Detailed Information on Checkers/Rally’s Initial Franchise Fee, Royalty Fee + 30 Other Fees (Items 5 and 6, 2022 FDD)

1.  Initial Franchise Fee:  $15,000 to $30,000

• The standard initial franchise fee is $30,000.

• If Checkers/Rally’s has approved the location of the Franchised Restaurant prior to signing the Franchise Agreement, then you must pay the full amount of the initial franchise fee when you sign the Franchise Agreement.

• If Checkers/Rally’s and you have not agreed upon an approved location of the Franchised Restaurant before signing the Franchise Agreement, then the initial franchise fee is payable as follows: $10,000 on the date you sign the Franchise Agreement; and the remaining $20,000 within 30 days of approval of the location of the Franchised Restaurant.

• If you sign the Franchise Agreement and a Non-Traditional Site Addendum to operate the Franchised Restaurant from a Non-Traditional Site, then the initial franchise fee will be reduced to $15,000.

• Checkers/Rally’s offers an incentive program for eligible veterans of the United States military forces (the “Vet Fran Incentive”) under which participants may pay a reduced initial franchise fee (currently $0, or a 100% reduction of Checkers/Rally’s current standard initial franchise fee of $30,000) under their first Franchise Agreement for a new Franchised Restaurant.

2.  Asset Transfer Fee (on sale of company-owned Restaurant):  $10,000

• If your Franchise Agreement is for an existing Checkers Restaurant or Rally’s Restaurant you are buying from Checkers/Rally’s or its affiliate, then you must pay Checkers/Rally’s a $10,000 asset transfer fee in addition to the initial franchise fee, payable on or before you close on the purchase of the Franchised Restaurant’s assets.

• Checkers/Rally’s may also impose the daily incremental late charge of $500 per day if you do not pay the asset transfer fee before closing.

• This fee is fully earned by Checkers/Rally’s as of the effective date of the Franchise Agreement.

3.  Initial Advertising and Promotional Program Deposit:  $10,000

• If your Franchise Agreement is for a new Checkers Restaurant or Rally’s Restaurant, you must pay a $10,000 advertising deposit (the “Initial Advertising Deposit”) to the National Production Fund. The Initial Advertising Deposit is due when you commence construction at the Premises for the Franchised Restaurant.

• This amount is used to conduct, through the National Production Fund (and if applicable, any local advertising cooperative), an initial advertising and promotional program at the Franchised Restaurant as Checkers/Rally’s deems appropriate.

• When the initial advertising and promotional program is complete, Checkers/Rally’s will (after deducting for incurred costs and expenses) credit any remaining amount from the initial advertising deposit toward your required contributions to the National Production Fund and/or your local advertising cooperative (as applicable).

4.  Security Deposit (Subleases):  varies

• If Checkers/Rally’s agrees to sublease the Premises of your Franchised Restaurant to you, it may require you to pay it a refundable security deposit before you open or begin to operate the Franchised Restaurant.

• The amount of the security deposit, if any, will depend on the amount of the security deposit paid to the landlord of the Premises.

5.  Sublease Administrative Fee:  up to 10% of the rent that remains due under the then-current lease term

• If your Franchise Agreement is for an existing Checkers Restaurant or Rally’s Restaurant you are buying from Checkers/Rally’s or its affiliate, and Checkers/Rally’s agrees to sublease the Premises of your Franchised Restaurant to you and remain on the master lease, then Checkers/Rally’s will charge you a sublease administrative fee of up to 10% of the rent that remains due under the then-current lease term in consideration of Checkers/Rally’s remaining a guarantor on the lease.

6.  Development Fee:  $10,000 per Restaurant to be developed

• If Checkers/Rally’s agrees to grant you development rights, you and Checkers/Rally’s will enter into a Development Agreement, which requires you to pay a development fee of $10,000 per Restaurant to be developed.

7.  Royalty:  4% of your Net Sales, or 2% of your Net Sales if you operate a Restaurant from a Non-Traditional Site

• Due Date:  Semi-monthly, on or before the 5th and 20th day of each month.

8.  National Production Fund Contributions:  you may be required to pay up to 3% of Net Sales

• Due Date:  Semi-monthly, on or before the 5th and 20th day of each month.

• Varies.

• The amount is credited toward your 4.5% advertising expenditure requirement.

• Your contribution rate is subject to change from time to time.

9.  Advertising Expenditure Requirement:  4.5% of your Net Sales

• Due Date:  Must be spent on advertising and promotion during each of your fiscal quarters.

• Includes amounts paid to NPF (other than Initial Advertising Deposit), advertising cooperatives, and amounts generally expended by you for advertising your Franchised Restaurant.

10.  Cooperative Advertising:  determined by your local or regional advertising cooperative

• Due Date:  Monthly, on the 5th day of each month.

• Payments to local or regional advertising cooperatives are credited toward your 4.5% advertising expenditure requirement.

11.  Delivery Administration Fee:  2% of the total price charged to a customer that orders certain approved food, beverage, and other items (“Delivered Products”) from a third-party delivery service provider approved by Checkers/Rally’s (each a “DSP”)

• Due Date:  Bi-monthly.

• Payable only if you are eligible to provide delivery services, elect to provide delivery, and enter into the delivery services participation agreement (the “Delivery Program”).

12.  Order Ahead Program Administration Fee:  2% of the total price charged to a customer that orders certain approved food, beverage, and other items (the “Order Ahead Products”) from Checkers/Rally’s optional “Order Ahead Program”

• Due Date:  Bi-monthly.

• Payable only if you are eligible and elect to enter the Order Ahead Program, which allows customers to pre-order the Order Ahead Products for pick-up from Restaurants.

