For a Chick Fil A Delivery Kitchen Unit, where are the Gross Receipts accounted for?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
it A, as between Chick-fil-A and the Operator, Chick-fil-A will not have any monetary obligation to Licensor under this Agreement. If the Operator is late in making any payment or fails to make any payment due to Licensor or as applicable, Chick-fil-A for the Use/Occupancy Charge due under this Agreement or the DK Lease, the Operator will indemnify and hold harmless Chick-fil-A pursuant to Section 10 of this Agreement.
- (b) At the election of Chick-fil-A, the payment program described under Section 14.12 of the Franchise Agreement will apply to the Operator's payment obligations with respect to the BOSF, the AOSF, the Use/Occupancy Charge and any or all of the Operator's other payment obligations described in the Franchise Agreement, this Agreement (including without limitation its attached Equipment Lease Addendum and the DK Lease), and any adjustment or increases to the Operator's payment obligations.
- (c) Notwithstanding anything to the contrary in the DK Lease, as between Chick-fil-A and the Operator, all Gross Receipts generated as a result of sales from the Delivery Kitchen Unit, will be deemed to be Gross Receipts of the Operator, and the Operator (and not Chick-fil-A) will have sole responsibility for payment of any sales, use, or excise tax, any apportioned personal property tax or any other tax arising from the Delivery Kitchen Unit, the sale and distribution of Products and promotional items, the lease of the Equipment and/or the presence of the Equipment at the Delivery Kitchen Unit, directly or through Licensor. The parties acknowledge and agree that sales, use, or similar taxes may be due and payable even when Products and promotional items are given away and not sold.
- (d) Gross Receipts generated as a result of sales from the Delivery Kitchen Unit will be accounted for on a separate Fee Calculation Report ("FCR") for the Delivery Kitchen Unit. Except as specifically stated on the DK Summary attached as Exhibit A, the Fee Calculation Report will also reflect the calculation and payment of all fees and other operating costs and expenses related to the operation of the Delivery Kitchen Unit that are due and will be calculated under the terms of the Franchise Agreement. Chick-fil-A will have the right and Operator authorizes Chick-fil-A to account for the Gross Receipts, fees, operating costs, expenses and taxes incurred with respect to the Delivery Kitchen Unit and to make calculations and allocations to Operator's Businesses as may be required under the Franchise Agreement
and in order to effectuate the terms of the Franchise Agreement and this Agreement and to produce the Fee Calculation Report for each of Operator's Businesses.
- (e) The Operator understands and agrees that the Operator's obligation to furnish and send reports and records pursuant to Section 15.1 and Section 15.2 of the Franchise Agreement applies to the Delivery Kitchen Unit and includes all reports and records designated by Chick-fil-A that the Operator furnishes to or receives from Licensor. The Operator authorizes Chick-fil-A to request and receive any reports and records it designates relating to the Delivery Kitchen Unit directly from Licensor.
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, gross receipts from a Delivery Kitchen Unit are accounted for on a separate Fee Calculation Report (FCR) specifically for that unit. This ensures that the financial performance of the Delivery Kitchen is tracked independently from any other Chick Fil A businesses the operator may have. Chick-fil-A retains the right to oversee and manage the accounting of these gross receipts, fees, operating costs, expenses, and taxes related to the Delivery Kitchen Unit. They can also make necessary calculations and allocations across the operator's various businesses to comply with the Franchise Agreement.
This arrangement means that Chick Fil A has a clear view of the Delivery Kitchen's financial activities and can ensure compliance with the franchise agreement terms. The operator is still responsible for providing all necessary reports and records, including those received from or furnished to the Licensor, as per Sections 15.1 and 15.2 of the Franchise Agreement. Chick-fil-A is also authorized to directly request and receive any relevant reports and records about the Delivery Kitchen Unit from the Licensor.
In cases where it's not feasible for the Delivery Kitchen to fulfill an order, a Designated Business may step in. In such instances, the Designated Business will record the gross receipts and report the transaction as part of its own Fee Calculation Report. This ensures that all sales are properly accounted for, even when the Delivery Kitchen isn't the one fulfilling the order. The operator is expected to minimize these instances as much as possible.
Prospective Chick Fil A franchisees should pay close attention to how gross receipts are defined and accounted for, as this directly impacts fee calculations and financial reporting. Understanding the Fee Calculation Report and the responsibilities for reporting and remitting taxes is crucial for managing the Delivery Kitchen Unit effectively. Additionally, franchisees should be aware of the conditions under which Chick-fil-A can rebill charges and the importance of promptly paying those rebilled amounts.