How are franchise restaurant royalties earned by Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- Franchise restaurant royalties are earned as the franchise delivers food to their customer or to a third-party delivery partner. The Company recognizes the royalty revenue in the period in which the franchise sales occur over the contract term of the franchise agreement. The Company generally bills royalties bi-monthly or bi-weekly to franchise customers and the payment is due within 10 days of the billing. See the "accounts and notes receivable" below for additional information on franchise royalty payments. Royalty rates are generally 4% of net sales but the rates may vary based on restaurants qualifying under certain development or reimaging programs.
- Franchise fees including the initial franchise fee, transfer fees, area development fees, and renewal fees are recognized over the term of the franchise contract as the performance obligation to grant the franchise right is satisfied over each day of the contract term. Franchise fees may vary based on qualification under certain development incentive programs.
The Company earns retail royalty fees based on a contract for the sale of licensed products, including the Famous Seasoned Fries© at retail outlets. The performance obligation is satisfied as sales in the retail outlets are made, royalties are payable monthly within 30 days, and vary with retail sales volume.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchise restaurant royalties are earned when the franchise delivers food to a customer or a third-party delivery partner. Checkersrallys recognizes royalty revenue during the same period the franchise sales occur, throughout the term of the franchise agreement.
Checkersrallys typically bills royalties either bi-monthly or bi-weekly to its franchisees, with payment due within 10 days of the billing date. The standard royalty rate is 4% of net sales, but this rate can vary for restaurants that qualify under specific development or reimaging programs.
In addition to franchise restaurant royalties, Checkersrallys also earns retail royalty fees from the sale of licensed products, such as the Famous Seasoned Fries©, in retail outlets. These retail royalties are earned as sales are made in the retail outlets, payable monthly within 30 days, and the amount varies based on retail sales volume. Franchisees should be aware of the different royalty structures and payment terms for restaurant sales versus retail sales, as well as any potential variations in royalty rates based on specific programs.