How are Gross Receipts generated from the Chick Fil A Captive Venue Unit accounted for?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
ipts 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 Captive Venue Unit, the sale and distribution of Products and promotional items, the lease of the Equipment and/or the presence of the Equipment at the Captive Venue Unit, directly or through Concessionor. 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 Captive Venue Unit will be accounted for on a separate Fee Calculation Report for the Captive Venue Unit. Except as specifically stated on the data sheet 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 Captive Venue 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 Captive Venue 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 Captive Venue Unit and includes all reports and records designated by Chick-fil-A that the Operator furnishes to or receives from Concessionor. The Operator authorizes Chick-fil-A to request and receive any reports and records it designates relating to the Captive Venue Unit directly from Concessionor.
(f) If any charge, fee, cost or expense which the Operator is obligated to pay pursuant to this Agreement or the Concession Agreement is initially billed to or paid by Chick-fil-A, Chick-fil-A will have the right to rebill the amount to the Operator. If Chick-fil-A rebills any amount to the Operator, the Operator will pay promptly the rebilled charge, fee, cost or expense directly to the appropriate business, governmental authority or other person or entity. If Chick-fil-A, at its election, pays any charge, fee, cost or expense on behalf of the Operator, the Operator will reimburse Chick-fil-A immediately upon the Operator's receipt of Chick-fil-A's written notice of having made the payment, in Chick-fil-A's sole and exclusive business judgment, either by (i) issuing Chick-fil-A a check or (ii) acknowledging and, to the extent required, approving Chick-fil-A's adjustments to the amounts owed by Chick-fil-A to the Operator or owed by the Operator to Chick-fil-A under the Franchise Agreement.
(g) If the Operator fails to perform any of its obligations under this Agreement or under the Concession Agreement, Chick-fil-A, at its option, may (but is not required to) do the same or cause the same to be done, in addition to any and all other rights and remedies of Chick-fil-A. The cost incurred by Chick-fil-A in connection with such performance by Chick-fil-A will be an additional charge due from the Operator to Chick-fil-A, together with interest for the period beginning with the original due incurred to the date of actual payment at an annual rate equal to the highest rate allowed by law or, if there is no maximum rate permitted by law, then a rate equal to one and one-quarter percent (1.25%) per month. Interest will be calculated on the basis of monthly compounding and the actual number of days elapsed divided by 365. Interest will be in addition to any other rights or remedies Chick-fil-A may have under this Agreement.
6. Leased Equipment and Fee.
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 Captive Venue Unit are accounted for on a separate Fee Calculation Report (FCR) specific to that unit. This report reflects the calculation and payment of all fees, operating costs, and expenses related to the Captive Venue Unit, as determined by the Franchise Agreement. Chick-fil-A has the authority to manage these receipts, fees, costs, expenses, and taxes, making necessary calculations and allocations to the Operator's Businesses to produce the Fee Calculation Report for each business. The Operator is obligated to provide all designated reports and records, including those furnished to or received from the Concessionor, as per the Franchise Agreement's sections 15.1 and 15.2. Chick-fil-A is also authorized to directly request and receive any relevant reports and records from the Concessionor regarding the Captive Venue Unit.
Furthermore, all gross receipts from sales at the Captive Venue Unit are considered the Operator's gross receipts. The Operator, not Chick-fil-A, is solely responsible for paying any sales, use, or excise tax, apportioned personal property tax, or any other tax related to the Captive Venue Unit, the sale and distribution of products, the lease of equipment, or the presence of equipment at the unit, whether directly or through the Concessionor. The document also clarifies that sales, use, or similar taxes may be due even when products and promotional items are given away without being sold.
For a prospective Chick Fil A franchisee, this means that while Chick-fil-A manages the accounting and reporting of gross receipts from the Captive Venue Unit, the franchisee (Operator) bears the ultimate responsibility for all tax obligations associated with the unit's operation. The franchisee must ensure accurate and timely reporting of all financial activities related to the Captive Venue Unit to both Chick-fil-A and, if applicable, the Concessionor. Understanding the specifics of Exhibit A and the referenced sections of the Franchise Agreement is crucial for compliance and financial management.
It is also important to note that Chick-fil-A may elect to apply the payment program described under Section 14.12 of the Franchise Agreement to the Operator's payment obligations related to the Use/Occupancy Charge and any other payment obligations outlined in the Concession Agreement. This includes any adjustments or increases to these payment obligations. This provision allows Chick-fil-A to have greater control over the payment process and ensures that all financial obligations are met in a timely manner.