Who bears the risk related to the termination of the Chick Fil A agreement?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
- c. The Operator will bear any and all risk arising from or related to termination of this Agreement. Upon termination of this Agreement, the Operator will remain liable for the then current outstanding balance of the Food Truck Fee, the Food Truck Insurance Fee and any other payments due Chick-fil-A or the Food Truck Lessor as provided in the Food Truck Lease and/or in this Agreement. The Operator agrees that upon default the Food Truck Lessor may demand, receive and collect any monies due or falling due after the default without in any manner affecting the status of the default or any notice of suit, action, order or judgment related to the default. Upon termination of the Food Truck Lease and/or this Agreement, any payment made by the Operator to Chick-fil-A or the Food Truck Lessor or any court will not: (i) reinstate, continue or extend the term of this Agreement; (ii) affect any notice previously given to the Operator; or (iii) pursuant to the terms and conditions of the Food Truck Agreement, operate as a waiver of the right of the Food Truck Lessor or, as applicable, Chick-fil-A to obtain possession of the Food Truck by proper suit, action, proceeding or remedy. All monies collected will be deemed to be payments made in accordance with the terms of this Agreement or applied toward any outstanding balances owed by the Operator.
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, the Operator bears any and all risk related to the termination of the agreement. This means that if the agreement is terminated, the franchisee, referred to as the Operator, is responsible for any financial or other consequences that arise.
Specifically, upon termination of the agreement, the Operator remains liable for the outstanding balance of the Food Truck Usage Fee, the Food Truck Insurance Fee, and any other payments due to Chick-fil-A or the Food Truck Lessor, as outlined in the Food Truck Lease and the agreement. This financial responsibility continues even after the agreement has ended. The Food Truck Lessor can also demand and collect any monies due after a default without affecting the default status.
Furthermore, any payment made by the Operator to Chick-fil-A or the Food Truck Lessor or any court will not reinstate, continue, or extend the term of the agreement, affect any previously given notice, or operate as a waiver of the right of the Food Truck Lessor or Chick-fil-A to obtain possession of the Food Truck. All collected monies will be applied towards any outstanding balances owed by the Operator. This clarifies that payments made after termination are solely for settling outstanding debts and do not grant any rights or remedies to the Operator.
This arrangement places a significant financial burden on the franchisee in the event of termination, highlighting the importance of understanding the terms of the agreement and the potential risks involved. Prospective franchisees should carefully consider these factors and seek professional advice before entering into the agreement.