding 3% of Net Sales. As of the FDD's issuance, the monthly advertising fee is 2.65% of Net Sales but can be increased up to 3.0%, depending on the restaurant's geographical location.
The NPF is accounted for separately from Checkers' other funds and is used to cover reasonable salaries, administrative costs, and overhead related to the administration of the NPF and its programs. These activities include conducting market research, preparing marketing materials and advertising campaigns, and collecting and accounting for contributions. Interest earned on NPF contributions is used to pay costs before using the NPF's other assets. NPF, Inc. prepares an annual unaudited statement of monies collected and costs incurred, which is available to franchisees upon written request.
NPF contributions are used to create and produce marketing and promotional materials, advertising campaigns, and related programs. These materials and campaigns are made available to restaurants and advertising cooperatives, which are responsible for placing and buying them with various media. For the fiscal year ended December 30, 2024, the NPF allocated its funds as follows: 33% for production, 23% for digital and social media, 16% for research and development, 18% for field marketing activities, 1% for marketing technology, 2% for eCommerce maintenance, 3% for administrative expenses, and 3% for outside services. Checkers may terminate or create a new NPF model with 30 days' notice, and unspent monies would be distributed to Checkers and Rally's franchisees and their affiliates in proportion to their contributions during the preceding 12-month period.