13.  Marketing, Advertising, Promotional, and Point-of-Purchase (“POP”) Materials:  at cost, plus any related administrative, shipping, handling, and storage charges. Costs may vary per Restaurant based on merchandising capacity.

• Due Date:  Payment due upon order.

• Advertising materials not prepared by Checkers/Rally’s must be submitted for approval prior to distribution.

14.  Transfer Fee – Transfer of a Single Restaurant: $20,000 (or $10,000, if the transferee is an existing franchisee); Transfer of Multiple Restaurants: $20,000 (or 10,000, if the transferee is an existing franchisee) for the first Restaurant, plus $5,000 for each additional Restaurant to be transferred as part of a single transaction

• Due Date:  Upon transferring the franchise.

15.  Renewal Fee:  up to 50% of then-current standard initial franchise fee, depending on the length of your successor franchise term

• Due Date:  Upon signing the new Franchise Agreement.

• If your successor franchise term is 10 years, the renewal fee is 33.3% of the then-current initial franchise fee for a new Restaurant; if your successor franchise term is 20 years, the renewal fee is 50% of the then-current initial franchise fee.

16.  Training Fee:  varies

• Due Date:  Upon receipt of Checkers/Rally’s bill.

• Checkers/Rally’s does not charge training fees for 2 attendees at initial training, but may charge fees for additional attendees and for additional training.

17.  Technology Fee:  $190 to $370

• Due Date:  Quarterly.

• In connection with the required Aloha POS system, you must pay Checkers/Rally’s or its affiliate ongoing costs for the Aloha Command and Configuration Center and Menu Management services.

18.  Firewall Fee:  $165 to $170

• Due Date:  Quarterly.

• You are required to obtain a firewall system at the Franchised Restaurant from one of Checkers/Rally’s preferred vendors. If you choose to use Netsurion for this service, you must pay Checkers/Rally’s or its affiliate an ongoing cost for Netsurion’s firewall system.

19.  Aloha Connected Payment:  $179 to $185

• Due Date:  Quarterly.

• You are required to use a Point to Point encryption credit card processing solution at the Franchised Restaurant from one of Checkers/Rally’s preferred vendors. If you choose to use the Connected Payment service offered by Aloha, you must pay Checkers/Rally’s or its affiliate directly and Checkers/Rally’s will then pay Aloha for these services.

20.  Interest on Late Payments:  highest contract rate of interest permitted by law. If there is no applicable legal maximum rate, then 4% plus the prime rate (as of the due date) as published in The Wall Street Journal.

• Due Date:  Immediately.

• This interest rate applies to any money you owe Checkers/Rally’s or any of its affiliates after the due date.

21.  Late Payment Fee:  $250

• Due Date:  As incurred.

• Due if you have insufficient funds in your account to cover an electronic payment, or, if you pay by check, a check is returned for insufficient funds.

22.  Special Assistance:  currently, only out-of-pocket expenses

• Due Date:  Upon receipt of Checkers/Rally’s bill.

• Checkers/Rally’s may impose per diem fees and charges for any special assistance you request.

23.  Fees to Evaluate and Approve Alternative Suppliers:  currently, only out-of-pocket expenses

• Due Date:  Upon receipt of Checkers/Rally’s bill.

• Checkers/Rally’s may impose reasonable inspections and supervision fees to cover its costs in evaluating alternative approved brands or suppliers you suggest.

24.  Extension Fee:  $5,000

• Due Date:  As incurred.

• You will pay this amount if Checkers/Rally’s grants you a one-time extension to either locate, secure, or develop a site acceptable to Checkers/Rally’s for the Franchised Restaurant.

25.  Rent:  varies

• Due Date:  Monthly.

• You will only pay this amount if Checkers/Rally’s subleases the Premises of your Franchised Restaurant to you.

• If Checkers/Rally’s subleases the Premises, you may pay rent directly to the landlord or to Checkers/Rally’s. If you pay rent to Checkers/Rally’s, it may charge an amount that is higher than the rent due under the underlying lease.

26.  Audit:  cost of audit

• Due Date:  Upon receipt of Checkers/Rally’s bill.

• Payable only if you fail to furnish required information or if Checkers/Rally’s finds an understatement of Net Sales greater than 2%.

27.  Insurance:  varies

• Due Date:  As incurred.

• If you fail to obtain the required insurance coverage for the Franchised Restaurant, Checkers/Rally’s may obtain such coverage at your expense.

28.  Maintenance Costs:  varies

• Due Date:  As incurred.

• If you fail or refuse to maintain the Franchised Restaurant as required, Checkers/Rally’s has the right to do so on your behalf and at your expense.

29.  Attorneys’ Fees and Other Costs:  varies

• Due Date:  As incurred.

• Payable if you fail to comply with the Franchise Agreement or if Checkers/Rally’s is joined in a lawsuit that is based on your operation of a Restaurant.

30.  Indemnification:  varies

• Due Date:  As incurred.

• You must reimburse Checkers/Rally’s for its losses and expenses as a result of third party claims arising from your failures or breaches under the Franchise Agreement, your operation of the Franchised Restaurant, and any unauthorized acts.

31.  Early Termination Damages:  varies

• Due Date:  As incurred.

32.  Costs to De-Identify the Premises Upon Termination or Expiration:  varies

• Due Date:  As incurred.

• You must reimburse Checkers/Rally’s for its losses and expenses if you fail to de-identify and remove signage from the Franchised Restaurant following the termination or expiration of the Franchise Agreement, and Checkers/Rally’s personnel is required to do so.