For Checkersrallys, can the NPF borrow funds to cover deficits, and if so, from whom?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
We may spend in any fiscal year an amount greater or less than the aggregate contributions of all Restaurants to the NPF in that year, and the NPF may borrow from us or other lenders (paying reasonable interest) to cover deficits in the NPF, or invest any surplus for future use by the NPF. We will prepare annually a statement of monies collected and costs incurred by the NPF and furnish you a copy upon your written request.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the National Production Fund (NPF) has the ability to borrow funds to cover any deficits that may occur. Specifically, the NPF may borrow from Checkersrallys itself or from other lenders. If the NPF does borrow funds, it will pay a reasonable interest rate on the borrowed amount. This provision ensures that the NPF can continue its operations even if there is a shortfall in contributions from franchisees.
This borrowing ability provides flexibility for the NPF to manage its finances and ensure consistent advertising and marketing efforts. Checkersrallys also has the option to invest any surplus funds for future use by the NPF, further enhancing its financial stability. The FDD states that Checkersrallys will use all interest earned on NPF contributions to pay costs before using the NPF's other assets.
Checkersrallys will provide an annual statement of monies collected and costs incurred by the NPF, which is available to franchisees upon written request. This transparency allows franchisees to stay informed about the financial activities of the NPF and how their contributions are being utilized. Franchisees should note that Checkersrallys does not act as a trustee or in any fiduciary capacity with respect to the NPF.