Are contributions to Checkersrallys local and regional advertising cooperatives credited toward the 4.5% advertising expenditure requirement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right to establish local and/or regional advertising cooperatives for "Checkers" and/or "Rally's" restaurants in your local or regional area, covering such geographical areas as we may designate at any time and from time to time. You must participate in such advertising cooperative and its programs (other than price advertising, as to which you may choose not to participate) and abide by its by-laws. You must contribute such amounts to the advertising cooperative(s) as they determine at any time and from time to time in accordance with their by-laws. Any Restaurants owned by us or any of our Affiliates located in such designated local or regional area(s) will contribute to the cooperative(s) on the same basis. Contributions to such local and regional advertising cooperatives are credited toward the 4.5% advertising expenditures required by this Section; however, if we provide you and your local and/or regional advertising cooperative ninety (90) days' notice of a special regional promotion, you must participate in such promotion and pay to us any regional advertising fees assessed in connection therewith, beginning on the effective date of such notice and continuing until such regional promotion is concluded. Any such special regional advertising fees shall be in addition to, and not credited towards, the 4.5% advertising expenditure required by this Section.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, contributions to local and regional advertising cooperatives are generally credited toward the 4.5% advertising expenditure requirement. This means that if Checkersrallys establishes local or regional advertising cooperatives, a franchisee's contributions to these cooperatives can count towards meeting their minimum advertising spending obligations. However, this credit does not apply to special regional advertising fees, which are in addition to the 4.5% requirement.
Checkersrallys has the right to establish these advertising cooperatives covering specific geographical areas. Franchisees are required to participate in these cooperatives, adhering to their bylaws and contributing the amounts determined by the cooperative. Notably, participation in price advertising is optional. Restaurants owned by Checkersrallys or its affiliates within the designated areas will also contribute to the cooperatives on the same basis as franchisees.
If a Checkersrallys franchise is located in an area without an advertising cooperative, the franchisee may be required to spend the difference between the National Production Fund (NPF) contribution rate and 4.5% of net sales on local marketing. Alternatively, they may be required to contribute to an advertising purchasing collective established and controlled by Checkersrallys, or join a local or regional cooperative created in their designated marketing area. This provides Checkersrallys with flexibility in how advertising funds are managed and spent, depending on the location of the franchise.
It's important to note that Checkersrallys retains significant control over advertising and promotional materials. Franchisees must submit any advertising materials not already approved by Checkersrallys for prior approval, and Checkersrallys can disapprove any materials. This ensures brand consistency and adherence to Checkersrallys's marketing standards. Franchisees should be aware of these requirements and the potential costs associated with advertising, including contributions to the NPF, local cooperatives, and special regional promotions.