Does Checkersrallys intend to earn a profit from subleases with franchisees?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
d unusual personal gain.
Items We Supply or Derive Revenue From
We and our affiliates may receive revenues from required purchases and leases of products and services by franchisees. The revenues are collected by approved suppliers or distribution centers on behalf of the system and are paid to us. Our total revenues for the fiscal year which ended December 30, 2024 were $300,381,238 of which $6,189,551 or 2.1% were revenues from required purchases and leases of products and services by franchisees. Our total revenue from franchisee purchases includes $2,225,520 in gross revenue from subleases with franchisees. We generally collect rent as a pass through for landlords on the underlying lease but may earn a profit. We did not earn any profit from subleases during our 2024 fiscal year. Our intention is not to earn a profit, but instead to use all revenues collected from franchisee and company-owned restaurant purchases of products and services to offset expenses we incur in administering system-wide programs such as people, guest and operations programs, insurance procurement, promotional and price management tools, supply chain programs, brand protection (including quality assurance and food safety) programs and research and development. However, we may earn a profit from
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 39–44)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Checkersrallys may earn a profit from subleases with franchisees, although it is not their intention to do so. Checkersrallys's total revenues for the fiscal year which ended December 30, 2024, were $300,381,238, of which $6,189,551 (2.1%) were revenues from required purchases and leases of products and services by franchisees. Included in this amount is $2,225,520 in gross revenue from subleases with franchisees.
Checkersrallys states that it generally collects rent as a pass-through for landlords on the underlying lease but may earn a profit. However, Checkersrallys states that it did not earn any profit from subleases during its 2024 fiscal year. Checkersrallys intends to use all revenues collected from franchisee and company-owned restaurant purchases of products and services to offset expenses incurred in administering system-wide programs such as people, guest and operations programs, insurance procurement, promotional and price management tools, supply chain programs, brand protection (including quality assurance and food safety) programs and research and development.
For a prospective franchisee, this means that while Checkersrallys aims to operate subleases without profit, the possibility exists. It is important to note that while Checkersrallys states its intention is not to profit from these subleases, the FDD also states that they may earn a profit from franchisees' required purchases and leases of products and services. A franchisee should confirm the specific terms of any sublease agreement and understand how rent and related occupancy costs are structured to assess any potential profit being made by Checkersrallys.