How does the semi-monthly royalty fee payment schedule for Checkers (Item 6) compare to other franchise systems in the quick-service restaurant industry?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise restaurant royalties are earned as the franchise delivers food to their customer or to a third-party delivery partner. The Company recognizes the royalty revenue in the period in which the franchise sales occur over the contract term of the franchise agreement. The Company generally bills royalties bi-monthly or bi-weekly to franchise customers and the payment is due within 10 days of the billing. See the "accounts and notes receivable" below for additional information on franchise royalty payments. Royalty rates are generally 4% of net sales but the rates may vary based on restaurants qualifying under certain development or reimaging programs.
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, royalties are generally billed bi-monthly or bi-weekly to franchise customers, with payment due within 10 days of the billing. The standard royalty rate is generally 4% of net sales, but this rate may vary for restaurants qualifying under certain development or reimaging programs. Net sales include all revenue from the franchised restaurant, including food, beverages, and other products and services, whether from cash, credit, or other transactions, but excluding sales taxes and documented refunds or discounts.
While the Checkers FDD specifies a bi-monthly or bi-weekly billing cycle for royalties, it does not provide explicit information on how this compares to other franchise systems in the quick-service restaurant industry. It is common for quick-service restaurant franchises to collect royalties on a weekly or monthly basis, though bi-monthly or bi-weekly is less common. The 4% royalty rate is within the typical range for the quick-service restaurant industry, but can vary based on the specific franchise and any incentive programs offered.
A prospective Checkers franchisee should consider the implications of the bi-monthly or bi-weekly payment schedule on their cash flow management. They should also inquire about any potential variations in the royalty rate based on development or reimaging programs. Understanding these factors will help a franchisee plan their finances and assess the overall cost of operating a Checkers franchise.