What constitutes a default by the Operator under the Chick Fil A agreement?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
The following events (referred to as "Events of Default") will each be an event of default by the Operator under this Agreement: (i) the Operator defaults in the payment of any installment of the Use/Occupancy Charge, the Equipment Fee or any other sum due under this Agreement; (ii) the Operator (or, as applicable, the Operator-Owner) defaults in any of the covenants, agreements, conditions or undertakings to be performed, observed or complied with by the Operator (or, as applicable, the Operator-Owner) under this Agreement other than the payment of the Use/Occupancy Charge, the Equipment Fee or any other sum due under this Agreement, and other than any other Event of Default listed in this Subsection 4(e), and such default continues for ten (10) days after notice in writing to the Operator; (iii) the Operator (or, as applicable, the Operator-Owner) attempts or otherwise purports to
assign, transfer or encumber this Agreement (or the Operator's interest in this Agreement or in the Site) to or to sublet or allow occupancy of the Site by a third party without the express written consent and approval of Chick-fil-A, and Licensor, contrary to Section 9 below; (iv) the Operator (or, as applicable, the Operator-Owner) violates, breaches or otherwise defaults in any of the terms of the Franchise Agreement, the DK Lease or the Additional Business Amendment, or the Franchise Agreement, the DK Lease or the Additional Business Amendment terminates or expires by lapse of time or otherwise; (v) the Operator or any of its officers, directors, members, employees, agents or contractors (including, without limitation, as applicable, the Operator-Owner) performs any act, neglects to perform any duty or fails to comply with any standard of conduct that would constitute a violation or default (or threatens to violate or default) under the DK Lease, any prime lease, ground lease or other title documents (or any document related to any of the above); (vi) the Operator vacates or abandons the Site.
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, there are several events that constitute a default by the Operator under the agreement. These "Events of Default" include failing to pay any installment of the Use/Occupancy Charge, the Equipment Fee, or any other sum due under the agreement.
Another event of default occurs if the Operator fails to perform, observe, or comply with any of the covenants, agreements, conditions, or undertakings required, other than those related to payment of fees, and this failure continues for ten days after written notice is given to the Operator. Attempting to assign or encumber the agreement, or subletting the site without Chick-fil-A's written consent, also constitutes a default.
Further, the Operator defaults if they violate or breach any terms of the Franchise Agreement, the DK Lease, or any Additional Business Amendment, or if these agreements terminate or expire. If the Operator, or any of their officers, directors, members, employees, agents, or contractors, fail to comply with any standard of conduct that would constitute a violation or default under the DK Lease, any prime lease, ground lease, or other title documents, this is also considered a default. Finally, vacating or abandoning the site is an event of default.