If no advertising cooperative exists when the Checkersrallys Non-Traditional Site franchise agreement is effective, what portion of the contribution are franchisees required to pay when one is established?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
You must contribute such amounts to the advertising cooperative(s) as they determine from time to time in accordance with the cooperative's bylaws, provided that: (i) if no cooperative exists in the geographic area of the Franchised Restaurant upon the Effective Date, then your obligation to contribute to any future cooperative that covers the Franchised Restaurant will require you to contribute only fifty percent (50%) of the then current amount that other members in the cooperative (whose Restaurants are not operating, or to be operated, in a Non-Traditional Site) are obligated to contribute; (ii) if a cooperative exists in the market area of the Premises upon the Effective Date, we will exert our best efforts to ensure that such cooperative revises its bylaws to allow, and/or specifically approves, you to pay a reduced contribution level as specified in subpart (i); and (iii) any such reduction in your cooperative contribution level under the preceding subpart (i) will neither apply to your required participation in any special regional promotion (in which promotion you must fully participate as contemplated below in this Section 10.02), nor reduce your minimum total five percent (5%) combined advertising expenditure obligation described above in this Section 10.02.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, if a Non-Traditional Site franchise agreement is effective and no advertising cooperative exists in the geographic area, the franchisee's contribution to any future cooperative is 50% of the amount that other members (whose restaurants are not in Non-Traditional Sites) are obligated to contribute. This reduced contribution does not apply to special regional promotions, in which the franchisee must fully participate. This reduction also does not reduce the minimum total 5% combined advertising expenditure obligation.
Checkersrallys retains the right to establish local or regional advertising cooperatives covering designated geographic areas. Franchisees are required to participate in these cooperatives and adhere to their bylaws, excluding price advertising, in which participation is optional. Any restaurants owned by Checkersrallys or its affiliates within the designated area will contribute to the cooperative on the same basis as the general membership.
This condition provides a potential financial benefit to franchisees operating in Non-Traditional Sites by reducing their advertising cooperative contributions when a cooperative is established after the franchise agreement's effective date. However, franchisees should be aware that this reduction does not extend to special regional promotions or the overall minimum advertising expenditure requirement. Franchisees should also confirm whether a cooperative already exists in their market area at the time of signing the Franchise Agreement, as this may affect their contribution obligations.