How do Cooperative Advertising payments relate to the advertising expenditure requirement for a Checkersrallys franchise?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
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ITEM 6 OTHER FEES
FRANCHISE AGREEMENT
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (See Note 1) |
|---|---|---|---|
| Royalty | 4% of your Net Sales | Semi-monthly, | Net Sales is defined in Note 2 |
| or 2% of your Net | on or before the | below. See Note 2 for the | |
| Sales if you operate a | 5th and 20th | 2025 Growth Incentive | |
| Restaurant from a | day of each | Program and Reimage | |
| Non-Traditional Site. | month. | Incentive Program. | |
| National Production Fund Contributions (See Notes 3 and 4) | You will be required to pay up to 3% of your Net Sales (currently, 2.65% of your Net Sales). | Monthly, on the 5th day of each month. | Varies. The amount is credited toward your 4.5% advertising expenditure requirement. Your contribution rate is subject to change from time to time. |
| 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. |
| COLUMN 1 | COLUMN 2 | COLUMN 3 | COLUMN 4 |
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (See Note 1) |
| ----------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Local Advertising Fee (see Notes 5 and 6) | The difference between the current NPF contribution rate and 4.5% of your Net Sales. | Must be spent on advertising and promotion during each of your fiscal quarters. | If your Franchised Restaurant is located in a geographical area where we have not established an advertising cooperative, then, we may require you contribute to an advertising purchasing collective that we establish and control. |
| Delivery Administration Fee | 2% of the total price charged to a customer that orders certain approved food, beverage and other items ("Delivered Products") from a third-party delivery service provider approved by us (each a "DSP"). | Bi-monthly. | Payable only if you are eligible to provide delivery services, elect to provide delivery and enter into the delivery services participation agreement (the "Delivery Program"). See Note 7. |
| Order Ahead Program Administration Fee | 2% of the total price charged to a customer that orders certain approved food, beverage and other items (the "Order Ahead Products") from our optional "Order Ahead Program." | Bi-monthly. | Payable only if you are eligible and elect to enter the Order Ahead Program, which allows customers to pre-order the Order Ahead Products for pick-up from Restaurants. See Note 8. |
| Marketing, Advertising, Promotional and Point-of-Purchase ("POP") Materials | Actual costs, which may vary per Restaurant based on merchandising capacity and the materials you request. | Payable monthly. | Advertising materials not prepared by us must be submitted for approval prior to distribution. |
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (See Note 1)
Source: Item 6 — OTHER FEES (FDD pages 21–29)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, payments made to local or regional advertising cooperatives are credited toward the franchisee's 4.5% advertising expenditure requirement. This means that if a franchisee is required to contribute to a cooperative, the amount they pay counts towards the total advertising spending they need to make. The cooperative contribution rates generally range from 0.5% to 1.85% of Net Sales, but may vary.
Checkersrallys requires franchisees to spend 4.5% of their Net Sales on advertising and marketing. This includes contributions to the National Production Fund (NPF), regional or local advertising cooperatives, and any amounts spent marketing the franchise in the local market or contributed to an advertising purchasing collective controlled by Checkersrallys. If the combined contribution rate for the NPF and the local advertising cooperative exceeds 4.5%, the franchisee's advertising expenditures may also exceed this percentage.
If a Checkersrallys franchise is located in an area without an established advertising cooperative, the franchisee may be required to either spend the difference between the 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. However, Checkersrallys can mandate participation in special regional promotions with 90 days' notice, and these fees are in addition to the standard 4.5% advertising expenditure requirement and are not credited towards it.