What are the ongoing royalty fees for Checkersrallys (Item 6), and how do these relate to the franchisee's obligation to contribute to the national production fund (Item 6)?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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. |
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees are required to pay a royalty fee and contribute to the National Production Fund (NPF). The standard royalty fee is 4% of Net Sales, paid semi-monthly. However, if a franchisee operates a restaurant from a Non-Traditional Site, the royalty fee is reduced to 2% of Net Sales. These royalty fees are due on or before the 5th and 20th day of each month.
In addition to the royalty fee, Checkersrallys franchisees must contribute to the NPF, which supports the creation and production of marketing materials and advertising campaigns. The NPF contribution can be up to 3% of Net Sales; however, the current contribution is 2.65% of Net Sales. This contribution is paid monthly, specifically on the 5th day of each month.
The amount contributed to the NPF is credited toward a franchisee's overall advertising expenditure requirement, which is set at 4.5% of Net Sales. If the NPF contribution is less than 4.5%, the franchisee must allocate the difference to local advertising efforts or contribute to a local or regional advertising cooperative. These local advertising expenditures or contributions also count towards fulfilling the 4.5% advertising expenditure requirement. The franchisor can also require franchisees to contribute to an advertising purchasing collective if the franchisor establishes and controls it.