For a Chick Fil A franchise, what is the Commencement Date in relation to the calculation of Gross Receipts?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
Commencing on the Commencement Date, the Operator shall on a timely basis, as rental upon the Site, without demand and without offset or deduction of any kind pay to Chick-fil-A the Base Rent, the Percentage Rent and all other amounts as may be provided for and set forth on or contemplated by the Rent Calculation Report attached to this Lease as Exhibit C and incorporated in and made a part of this Lease by this reference. The Percentage Rent payable by the Operator to Chick-fil-A shall be calculated based on all Gross Receipts (as defined in Section 3.2 below) of the Business except as otherwise specifically set forth in the Rent Calculation Report.
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, the Commencement Date marks the point from which Gross Receipts are considered for calculating rent and fees. Specifically, the operator begins paying base rent and percentage rent to Chick Fil A starting on the Commencement Date. The percentage rent is calculated based on the Gross Receipts of the business, as defined in Section 3.2 of the lease agreement.
Gross Receipts include all sales, whether for cash or credit, related to the Chick Fil A site. This encompasses sales where orders are taken at the site or remotely via telephone, internet, or other digital platforms. The Commencement Date, therefore, is the trigger for when these Gross Receipts become relevant for calculating the operator's rental obligations to Chick Fil A.
Furthermore, Chick Fil A requires operators to furnish reports containing financial and other information after the Commencement Date. These reports are essential for computing the fees and expenses, and Chick Fil A provides a Fee Calculation Report to the operator around the fifteenth of each month, detailing Gross Receipts and other relevant financial metrics. This ensures transparency and facilitates the payment of fees and expenses as outlined in Section 14 of the Franchise Agreement.