How is the Net Profit for Initial Business calculated for a Chick Fil A franchise?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
Business for each calendar month during that portion of the Agreed Term for such Additional Business following the Commencement Date for such Additional Business means the difference between: (i) the Operating Profit for such Additional Business for such calendar month and (ii) the Base Operating Service Fee for such Additional Business for such calendar month;
- (i) "Aggregate Net Profit" for a calendar month means the Net Profit for Initial Business for such month plus the sum of the Net Profit for Additional Business for such month of all Additional Businesses operated by the Operator;
- (j) "Additional Operating Service Fee" as to a particular Business for each calendar month of that portion of the Agreed Term of such Business following the Commencement Date of such Business means (i) in the case of the Initial Business, fifty percent (50%) of the Net Profit for Initial Business for such calendar month or (ii) in the case of an Additional Business, fifty percent (50%) of the Net Profit for Additional Business for such calendar month, which is payable by the Operator to Chick-fil-A;
- (k) "Aggregate Additional Operating Service Fee" for a calendar month means the sum of the Additional Operating Service Fee for such month of all Businesses operated by the Operator;
- (l) "Additional Profit" as to a particular Business for each calendar month of that portion of the Agreed Term of such Business following the Commencement Date of such Business means (i) in the case of the Initial Business, fifty percent (50%) of the Net Profit for Initial Business for such calendar month or (ii) in the case of an Additional Business, fifty percent (50%) of the Net Profit for Additional Business for such calendar month, which is retained by the Operator;
- (m) "Aggregate Additional Profit" for a calendar month means the sum of the Additional Profit for such month of all Businesses operated by the Operator;
- (n) "Extra Profit" for each calendar month during that portion of the Agreed Term of the Initial Business following the Commencement Date of such Initial Business means any advance on Additional Profit in the maximum amount of One Thousand Five Hundred and No/100 Dollars ($1,500.00). For purposes of the calculation and payment mechanisms set forth in this
Agreement, the Operator shall not have the right to retain an Extra Profit with respect to any Additional Business;
- (o) "Base Profit Offsets" is a floating amount that is zero (-0-) at the Commencement Date of the Initial Business and at the beginning of each calendar year thereafter during such time as the Agreed Term of any Business remains in effect hereunder and is: (i) increased from time to time during each such calendar year by the amount of all Base Profit retained by the Operator but not covered by Aggregate Operating Profit; and (ii) decreased from time to time during each such calendar year when and to the extent subsequent Aggregate Operating Profit is sufficient to cover such Base Profit; all as set forth in Sections 14.3 through 14.9 below;
- (p) "Service Fee Offsets" is a floating amount that is zero (-0-) at the Commencement Date of the Initial Business and at the beginning of each calendar year thereafter during such time as the Agreed Term of any Business remains in effect hereunder and is (i) increased from time to time during each such calendar year by the amount of all Base Operating Service Fees that the Operator does not pay to Chick-fil-A, and (ii) decreased from time to time during each such calendar year when and to the extent that the Operator pays such previously unpaid Base Operating Service Fees to Chick-fil-A;
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, the Aggregate Net Profit for a calendar month is calculated by adding the Net Profit for Initial Business for that month to the sum of the Net Profit for Additional Business for that month across all Additional Businesses operated by the franchisee. The Additional Operating Service Fee for the Initial Business is 50% of the Net Profit for Initial Business for each calendar month. Similarly, the Additional Profit for the Initial Business is 50% of the Net Profit for Initial Business for each calendar month, which is retained by the operator.
Chick Fil A operators may retain an Extra Profit for each calendar month during the Agreed Term of the Initial Business, up to $1,500.00, as an advance on Additional Profit. However, this right to retain an Extra Profit does not extend to any Additional Business. If the operator's net receipts are insufficient to cover the Base Profit, Extra Profit, and Aggregate Base Operating Service Fee, future receipts must first cover any existing arrearage of these items before the operator can retain any future Additional Profit.
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, 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. This report will also include any other information Chick-fil-A deems necessary or appropriate.