Are Checkersrallys affiliates obligated to contribute to the NPF throughout the franchise term?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
We have established and administer the NPF for the creation and production of marketing materials and preparation of advertising campaigns. The NPF is currently incorporated and operated through NPF Inc. NPF Inc. has all of the rights and duties described here. In addition to the Initial Advertising Deposit described in Item 5, you must contribute to the NPF amounts that are established by us from time to time, not to exceed 3% of Net Sales, which are payable semi-monthly at the same time as the royalty fees due under the Franchise Agreement. As of the issuance date of this Franchise Disclosure Document, you must contribute a monthly advertising fee (currently, 2.65%, but can be increased up to 3.0% of your Net Sales) to the NPF depending on the geographical area where your Franchised Restaurant is located (See Note 5 in Item 6). Other domestic franchisees contribute on the same basis to the NPF, except for certain operators of Rally's Restaurants operating under older forms of agreement. The NPF receives and administers monies from operators of Restaurants. All company-owned Checkers Restaurants and Rally's Restaurants also currently contribute on the same basis as franchisees to the NPF, but we and our affiliates are not obligated to do so (or to continue doing so throughout your franchise term). Some third party vendors also contribute to the NPF.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 46–57)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees are generally required to contribute to the National Production Fund (NPF). The standard contribution is determined by Checkersrallys, but it cannot exceed 3% of Net Sales. These contributions are typically paid semi-monthly, coinciding with royalty fee payments as outlined in the Franchise Agreement. However, Checkersrallys and its affiliates are not obligated to contribute to the NPF throughout the franchise term. Some Rally's Restaurants operating under older agreements may also have different contribution terms.
The NPF is used for creating marketing materials and advertising campaigns. The funds are administered by NPF Inc., which manages the collection and spending of contributions. While franchisees must contribute to the NPF, Checkersrallys does not guarantee any specific amount of advertising in a franchisee's local market area. This means that while franchisees are required to pay into the fund, they may not see a direct or proportional benefit in their specific location.
Checkersrallys retains the right to modify or terminate the NPF model with 30 days' notice. If the NPF is terminated, unspent funds will be distributed to Checkers and Rally's franchisees, as well as to Checkersrallys and its affiliates, based on their contributions over the preceding 12 months. This provision ensures that franchisees may receive a portion of the remaining funds if the advertising program is discontinued. Franchisees should be aware that the NPF may also be used to promote other restaurant concepts owned or franchised by Checkersrallys or its affiliates.