What is included in the definition of 'Gross Receipts' for a Chick Fil A franchise, and what is specifically excluded?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
it A, as between Chick-fil-A and the Operator, Chick-fil-A will not have any monetary obligation to Licensor under this Agreement. If the Operator is late in making any payment or fails to make any payment due to Licensor or as applicable, Chick-fil-A for the Use/Occupancy Charge due under this Agreement or the DK Lease, the Operator will indemnify and hold harmless Chick-fil-A pursuant to Section 10 of this Agreement.
- (b) At the election of Chick-fil-A, the payment program described under Section 14.12 of the Franchise Agreement will apply to the Operator's payment obligations with respect to the BOSF, the AOSF, the Use/Occupancy Charge and any or all of the Operator's other payment obligations described in the Franchise Agreement, this Agreement (including without limitation its attached Equipment Lease Addendum and the DK Lease), and any adjustment or increases to the Operator's payment obligations.
- (c) Notwithstanding anything to the contrary in the DK Lease, as between Chick-fil-A and the Operator, all Gross Receipts generated as a result of sales from the Delivery Kitchen Unit, will be deemed to be Gross Receipts 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 Delivery Kitchen Unit, the sale and distribution of Products and promotional items, the lease of the Equipment and/or the presence of the Equipment at the Delivery Kitchen Unit, directly or through Licensor. 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 Delivery Kitchen Unit will be accounted for on a separate Fee Calculation Report ("FCR") for the Delivery Kitchen Unit. Except as specifically stated on the DK Summary 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 Delivery Kitchen 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 Delivery Kitchen 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 Delivery Kitchen Unit and includes all reports and records designated by Chick-fil-A that the Operator furnishes to or receives from Licensor. The Operator authorizes Chick-fil-A to request and receive any reports and records it designates relating to the Delivery Kitchen Unit directly from Licensor.
- (f) If any charge, fee, cost or expense which the Operator is obligated to pay pursuant to this Agreement or the DK Lease 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.
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
The 2025 Chick Fil A Franchise Disclosure Document addresses how gross receipts are handled for different operational contexts, specifically Delivery Kitchen Units, Captive Venue Units, and Food Trucks. For Delivery Kitchen Units, all gross receipts generated from sales are attributed to the Operator. The Operator is then solely responsible for all applicable taxes, including sales, use, and excise taxes, even on promotional items given away rather than sold. These receipts are accounted for separately on a Fee Calculation Report (FCR) for the Delivery Kitchen Unit.
Similarly, gross receipts from Captive Venue Units are also tracked on a separate FCR. Chick Fil A retains the right to manage and allocate these receipts, fees, operating costs, expenses, and taxes as needed under the Franchise Agreement. The Operator is obligated to provide all necessary reports and records, including those received from any Concessionor, ensuring transparency and compliance.
For Food Trucks, gross receipts are included in the Operator's overall business gross receipts, treated as sales occurring outside the restaurant according to Chick Fil A's standards. The Operator must maintain separate books and records for the Food Truck's financial activities for at least five years, providing them to Chick Fil A's Tax Department upon request for audits. This detailed accounting ensures that all revenue streams are properly tracked and reported, allowing Chick Fil A to accurately calculate fees and ensure compliance with tax regulations.