In the Chick Fil A FDD, what is the relationship between Gross Receipts and Operating Profit?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
t to Section 14.12 above during that portion of the Agreed Term following the Commencement Date, which reports shall contain all financial and other information reasonably requested by Chick-fil-A, including without limitation all information relevant to or necessary for the computation of information to be furnished by Chick-fil-A to the Operator as provided below. For the purpose of calculating and facilitating the mechanism for the payment of the fees and expenses for the Businesses set forth in Section 14, Chick-fil-A will furnish a written fee calculation report to the Operator on or about the fifteenth (15th) day following the end of each calendar month during that portion of the Agreed Term following the Commencement Date, which report will set forth, as applicable, the Gross Receipts, Operating Profit, Base Profit, Extra Profit, Base Operating Service Fee, Net Profit for Initial Business, Additional Operating Service Fee and Additional Profit for such calendar month and such other information as Chick-fil-A deems necessary or appropriate ("Fee Calculation Report").
- 15.2 The Operator shall send to Chick-fil-A, at its election, copies, electronic versions or the originals of all financial records concerning each Business and all transactions undertaken by the Operator in the operation of each Business so as to enable Chick-fil-A to accurately determine all amounts owed to it by the Operator (and vice-versa) hereunder, and to produce the Fee Calculation Report as described above. Chick-fil-A agrees to permit said records to be examined from time to time by the Operator during normal business hours. The Operator will maintain, as the case may be, the originals or complete duplicates of any files submitted to Chick-fil-A to the extent that the Operator deems necessary or appropriate.
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, the relationship between Gross Receipts and Operating Profit is used to calculate fees and other financial obligations. Chick Fil A will furnish a written Fee Calculation Report to the Operator on or about the fifteenth (15th) day following the end of each calendar month. This report will detail the Gross Receipts and Operating Profit, among other financial data, for that month. This report is crucial for determining the fees and expenses for the Businesses as outlined in Section 14 of the franchise agreement.
Gross Receipts are defined as the entire gross receipts with respect to such Business (excluding only sales taxes levied upon retail sales and payable over to the appropriate governmental authority) from all sales at, from or related to the Site of such Business during such calendar month, whether for cash or on a charge, credit or time basis, including but not limited to such sales and services (i) where orders originate and/or are accepted by the Operator at, in or away from the Site of such Business, or (ii) pursuant to telephone, internet, online or other similar orders received or filled at or in such Site.
Chick Fil A also uses Gross Receipts to determine payments from the Operator or from Suppliers to the Operator. These payments are not a part of the Gross Receipts, Operating Profit, Base Profit, Extra Profit, Additional Profit or any other form of profit, income or receipt in which the Operator has an interest (except to the extent that they are ordinary and necessary expenses).