Can suppliers pay Checkers rebates or allowances based on purchases by Checkers and Rally's franchisees and company-owned restaurants?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Suppliers may pay us rebates or allowances based on purchases by Checkers and Rally's franchisees and by us for our company-owned Checkers Restaurants and Rally's Restaurants. The payments may vary from supplier to supplier, and in some cases, the basis for the payment varies over time with respect to the same supplier. Suppliers who exhibit at our conventions contribute to the cost of the conventions.
In the fiscal year ended December 30, 2024, one supplier provided allowances directly to Checkers Restaurants and Rally's Restaurants, their affiliates, as well as the NPF, based in large part on the amount of sales to all Checkers Restaurants and Rally's Restaurants. For each participating Checkers Restaurant and Rally's Restaurant (whether companyowned or franchised), the supplier paid a fixed dollar amount per gallon of beverage syrup directly to each participating restaurant, and paid a fixed dollar amount per gallon of beverage syrup to the NPF.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 39–44)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, suppliers are permitted to provide rebates or allowances to Checkers based on purchases made by both Checkers and Rally's franchisees, as well as by company-owned Checkers and Rally's restaurants. These payments can vary from one supplier to another, and the basis for these payments may change over time, even with the same supplier. Additionally, suppliers who participate in Checkers' conventions may contribute to covering the costs of these events.
For the fiscal year ending December 30, 2024, one supplier provided allowances directly to Checkers and Rally's restaurants, their affiliates, and the NPF (presumably a franchisee purchasing group), largely based on the sales volume to all Checkers and Rally's restaurants. Specifically, for each participating Checkers or Rally's restaurant, whether company-owned or franchised, the supplier paid a fixed dollar amount per gallon of beverage syrup directly to the restaurant and a fixed dollar amount per gallon of beverage syrup to the NPF.
This arrangement could benefit Checkers franchisees by potentially lowering the cost of goods or providing additional revenue through the NPF, if they participate. However, the variability in payment amounts and the potential for changes over time introduce an element of uncertainty. Prospective franchisees should inquire about the specific details of these rebate and allowance programs, including which suppliers participate, the current payment rates, and how the NPF funds are distributed or used to benefit franchisees.