What constitutes being in 'good standing' for a Chick Fil A Operator under this agreement?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
- a. The rights granted under this Agreement are contingent upon the Franchise Agreement, this Agreement, and the Food Truck Lease, being in full force and effect and the Operator otherwise being in good standing at the effective date of this Agreement and at all times during the term of this Agreement. If prior to the expiration of the term of this Agreement, the Franchise Agreement is terminated or expires with respect to the Business or the Food Truck Lease is terminated or expires, this Agreement will automatically terminate or expire at the same time. If the Franchise Agreement is in default at the effective date of this Agreement or at any time during the term of this Agreement (and has not been terminated), such default will also constitute a default by the Operator under this Agreement, and Chickfil-A may terminate the Operator's rights under this Agreement or suspend such rights until the default is cured.
- b. This Agreement and the rights granted hereunder may be terminated by Chick-fil-A for a default by the Operator under this Agreement or a default of the Food Truck Lease, without also terminating the Franchise Agreement, provided that Chick-fil-A, in the exercise of its sole and exclusive business judgment, shall have the right at its election to also terminate the Franchise Agreement as to the Business and one or more or all of any other of the Businesses operated under the Franchise Agreement by providing written notice to the
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, maintaining 'good standing' is crucial for an Operator, as it directly impacts their rights and the overall agreement. Specifically, the rights granted to an operator are contingent upon the Franchise Agreement, this Agreement, and the Food Truck Lease being in full force and effect and the Operator otherwise being in good standing at the effective date of this Agreement and at all times during the term of this Agreement.
If the Franchise Agreement is not in good standing at the effective date of this Agreement or at any time during the term of this Agreement (and has not been terminated), such default will also constitute a default by the Operator under this Agreement, and Chick-fil-A may terminate the Operator's rights under this Agreement or suspend such rights until the default is cured. This means that any lapse in the Franchise Agreement's compliance can trigger a default, potentially leading to termination or suspension of the Operator's rights.
Chick-fil-A also retains the right to terminate the Agreement for a default by the Operator under this Agreement or a default of the Food Truck Lease, without also terminating the Franchise Agreement. However, Chick-fil-A, in the exercise of its sole and exclusive business judgment, shall have the right at its election to also terminate the Franchise Agreement as to the Business and one or more or all of any other of the Businesses operated under the Franchise Agreement by providing written notice to the Operator. This clause underscores Chick-fil-A's discretion in enforcing compliance and the potential ramifications for Operators who fail to maintain good standing.