Which items in the Checkersrallys Disclosure Document relate to the franchisee's advertising obligations?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
| OBLIGATION | SECTION IN AGREEMENT | DISCLOSURE DOCUMENT ITEM |
|---|---|---|
| o. Advertising | Sections 3.06 and 10 of the Franchise Agreement | Items 6, 7, 8 and 11 |
[Item 11: FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING]
Advertising
National Production Fund
We have established and administer the NPF for the creation and production of marketing materials and preparation of advertising campaigns. The NPF is currently incorporated and operated through NPF Inc. NPF Inc. has all of the rights and duties described here. In addition to the Initial Advertising Deposit described in Item 5, you must contribute to the NPF amounts that are established by us from time to time, not to exceed 3% of Net Sales, which are payable semi-monthly at the same time as the royalty fees due under the Franchise Agreement. As of the issuance date of this Franchise Disclosure Document, you must contribute a monthly advertising fee (currently, 2.65%, but can be increased up to 3.0% of your Net Sales) to the NPF depending on the geographical area where your Franchised Restaurant is located (See Note 5 in Item 6). Other domestic franchisees contribute on the same basis to the NPF, except for certain operators of Rally's Restaurants operating under older forms of agreement. The NPF receives and administers monies from operators of Restaurants. All company-owned Checkers Restaurants and Rally's Restaurants also currently contribute on the same basis as franchisees to the NPF, but we and our affiliates are not obligated to do so (or to continue doing so throughout your franchise term). Some third party vendors also contribute to the NPF. The NPF does not spend any money on advertising that is principally a solicitation for the sale of new franchises. Neither we nor NPF, Inc. are required to spend any amount on advertising in your market area.
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 44–46)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Item 11 and the sections of the Franchise Agreement outlined in Item 9 relate to the franchisee's advertising obligations. Item 9 of the FDD lists franchisee obligations and refers to 'Sections 3.06 and 10 of the Franchise Agreement' and 'Items 6, 7, 8 and 11' of the FDD in relation to advertising. This indicates that the advertising obligations are detailed in those sections of the franchise agreement and these items of the FDD.
Item 11 specifically addresses advertising, detailing the National Production Fund (NPF). Franchisees must contribute to this fund, with the amount determined by Checkersrallys, but it cannot exceed 3% of Net Sales. These contributions are payable semi-monthly, coinciding with royalty fee payments. As of the FDD's issuance date, franchisees must contribute a monthly advertising fee, currently at 2.65% (but potentially rising to 3.0% of Net Sales), to the NPF, varying by the Franchised Restaurant's geographical location.
The NPF is used for creating marketing materials and advertising campaigns and is administered through NPF Inc. While other domestic franchisees and company-owned Checkersrallys restaurants contribute to the NPF on the same basis, Checkersrallys and its affiliates are not obligated to continue doing so throughout the franchise term. It's important to note that neither Checkersrallys nor NPF, Inc. are required to spend any specific amount on advertising in the franchisee's market area. This means that while franchisees are required to contribute to the NPF, there is no guarantee of direct advertising support in their specific location.