Does the reduced cooperative contribution level for a Checkersrallys Non-Traditional Site franchisee reduce the minimum total advertising expenditure obligation?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
You must contribute such amounts to the advertising cooperative(s) as they determine from time to time in accordance with the cooperative's bylaws, provided that: (i) if no cooperative exists in the geographic area of the Franchised Restaurant upon the Effective Date, then your obligation to contribute to any future cooperative that covers the Franchised Restaurant will require you to contribute only fifty percent (50%) of the then current amount that other members in the cooperative (whose Restaurants are not operating, or to be operated, in a Non-Traditional Site) are obligated to contribute; (ii) if a cooperative exists in the market area of the Premises upon the Effective Date, we will exert our best efforts to ensure that such cooperative revises its bylaws to allow, and/or specifically approves, you to pay a reduced contribution level as specified in subpart (i); and (iii) any such reduction in your cooperative contribution level under the preceding subpart (i) will neither apply to your required participation in any special regional promotion (in which promotion you must fully participate as contemplated below in this Section 10.02), nor reduce your minimum total five percent (5%) combined advertising expenditure obligation described above in this Section 10.02.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a reduced cooperative contribution level for a Non-Traditional Site franchisee does not reduce the minimum total advertising expenditure obligation. Even if a Checkersrallys franchisee operating in a Non-Traditional Site benefits from a reduced contribution to the advertising cooperative, they are still obligated to meet the minimum combined advertising expenditure of five percent (5%).
This means that while the franchisee might pay less into the cooperative itself, they must compensate by spending more on other forms of advertising to reach the 5% threshold. This could include direct marketing, local advertising, or other promotional activities approved by Checkersrallys. The franchisee needs to be prepared to track and document these expenditures to demonstrate compliance with the advertising requirements.
Checkersrallys retains the right to implement special regional promotions, in which case the franchisee must fully participate, and the fees associated with these promotions are in addition to the minimum 5% advertising expenditure. This ensures that all franchisees, including those in Non-Traditional Sites with reduced cooperative contributions, contribute adequately to the overall marketing efforts of the Checkersrallys brand.