How do National Production Fund Contributions relate to the advertising expenditure requirement for a Checkersrallys franchise?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
ement.
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. | Advertising materials not prepared by us must be submitted for approval prior to distribution. |
Source: Item 6 — OTHER FEES (FDD pages 21–29)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees are required to spend 4.5% of Net Sales on advertising and marketing. The National Production Fund (NPF) contribution is a component of this advertising expenditure. Currently, the NPF contribution is 2.65% of Net Sales, though this percentage can change. The NPF contributions are credited toward the 4.5% advertising expenditure requirement.
If a Checkersrallys restaurant is in an area with a local or regional advertising cooperative, payments to that cooperative also count toward the 4.5% advertising expenditure requirement. The cooperative contribution rates generally range from 0.5% to 1.85% of Net Sales, but may vary. If the combined NPF contribution rate and the advertising cooperative contribution rate exceed 4.5%, the franchisee's advertising expenditures may also exceed 4.5% of Net Sales.
For Checkersrallys restaurants located in areas where an advertising cooperative has not been established, the franchisee must spend the difference between the current NPF contribution rate and 4.5% of Net Sales on local advertising. Alternatively, Checkersrallys may require the franchisee to contribute that difference to an advertising purchasing collective established and controlled by Checkersrallys, or join a local or regional cooperative that Checkersrallys creates in their designated marketing area. Franchisees should be aware that special regional promotions may require additional advertising fees that are not credited towards the minimum 4.5% advertising expenditure.