For Chick Fil A, what is the duration of the Initial Term of the lease agreement?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
Unless earlier terminated as provided in this Agreement or in the Franchise Agreement, the initial term of this Agreement with respect to the Delivery Kitchen Unit (the "Initial Term") will commence as of the Effective Date of this Agreement and will end on the Thirty-first Day of December of the year in which the Effective Date occurs. The Initial Term, together with any and all extensions of the Initial Term and subject to the rights for earlier termination or expiration pursuant to this Agreement or the Franchise Agreement, is sometimes referred to in this Agreement as the "Agreed Term" or the "Term." Unless this Agreement, the Franchise Agreement or the DK Lease is terminated earlier, the Agreed Term of this Agreement will be automatically extended for successive additional periods of one (1) year, unless written notice of intent not to renew either the Franchise Agreement or this Agreement is given by either party to the other at least thirty (30) days prior to the end of the Agreed Term; provided however, this Agreement may not be renewed if the Operator does not have the right to renew the Franchise Agreement or does not have the right to renew the Franchise Agreement with respect to the Delivery Kitchen Unit or the Franchise Agreement is otherwise terminated or not renewed, as provided in Section 2.3 of the Franchise Agreement. In addition to Chick-fil-A's right to amend or modify the DK Lease pursuant to this Agreement, Chick-fil-A will have the right to change the terms and conditions of this Agreement upon a
renewal pursuant to Section 2.4 of the Franchise Agreement by giving the Operator a written notice of the changed terms and conditions at least forty-five (45) days prior to the end of the then-current Term, in which case the Operator will have fifteen (15) days from the date of the notice to decide and to notify Chickfil-A in writing of the Operator's decision to either renew or not renew upon the changed terms and conditions offered. The Operator's failure to provide timely notice to Chick-fil-A of a decision to either renew or not renew upon the changed terms and conditions offered will be deemed to be an election by the Operator to terminate this Agreement at the end of such Agreed Term.
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, the initial term of the agreement for both the standard franchise and the Delivery Kitchen Unit commences on the effective date of the agreement and concludes on December 31st of the year in which the effective date falls. This means that regardless of when the franchise agreement is signed during a given year, the initial term will always end on the last day of that year.
Following the initial term, the agreement automatically extends for successive one-year periods. However, this extension is contingent upon both parties not providing written notice of intent to not renew at least 30 days before the term's end. Additionally, the agreement cannot be renewed if the operator loses the right to renew the Franchise Agreement, especially concerning the specific business or if the Franchise Agreement is terminated or not renewed as per Section 2.3 of the Franchise Agreement.
Chick-fil-A retains the right to modify the agreement's terms and conditions upon renewal of the Franchise Agreement, as outlined in Section 2.4. In such cases, Chick-fil-A must provide written notice of these changes at least 45 days before the current term expires. The operator then has 15 days from the notice date to decide and inform Chick-fil-A of their decision to either accept the new terms or not renew the agreement. Failure to provide timely notice is considered an election to terminate the agreement at the end of the current term.