Under what condition does the royalty fee for a Checkersrallys restaurant decrease to 2% of Net Sales?
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. |
2025 Reimage Incentive
If you meet the following criteria: (i) you are signing a franchise agreement on or before June 30, 2025; (ii) you complete a full scope reimage (as approved in advance by us) that complies with our current reimaging requirements by December 30, 2025; and (iii) you, your owners, and your and their affiliates are in full compliance with the franchise agreement and any other agreement between us and you or them, then from the date the Franchised Restaurant opens following the reimage continuing through until the end of the twelfth month of operation following reopening, your royalty will be 2% of Net Sales. Beginning in the thirteenth month following the reopening and for the remainder of the term of the Franchise Agreement, your royalty will be 4% of Net Sales. To receive the benefit of these reduced royalty amounts, you must sign our required form of 2025 Reimage Incentive Addendum to the Franchise Agreement (attached as Exhibit B-6 to this Franchise Disclosure Document).
Source: Item 6 — OTHER FEES (FDD pages 21–29)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, there are two scenarios where the royalty fee can decrease to 2% of Net Sales. The first is if a franchisee operates a restaurant from a Non-Traditional Site. The standard royalty fee is 4% of Net Sales, but this is reduced to 2% for restaurants in Non-Traditional Sites. Net Sales is defined as all revenue derived from operating the franchised restaurant, including sales of food, beverages, and services, but excluding sales taxes and documented refunds or discounts.
The second scenario is under the 2025 Reimage Incentive. Franchisees who sign a franchise agreement on or before June 30, 2025, and complete a full scope reimage that complies with Checkersrallys's current reimaging requirements by December 30, 2025, may qualify. Additionally, the franchisee must be in full compliance with all agreements with Checkersrallys. If these conditions are met, the royalty will be 2% of Net Sales from the date the re-imaged restaurant opens through the end of the twelfth month of operation following reopening. After this period, the royalty reverts to 4% of Net Sales for the remainder of the franchise agreement term. To receive this benefit, franchisees must sign the 2025 Reimage Incentive Addendum.
It is important for prospective franchisees to carefully review the definitions of "Non-Traditional Site" and the requirements for a "full scope reimage" with Checkersrallys to determine if they qualify for either of these reduced royalty fee scenarios. Understanding these conditions is crucial for accurately projecting potential costs and profitability.