What is the typical voting structure for advertising cooperatives for Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
NOTE 5: Decisions of advertising cooperatives generally are made by majority vote based on one vote per restaurant. Accordingly, we may control the cooperative in certain areas where company-owned Checkers Restaurants or Rally's Restaurants constitute the majority. Typically, however, the by-laws require certain votes (e.g., contribution rate increases) to be based on one vote per entity and not one vote per restaurant. The cooperative contribution rates generally range from 0.5% to 1.85% of Net Sales, but may vary. Cooperatives may purchase any media or advertising of their choosing, including home, linear TV, terrestrial/streaming radio, connected TV, online video, digital display, paid search, programmatic digital, and social media. Rate contributions of advertising cooperatives are established by a majority vote of members.
In addition, if we provide you and any local or regional advertising cooperative with 90 days' notice of a special regional promotion, you must participate in the promotion and pay us any regional advertising fees beginning on the effective date of the notice and continuing until the regional promotion ends. Any special regional advertising fees will be in addition to, and not credited towards, the minimum 4.5% advertising expenditure we currently require you to make.
NOTE 6: If your Franchised Restaurant is located in a geographical area where we have not established an advertising cooperative, then, at our option, you will be required to either (i) spend the difference between the current NPF contribution rate and 4.5% of your Net Sales marketing your Franchised Restaurant in your local market, (ii) contribute the difference between the current NPF contribution rate and 4.5% of your Net Sales to an advertising purchasing collective that we establish and control (which may not be governed by by-laws similar to a typical local or regional advertising cooperative where you will have voting rights), or (iii) join a local or regional cooperative that we create in your designated marketing area (in which case your contribution rate will be determined by the cooperative in accordance with its by-laws).
Source: Item 6 — OTHER FEES (FDD pages 21–29)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, decisions within advertising cooperatives are generally determined by a majority vote, with each restaurant having one vote. This structure could allow Checkersrallys to control the cooperative in regions where company-owned restaurants constitute the majority. However, the bylaws often stipulate that certain critical votes, such as those concerning contribution rate increases, are based on one vote per entity rather than one vote per restaurant.
The cooperative contribution rates typically range from 0.5% to 1.85% of Net Sales, but these rates can vary. These cooperatives have the autonomy to invest in various advertising mediums, including home, linear TV, terrestrial/streaming radio, connected TV, online video, digital display, paid search, programmatic digital, and social media. The specific contribution rates for these advertising cooperatives are established through a majority vote of the members.
If Checkersrallys initiates a special regional promotion with 90 days' notice, franchisees are required to participate and pay any associated regional advertising fees. These fees are in addition to the standard 4.5% advertising expenditure required. In areas where an advertising cooperative has not been established, Checkersrallys has the option to require franchisees to either spend the difference between the current National Production Fund (NPF) contribution rate and 4.5% of Net Sales on local marketing, contribute that difference to an advertising purchasing collective controlled by Checkersrallys, or join a local or regional cooperative created by Checkersrallys.