How is the Cooperative Advertising fee determined for a Checkersrallys franchise?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (See Note 1) | |---|---|---|---| | Cooperative Advertising (See Notes 4 and 5) | Determined by your local or regional advertising cooperative. | Monthly, on the 5th day of each month. | Payments to local or regional advertising cooperatives are credited toward your 4.5% advertising expenditure requirement. | NOTE 5: Decisions of advertising cooperatives generally are made by majority vote based on one vote per restaurant. Accordingly, we may control the cooperative in certain areas where company-owned Checkers Restaurants or Rally's Restaurants constitute the majority. Typically, however, the by-laws require certain votes (e.g., contribution rate increases) to be based on one vote per entity and not one vote per restaurant. The cooperative contribution rates generally range from 0.5% to 1.85% of Net Sales, but may vary. Cooperatives may purchase any media or advertising of their choosing, including home, linear TV, terrestrial/streaming radio, connected TV, online video, digital display, paid search, programmatic digital, and social media. Rate contributions of advertising cooperatives are established by a majority vote of members.
In addition, if we provide you and any local or regional advertising cooperative with 90 days' notice of a special regional promotion, you must participate in the promotion and pay us any regional advertising fees beginning on the effective date of the notice and continuing until the regional promotion ends. Any special regional advertising fees will be in addition to, and not credited towards, the minimum 4.5% advertising expenditure we currently require you to make.
NOTE 6: If your Franchised Restaurant is located in a geographical area where we have not established an advertising cooperative, then, at our option, you will be required to either (i) spend the difference between the current NPF contribution rate and 4.5% of your Net Sales marketing your Franchised Restaurant in your local market, (ii) contribute the difference between the current NPF contribution rate and 4.5% of your Net Sales to an advertising purchasing collective that we establish and control (which may not be governed by by-laws similar to a typical local or regional advertising cooperative where you will have voting rights), or (iii) join a local or regional cooperative that we create in your designated marketing area (in which case your contribution rate will be determined by the cooperative in accordance with its by-laws).
Source: Item 6 — OTHER FEES (FDD pages 21–29)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the Cooperative Advertising fee is determined by the local or regional advertising cooperative the franchisee joins. The amount of the fee is determined monthly and payments are due on the 5th day of each month. These payments are credited toward the franchisee's overall 4.5% advertising expenditure requirement.
Advertising cooperatives' decisions are generally made by a majority vote, with one vote per restaurant. Checkersrallys may control the cooperative in areas where company-owned restaurants constitute the majority. However, certain critical votes, such as contribution rate increases, are based on one vote per entity, not per restaurant. The contribution rates typically range from 0.5% to 1.85% of Net Sales, but this can vary. The cooperatives have the autonomy to purchase various advertising media, including TV, radio, online video, and social media.
If a Checkersrallys restaurant is in an area without an established advertising cooperative, Checkersrallys has the option to require the franchisee to either spend the difference between the current National Production Fund (NPF) contribution rate and 4.5% of Net Sales on local marketing, contribute that difference to an advertising purchasing collective controlled by Checkersrallys, or join a local or regional cooperative created by Checkersrallys. In the latter case, the cooperative determines the contribution rate according to its by-laws.
Checkersrallys also has the right to implement special regional promotions with 90 days' notice, during which franchisees must participate and pay regional advertising fees. These fees are in addition to the minimum 4.5% advertising expenditure requirement and are not credited towards it. This means franchisees need to be prepared to adjust their advertising spending based on the cooperative's decisions and any special promotions initiated by Checkersrallys.