What happens if the Concession Agreement expires before the Chick Fil A Franchise Agreement?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
If Chick-fil-A offers you the opportunity to operate a captive venue unit whether as your initial business or as an additional franchised Chick-fil-A Restaurant, you and Chick-fil-A will enter into the Concession Sublicense Agreement in the form attached as an exhibit to the Additional Business Amendment for Captive Venue to your Franchise Agreement. The Concession Sublicense Agreement attaches the Concession Agreement (and, if applicable, any underlying prime lease or ground lease). In the case of any captive venue unit, the Concession Sublicense Agreement and its attached Concession Agreement incorporated by reference into your Franchise Agreement substitutes for the Lease(s) applicable to a traditional restaurant premises as to the captive venue unit. Under the Concession Sublicense Agreement, Chick-fil-A sublicenses its rights and privileges under the Concession Agreement to you, and you accept the sublicense and agree to faithfully perform Chick-fil-A's obligations under the Concession Agreement for the particular captive venue premises. You will be a sub-licensee (technically a sub-concessionaire) of the premises. The business terms for these Concession Agreements vary depending on the location of the Chick-fil-A Restaurant. If you sublicense the rights to occupy the captive v`enue restaurant premises from us, the term of the Concession Sublicense Agreement for the captive venue restaurant premises is the same as the term of your Franchise Agreement or the earlier expiration or termination of the Concession Agreement, whichever is shorter.
Source: Item 10 — Financing (FDD pages 51–55)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, if a franchisee operates a captive venue unit, the term of the Concession Sublicense Agreement is tied to both the Franchise Agreement and the Concession Agreement. Specifically, the term of the Concession Sublicense Agreement is the same as the term of the Franchise Agreement or the earlier expiration or termination of the Concession Agreement, whichever is shorter. This means that if the Concession Agreement expires or terminates before the Franchise Agreement, the Concession Sublicense Agreement will also terminate at that earlier date.
For a prospective Chick Fil A franchisee, this condition is significant because it directly impacts the duration of their right to operate the captive venue unit. Unlike a traditional restaurant location where the lease term mirrors the franchise term, captive venue units are subject to the underlying Concession Agreement between Chick Fil A and the venue owner. If Chick Fil A cannot renew or extend the Concession Agreement, the franchisee's right to operate at that location will cease, even if the Franchise Agreement is still in effect.
This creates a potential risk for the franchisee, as their ability to continue operating and generating revenue from the captive venue unit is dependent on Chick Fil A's relationship with the venue owner and the terms of the Concession Agreement. It is crucial for prospective franchisees to understand the terms and expiration date of the Concession Agreement for any captive venue unit they are considering, and to inquire about Chick Fil A's plans for renewal or extension. This information will help them assess the long-term viability of the franchise location and the potential risk of early termination due to the Concession Agreement's expiration.