Does a reduced cooperative contribution level for a Checkers franchisee reduce the minimum total 5% combined advertising expenditure obligation?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
You must contribute such amounts to the advertising cooperative(s) as they determine from time to time in accordance with the cooperative's bylaws, provided that: (i) if no cooperative exists in the geographic area of the Franchised Restaurant upon the Effective Date, then your obligation to contribute to any future cooperative that covers the Franchised Restaurant will require you to contribute only fifty percent (50%) of the then current amount that other members in the cooperative (whose Restaurants are not operating, or to be operated, in a Non-Traditional Site) are obligated to contribute; (ii) if a cooperative exists in the market area of the Premises upon the Effective Date, we will exert our best efforts to ensure that such cooperative revises its bylaws to allow, and/or specifically approves, you to pay a reduced contribution level as specified in subpart (i); and (iii) any such reduction in your cooperative contribution level under the preceding subpart (i) will neither apply to your required participation in any special regional promotion (in which promotion you must fully participate as contemplated below in this Section 10.02), nor reduce your minimum total five percent (5%) combined advertising expenditure obligation described above in this Section 10.02.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, a reduction in a franchisee's cooperative contribution level does not reduce the minimum total 5% combined advertising expenditure obligation.
Specifically, the FDD states that even if a Checkers franchisee benefits from a reduced contribution level to a local or regional advertising cooperative, this reduction does not affect their obligation to spend a minimum total of 5% on combined advertising expenditures. This 5% includes contributions to the advertising cooperative, the National Production Fund (NPF), and other approved advertising methods.
This means that while a franchisee might pay less to the cooperative under certain conditions, they are still required to meet the overall 5% advertising expenditure threshold through other means, such as direct advertising or increased contributions to the NPF. This ensures that all Checkers locations maintain a consistent level of advertising and promotional effort, regardless of any reduced cooperative contributions.