What determines the cost of lemon juice from Bay Center for Chick Fil A franchisees?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
actors, a distribution fee and an allowance for fuel and freight costs from the CFA Supply warehouse to the Chick-fil-A Restaurants it will supply.
Our affiliate Bay Center produces Chick-fil-A branded lemon juice that is a proprietary principal ingredient used to produce proprietary Chick-fil-A branded lemonade. Bay Center is an approved supplier to supply lemon juice to Chick-fil-A Restaurants in geographic areas it operates. Bay Center may be the only approved supplier of lemon juice for the geographic area where it operates. Bay Center began operations in 2020. The lemon juice is purchased by Chick-fil-A's authorized distributor(s) from Bay Center and is shipped by Bay Center directly to Chick-fil-A's authorized distributor(s). The distributor(s) pays Bay Center for the proprietary lemon juice when the lemon juice is purchased by the distributor(s). The distributor(s) then sells the lemon juice to the Operators. If your franchised Chick-fil-A Restaurant is in a location Bay Center supplies, your cost for the lemon juice depends on a pricing formula Bay Center determines in the exercise of its sole and exclusive business judgment that includes a markup by Bay Center that may change. Based upon the cost of ingredients to Bay Center (including any freight charges) your cost will fluctuate.
You must purchase all of the following items from suppliers who are approved in advance by Chick-fil-A: all present and future items of food and drink; all items of non-food inventory intended for sale to or use by your customers;
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 cost of lemon juice for franchisees is determined by a pricing formula set by Bay Center, an affiliate of Chick Fil A and an approved supplier of lemon juice. This formula is based on Bay Center's sole business judgment and includes a markup that may change. The cost of ingredients to Bay Center, including any freight charges, also affects the price franchisees pay. Bay Center began operations in 2020.
Chick Fil A's authorized distributors purchase the lemon juice from Bay Center and then sell it to the Operators (franchisees). The distributors pay Bay Center for the lemon juice at the time of purchase. The FDD indicates that in 2024, Bay Center received $186,616,788 from purchases made by Chick-fil-A's authorized distributor(s) for distribution of lemon juice to Operators and Licensees in geographic areas it serviced, which is included in Chick Fil A's consolidated revenues. This figure does not include any markup added by the distributor(s) at the time of resale to the franchisees.
This arrangement means that Chick Fil A franchisees do not directly negotiate the price of lemon juice with Bay Center. Instead, they are subject to the pricing set by Bay Center and the markups applied by the distributors. Because the pricing formula can change and is influenced by ingredient costs and freight charges, the cost of lemon juice may fluctuate. Chick Fil A retains the right to change approved suppliers at any time.
Prospective franchisees should be aware that Chick Fil A and its affiliates can profit from the sale of required supplies. In 2024, Chick Fil A's total consolidated revenues from Operator and Licensee purchases of various items, including operating supplies, and leases was $1,778,691,073, representing 19.63% of Chick Fil A's total consolidated revenues. This highlights the importance of understanding the supplier relationships and pricing structures within the Chick Fil A franchise system.