What is the typical royalty rate for a Checkers franchise, and what conditions might cause it to vary?
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.
- Franchise fees including the initial franchise fee, transfer fees, area development fees, and renewal fees are recognized over the term of the franchise contract as the performance obligation to grant the franchise right is satisfied over each day of the contract term. Franchise fees may vary based on qualification under certain development incentive programs.
The Company earns retail royalty fees based on a contract for the sale of licensed products, including the Famous Seasoned Fries© at retail outlets. The performance obligation is satisfied as sales in the retail outlets are made, royalties are payable monthly within 30 days, and vary with retail sales volume.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the typical royalty rate is 4% of net sales. These royalties are earned when the franchise delivers food to a customer or a third-party delivery partner. Checkers generally bills royalties bi-monthly or bi-weekly, with payment due within 10 days of the billing.
However, the royalty rates may vary for restaurants that qualify under certain development or reimaging programs. This implies that Checkers may offer incentives or reduced royalty rates to encourage franchisees to develop new locations or update existing ones.
In addition to standard franchise royalties, Checkers also earns retail royalty fees from the sale of licensed products, such as the Famous Seasoned Fries©, at retail outlets. These royalties are payable monthly within 30 days and vary with retail sales volume. Prospective franchisees should inquire about the specific conditions and qualifications for development or reimaging programs that could affect their royalty rate.