How does Checkersrallys account for advertising co-ops that it does not control?

According to Checkersrallys's 2025 Franchise Disclosure Document, the company consolidates advertising co-ops for which it determines it has control based on voting interests. However, Checkersrallys does not consolidate advertising co-ops that it does not control.

For accounting purposes, Checkersrallys treats these non-controlled co-ops similarly to how it accounts for the Checkers/Rally's National Production Fund, Inc. (NPF). The contributions to the NPF represent 0.5% of net restaurant sales, while contributions to the advertising co-ops range from 0.5% to 4.25% of net restaurant sales.

This means that while the contributions to the advertising co-ops are recorded as an expense, the assets, liabilities, and operating results of the co-ops themselves are not included in Checkersrallys's consolidated financial statements. This is a common accounting practice when a company does not have a controlling interest in another entity.

For a prospective franchisee, this indicates that while they may be required to contribute to local advertising co-ops, Checkersrallys's financial performance is not directly impacted by the financial activities of those co-ops, as long as Checkersrallys does not maintain control over them.