For Checkers, what is the purpose of Checkers and Rally's Distribution and Services, Inc. (CDSI)?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company and its franchisees each pay charges based on volumes of products purchased from suppliers to Checkers and Rally's Distribution and Services, Inc. ("CDSI"), established for the purpose of providing procurement services and quality assurance support for the benefit of both Company-operated and franchised restaurants. During the fiscal year ended December 30, 2024 (Successor) and the period from June 17, 2023 through January 1, 2024 (Successor) and the period from January 3, 2023 through June 16, 2023 (Predecessor) only one member, representing 25% of the CDSI Board of Directors is an employee of the Company. CDSI is not included in the accompanying consolidated financial statements, although the company's contributions to CDSI are included within restaurant food and paper costs in the accompanying consolidated statements of operations.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers and Rally's Distribution and Services, Inc. (CDSI) is established to provide procurement services and quality assurance support to both company-operated and franchised restaurants. Both Checkers and its franchisees pay charges based on the volume of products purchased from suppliers to CDSI.
The FDD states that for the fiscal year ended December 30, 2024, and the periods from June 17, 2023, through January 1, 2024, and from January 3, 2023, through June 16, 2023, only one member, representing 25% of the CDSI Board of Directors, was an employee of the company. CDSI is not included in the consolidated financial statements. However, Checkers' contributions to CDSI are included within "restaurant food and paper costs" in the consolidated statements of operations.
For a prospective franchisee, this means that a portion of their expenses will be tied to product purchases through CDSI. These payments cover the costs of procurement services and quality control measures. While CDSI is intended to benefit both company-operated and franchised restaurants, franchisees should be aware that Checkers has some representation on the CDSI board. Franchisees should consider the potential impact of these related-party transactions on their restaurant's expenses and overall profitability.