How is 'Aggregate Operating Profit' defined for Chick Fil A franchisees?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
(b) "Operating Profit" for a particular restaurant for each calendar month is the amount by which Gross Receipts exceeds the ordinary and necessary expenses (as this term is reasonably determined by Chick-fil-A) incurred by you for the restaurant during the month; by way of example, for purposes of this calculation the following items shall not be ordinary and necessary expenses:
(1) any amount you pay to yourself or, if you are approved to form and use an entity, the entity pays to you as compensation for services;
(2) any salary paid to any member of your family, to the extent the salary exceeds normal wages for similar work; and
(3) the "Base Operating Service Fee" (as defined below) and the "Additional Operating Service Fee" (as defined below);
"Aggregate Operating Profit" for a calendar month is the sum of the Operating Profit for the month of all restaurants operated by you;
Source: Item 6 — OTHER FEES (FDD pages 27–40)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, 'Aggregate Operating Profit' for a calendar month is defined as the sum of the Operating Profit for the month of all restaurants operated by the franchisee. The 'Operating Profit' for a particular restaurant for each calendar month is the amount by which Gross Receipts exceeds the ordinary and necessary expenses incurred by the franchisee for the restaurant during that month, as reasonably determined by Chick-fil-A.
However, certain items are explicitly excluded from being considered ordinary and necessary expenses. These include any compensation paid to the franchisee (or to the entity if the franchisee operates under one), any salary paid to family members exceeding normal wages for similar work, and both the Base Operating Service Fee and the Additional Operating Service Fee.
This definition is important because it determines the basis on which Chick Fil A calculates various fees and profit distributions. Franchisees need to understand how 'Gross Receipts' and 'ordinary and necessary expenses' are defined, as these directly impact their 'Operating Profit' and, consequently, their 'Aggregate Operating Profit'. The exclusion of certain expenses, like the franchisee's own compensation, is a notable factor that affects the overall profitability calculation.