Under what condition might Checkersrallys require a franchisee to contribute to an advertising purchasing collective?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
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, if a franchisee's restaurant is in an area where Checkersrallys has not established an advertising cooperative, Checkersrallys has the option to require the franchisee to contribute to an advertising purchasing collective that Checkersrallys establishes and controls. This collective may not be governed by by-laws similar to a typical local or regional advertising cooperative, meaning the franchisee may not have voting rights in how the advertising funds are spent.
Instead of contributing to the advertising purchasing collective, the franchisee has two other options. They can choose to spend the difference between the current National Production Fund (NPF) contribution rate and 4.5% of their Net Sales on local marketing. Alternatively, they can join a local or regional cooperative that Checkersrallys creates in their designated marketing area, in which case their contribution rate will be determined by the cooperative's by-laws.
This advertising purchasing collective is different from a typical advertising cooperative. In a typical cooperative, decisions are made by a majority vote based on one vote per restaurant, although certain votes like contribution rate increases may be based on one vote per entity. Checkersrallys may control the cooperative in areas where company-owned restaurants constitute the majority. The contribution rates for these cooperatives generally range from 0.5% to 1.85% of Net Sales, but this can vary. These cooperatives can purchase various forms of advertising, including TV, radio, online video, and social media.