Is a Checkersrallys franchisee required to participate in local or regional advertising cooperative programs, even if they involve price advertising?
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.
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 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. If we require you to contribute to an advertising purchasing collective, we will provide you with an accounting of the amount spent in your designated marketing area.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees are generally required to participate in local and regional advertising cooperatives. However, participation in price advertising within these cooperatives is optional.
The FDD specifies that Checkersrallys has the right to establish local or regional advertising cooperatives. Franchisees must participate in these cooperatives and adhere to their bylaws. However, franchisees can choose not to participate in price advertising programs. Franchisees are required to contribute to the advertising cooperatives as determined by the cooperative's bylaws.
These contributions to local and regional advertising cooperatives can be credited toward the required advertising expenditure, which is 4.5% of Net Sales. However, Checkersrallys can require participation in special regional promotions with 90 days' notice. Fees for these promotions are in addition to the standard 4.5% advertising expenditure.
If a Checkersrallys restaurant is in an area without an advertising cooperative, Checkersrallys has the option to require the franchisee to spend the difference between the current NPF contribution rate and 4.5% of Net Sales on local marketing, contribute to an advertising purchasing collective controlled by Checkersrallys, or join a local or regional cooperative created by Checkersrallys.