What is the purpose of Checkers and Rally's Distribution and Services, Inc. (CDSI) for Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company and its franchisees each pay charges based on volumes of products purchased from suppliers to Checkers and Rally's Distribution and Services, Inc. ("CDSI"), established for the purpose of providing procurement services and quality assurance support for the benefit of both Company-operated and franchised restaurants. During the fiscal year ended December 30, 2024 (Successor) and the period from June 17, 2023 through January 1, 2024 (Successor) and the period from January 3, 2023 through June 16, 2023 (Predecessor) only one member, representing 25% of the CDSI Board of Directors is an employee of the Company. CDSI is not included in the accompanying consolidated financial statements, although the company's contributions to CDSI are included within restaurant food and paper costs in the accompanying consolidated statements of operations.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Checkers and Rally's Distribution and Services, Inc. (CDSI) exists to provide procurement services and quality assurance support for both company-operated and franchised restaurants. Franchisees and the company pay charges based on the volume of products purchased from suppliers to CDSI.
CDSI is not included in Checkersrallys's consolidated financial statements. However, the company's contributions to CDSI are included within "restaurant food and paper costs" in the consolidated statements of operations. This means that while CDSI is a related entity, its financial performance is not directly reflected in Checkersrallys's overall financial statements, but the costs associated with using CDSI's services are.
For prospective Checkersrallys franchisees, this arrangement means they are required to purchase products through CDSI, and the costs will be factored into their operating expenses under "restaurant food and paper costs". It also suggests that CDSI plays a crucial role in maintaining quality standards across all Checkersrallys locations, which can impact brand consistency and customer satisfaction. Only one member, representing 25% of the CDSI Board of Directors is an employee of the Company.