Is a Checkersrallys franchisee required to participate in advertising cooperatives?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
You must participate in such advertising cooperatives 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 from time to time in accordance with their by-laws. In circumstances that reasonably may warrant varied participation or contribution levels among certain members (for example, restaurants at Non-Traditional Sites that generally receive less benefit from a cooperative's local advertising), we may attempt to work with the cooperative's membership to revise its by-laws or other policies, as we deem appropriate. 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 local and regional advertising cooperatives
are credited toward the 4.5% advertising expenditures required by the Franchise Agreement; however, if we provide you and your local and/or regional advertising cooperative 90 days' notice of a special promotion, you must participate in such promotion and pay to us any advertising fees assessed in connection with the promotion, beginning on the effective date of such notice and continuing until such promotion is concluded. Any such regional advertising fees shall be in addition to, and not credited towards, the 4.5% advertising expenditure required by the Franchise Agreement.
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 participate in advertising cooperatives and their programs, but can opt out of price advertising. Franchisees must contribute amounts determined by the cooperatives, according to their by-laws. The contribution rates to these cooperatives generally range from 0.5% to 1.85% of Net Sales, but these rates are subject to change. These contributions are credited toward the 4.5% advertising expenditures required by the Franchise Agreement. However, Checkersrallys may require participation in special promotions with separate advertising fees.
Checkersrallys has the right to establish local and regional advertising cooperatives, and to form, change, dissolve, or merge them. The advertising cooperatives are independently administered with assistance from Checkersrallys and an outside accounting firm. Financial statements and reports are available for franchisee review. Decisions are generally made by majority vote based on one vote per restaurant; Checkersrallys may control the cooperative in areas where company-owned restaurants constitute the majority.
If a Checkersrallys franchisee's contributions to the National Production Fund (NPF) and local/regional advertising cooperative are less than 4.5% of Net Sales monthly, they must spend the difference on local advertising. Alternatively, Checkersrallys may require contributions to an advertising purchasing collective. Checkersrallys also has the right to require franchisees to use specific suppliers for local advertising and to spend the required local advertising money with those suppliers. There is no obligation for Checkersrallys to maintain any advertising program or spend any amount on advertising in the franchisee's geographic area.