How is the 'Base Operating Service Fee' calculated for a Chick Fil A restaurant each month?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) "Base Operating Service Fee" for a particular restaurant for each calendar month is the amount by which 15% of the Gross Receipts for the month exceeds the monthly equipment rental payable and business services fee for the calendar month.
Chick-fil-A allocates a portion of the Base Operating Service Fee as a royalty for the sublicense of intellectual property. "Aggregate Base Operating Service Fee" for a calendar month is the sum of the Base Operating Service Fee for the month of all restaurants operated by you;
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- (a) "Gross Receipts" for a particular restaurant for each calendar month is your entire gross receipts from sales (excluding sales tax) with respect to the restaurant, including any associated food truck; any captive venue or delivery kitchen unit that is an additional Chick-fil-A Restaurant business and is accounted for as a separate restaurant;
(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:
(3) the "Base Operating Service Fee" (as defined below) and the "Additional Operating Service Fee" (as defined below);
Between the first and fifteenth day of each month, Chick-fil-A prepares a fee calculation report for your franchised Chick-fil-A Restaurant business for the preceding month in order to determine the fees and other expenses to be paid from your Gross Receipts and, as part of the fee calculation process, calculates the fees and expenses according to the formula described in Note 2 above.
Source: Item 6 — OTHER FEES (FDD pages 27–40)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, the 'Base Operating Service Fee' for each restaurant is calculated monthly. The fee is the amount by which 15% of the Gross Receipts for the month exceeds the total of the monthly equipment rental fee and the business services fee for that same month. The 'Aggregate Base Operating Service Fee' for a month is the sum of all the 'Base Operating Service Fees' for all restaurants operated by the franchisee.
'Gross Receipts' for a Chick Fil A restaurant includes all gross sales (excluding sales tax) from the restaurant, including any associated food truck, captive venue, or delivery kitchen unit that is an additional Chick Fil A Restaurant business and is accounted for as a separate restaurant. 'Operating Profit' for a 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 the month, as reasonably determined by Chick Fil A. However, any amount the franchisee pays to themselves as compensation, any salary paid to family members exceeding normal wages for similar work, and the 'Base Operating Service Fee' and the 'Additional Operating Service Fee' are not considered ordinary and necessary expenses.
Chick Fil A prepares a fee calculation report between the first and fifteenth day of each month for the preceding month to determine the fees and other expenses to be paid from the Gross Receipts. The fees and expenses are calculated according to the formula described in Note 2 of Item 6. Although calculated and due on a monthly basis, these fees and expenses are paid from Gross Receipts as expenses of the franchised Chick Fil A Restaurant business to Chick Fil A on either a monthly or pro rata/month to date daily basis. The expenses paid to the insurance administrator related to insurance premiums are also reflected on the fee calculation report.
Prospective franchisees should note that the 'Base Operating Service Fee' is a significant component of the overall financial relationship with Chick Fil A. Understanding how this fee is calculated and how it interacts with other fees and expenses is crucial for assessing the profitability of a Chick Fil A franchise. Franchisees should carefully review the definitions of 'Gross Receipts,' 'Operating Profit,' and other related terms in the Franchise Agreement to fully understand their financial obligations.