Under what condition are contingent rental provisions triggered for Checkers leases?

According to Checkers's 2025 Franchise Disclosure Document, certain leases have contingent rental provisions. These provisions are based on a percentage of gross sales. The trigger for these provisions is meeting an established sales threshold. Once Checkers expects a location to meet the minimum sales volume, they recognize the contingent rent expenses as variable expenses.

For a prospective Checkers franchisee, this means that the lease agreement for their restaurant location might include a clause where the rent increases if the restaurant's gross sales exceed a certain amount. This is a fairly common practice in the franchise industry, where landlords want to share in the success of a business operating on their property.

It's important for franchisees to understand these contingent rental provisions, as they can impact the profitability of their restaurant. Franchisees should carefully review their lease agreement and understand the sales thresholds and the percentage of gross sales that will be used to calculate the contingent rent. They should also factor in these potential rent increases when projecting their restaurant's financial performance. While the document states that contingent rent expense was not material for the reported periods, franchisees should still be aware of the possibility of such expenses in the future.