What is The Chicken Coop Insurance Company ('The Coop') and what is its purpose for Chick Fil A franchisees?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
There are currently no buying or distribution cooperatives except for The Chicken Coop Insurance Company ("The Coop"). The Coop is a captive reinsurance company owned and controlled by franchised domestic U.S. Operators, who are also its reinsureds. The Coop and its subsidiary, a risk purchasing group, were formed to enable Operators to purchase workers' compensation, general liability, auto liability, and employment practices liability insurance collectively as a group rather than each Operator sourcing its own workers' compensation, general liability, auto liability, and employment practices liability insurance coverages individually through its own insurance agents. The main benefits sought to be achieved from the pooling of Operator risks within a designated retention are to help contain franchised Operators' overall premium costs, attempt to minimize dramatic premium shifts Operators may experience if adverse claims occur, and to be able to distribute to Operators any built up surplus generated by underwriting profits, subject to certain conditions described below.
Chick-fil-A, Inc. has no ownership interest in The Coop nor is it insured or reinsured by The Coop. Only domestic U.S. Operators are shareholders of The Coop and are reinsured through The Coop. Although franchised domestic U.S. Operators are shareholders of the Coop and benefit from the reinsurance provided by the Coop, the Coop does not offer Operators insurance and Operators do not buy insurance from or through the Coop. Rather, Operators are directly insured by a licensed insurance company (not affiliated with Chick-fil-A, Inc.) that through a designated retention, reinsures a portion of the covered risks to The Coop. Additional lines of coverage may be added in the future and may be included in the mandatory insurance program. The Coop is central to the workers' compensation, general liability, auto liability, and employment practices liability insurance program in which all Operators must participate through the licensed independent insurance company that reinsures to the Coop (except that Operators in several states must obtain workers' compensation insurance through a program required in their state). Obtaining and then maintaining these coverages is required under the Franchise Agreement. These coverages are also required under state law. If an Operator does not sign an agreement with the Coop in connection with its share ownership of the Coop, the Operator will not be a shareholder of the Coop and will not be able to buy the affected insurance through the Operator Insurance Program as required under the Franchise Agreement. The states that currently require Operators to buy their workers' compensation insurance via a State program include North Dakota, Ohio, Washington and Wyoming.
The Coop is governed by a Board of Directors elected by Operators. A majority of the members of the Board of Directors will be Operators (five in total) and consist of a number of members who will serve for a three-year term with additional members nominated by a third party not affiliated with Chickfil-A.
Each Operator is a shareholder of The Coop and must sign a Shareholder Agreement in connection with its share ownership of The Coop. If an Operator's relationship with Chick-fil-A ceases, the Operator's share in The Coop will be redeemed by The Coop subject to certain terms and conditions.
The Board of Directors of The Coop will decide when and if dividends will be paid. Any payment of dividends is subject to regulatory approval and reinsurance requirements and may not be paid unless certain terms and conditions are met.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 43–49)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, The Chicken Coop Insurance Company ('The Coop') is a captive reinsurance company. It is owned and controlled by franchised domestic U.S. Chick Fil A Operators, who are also its reinsureds. The Coop was created, along with its subsidiary risk purchasing group, to allow Chick Fil A Operators to collectively purchase workers' compensation, general liability, auto liability, and employment practices liability insurance, instead of sourcing these individually.
The primary goals of The Coop are to help contain overall premium costs for Chick Fil A franchisees, minimize dramatic premium shifts due to adverse claims, and distribute any surplus generated by underwriting profits back to the Operators, subject to certain conditions. Chick-fil-A, Inc. has no ownership interest in The Coop, nor is it insured or reinsured by The Coop. Only domestic U.S. Operators are shareholders of The Coop and are reinsured through The Coop. Operators do not buy insurance from The Coop directly; instead, they are insured by a licensed insurance company that reinsures a portion of the covered risks to The Coop.
Participation in the insurance program through The Coop is generally mandatory for Chick Fil A Operators, with the exception of those in states like North Dakota, Ohio, Washington, and Wyoming, where workers' compensation insurance must be obtained through a state-required program. Operators are required to obtain and maintain these insurance coverages under the Franchise Agreement and state law. If an Operator does not sign an agreement with The Coop, they cannot participate in the Operator Insurance Program. The Coop is governed by a Board of Directors elected by Operators, with a majority of the board consisting of Operators serving three-year terms.
Each Chick Fil A Operator is a shareholder of The Coop and must sign a Shareholder Agreement. If an Operator's relationship with Chick-fil-A ends, their share in The Coop will be redeemed, subject to certain terms and conditions. The Board of Directors decides when and if dividends will be paid, subject to regulatory approval and reinsurance requirements. This structure aims to provide a more stable and potentially more profitable insurance arrangement for Chick Fil A franchisees by pooling risks and allowing for the distribution of underwriting profits.