How is the Local Advertising Fee calculated for a Checkersrallys franchise?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
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ITEM 6 OTHER FEES
FRANCHISE AGREEMENT
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (See Note 1) |
|---|---|---|---|
| Royalty | 4% of your Net Sales | Semi-monthly, | Net Sales is defined in Note 2 |
| or 2% of your Net | on or before the | below. See Note 2 for the | |
| Sales if you operate a | 5th and 20th | 2025 Growth Incentive | |
| Restaurant from a | day of each | Program and Reimage | |
| Non-Traditional Site. | month. | Incentive Program. | |
| National Production Fund Contributions (See Notes 3 and 4) | You will be required to pay up to 3% of your Net Sales (currently, 2.65% of your Net Sales). | Monthly, on the 5th day of each month. | Varies. The amount is credited toward your 4.5% advertising expenditure requirement. Your contribution rate is subject to change from time to time. |
| Cooperative Advertising (See Notes 4 and 5) | Determined by your local or regional advertising cooperative. | Monthly, on the 5th day of each month. | Payments to local or regional advertising cooperatives are credited toward your 4.5% advertising expenditure requirement. |
| COLUMN 1 | COLUMN 2 | COLUMN 3 | COLUMN 4 |
| TYPE OF FEE | AMOUNT | DUE DATE | REMARKS (See Note 1) |
| ----------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Local Advertising Fee (see Notes 5 and 6) | The difference between the current NPF contribution rate and 4.5% of your Net Sales. | Must be spent on advertising and promotion during each of your fiscal quarters. | If your Franchised Restaurant is located in a geographical area where we have not established an advertising cooperative, then, we may require you contribute to an advertising purchasing collective that we establish and control. |
| Delivery Administration Fee | 2% of the total price charged to a customer that orders certain approved food, beverage and other items ("Delivered Products") from a third-party delivery service provider approved by us (each a "DSP"). | Bi-monthly. | Payable only if you are eligible to provide delivery services, elect to provide delivery and enter into the delivery services participation agreement (the "Delivery Program"). See Note 7. |
| Order Ahead Program Administration Fee | 2% of the total price charged to a customer that orders certain approved food, beverage and other items (the "Order Ahead Products") from our optional "Order Ahead Program." | Bi-monthly. | Payable only if you are eligible and elect to enter the Order Ahead Program, which allows customers to pre-order the Order Ahead Products for pick-up from Restaurants. See Note 8. |
| Marketing, Advertising, Promotional and Point-of-Purchase ("POP") Materials | Actual costs, which may vary per Restaurant based on merchandising capacity and the materials you request. | Payable monthly. |
Source: Item 6 — OTHER FEES (FDD pages 21–29)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the Local Advertising Fee is calculated as the difference between the current National Production Fund (NPF) contribution rate and 4.5% of your Net Sales. This fee must be spent on advertising and promotion during each of your fiscal quarters. Net Sales is defined as all revenue derived from operating the Franchised Restaurant, including the aggregate of all sales amounts from food, beverages and other products sold and services rendered at the Premises or otherwise rendered in connection with your Franchised Restaurant, and all monies derived from sales at or away from the Franchised Restaurant, whether from cash, check, credit or debit card, barter exchange, trade credit, or other credit transactions, but excluding sales taxes and reduced by documented refunds, credits, allowances, adjustments, promotional discounts, and charge-backs.
Currently, Checkersrallys requires franchisees to spend 4.5% of Net Sales on advertising and marketing, which includes the NPF contribution and any contributions to a regional or local advertising cooperative. The NPF contribution rate is currently 2.65% of Net Sales. Therefore, if a Checkersrallys restaurant is not part of a local advertising cooperative, the local advertising fee would be the difference between 4.5% and 2.65%, which equals 1.85% of Net Sales.
If a Checkersrallys franchise is located in an area where the franchisor has not established an advertising cooperative, Checkersrallys may require the franchisee to contribute to an advertising purchasing collective that Checkersrallys establishes and controls. This ensures that all franchisees contribute to local advertising efforts, even if they are not part of a formal cooperative. The franchisee must spend the local advertising fee on advertising and promotion each fiscal quarter, ensuring consistent local marketing efforts. Prospective franchisees should inquire about the specific advertising requirements and options available in their designated marketing area.