How is the Operating Service fee determined for a Chick Fil A franchise, and how often is it due?

t practices liability insurance coverages. All fees are non-refundable and are imposed uniformly except as expressly provided below.

• 1. Under the Franchise Agreement, you are required to pay certain fees to Chick-fil-A out of your receipts calculated and due on a monthly basis according to a set formula. That formula is described below, but the definitions of certain terms used in the formula are provided first:
  • (a) "Gross Receipts" for a particular restaurant for each calendar month is your entire gross receipts from sales (excluding sales tax) with respect to the restaurant, including any associated food truck; any captive venue or delivery kitchen unit that is an additional Chick-fil-A Restaurant business and is accounted for as a separate restaurant;

• (b) "Operating Profit" for a particular restaurant for each calendar month is the amount by which Gross Receipts exceeds the ordinary and necessary expenses (as this term is reasonably determined by Chick-fil-A) incurred by you for the restaurant during the month; by way of example, for purposes of this calculation the following items shall not be ordinary and necessary expenses:

  • (1) any amount you pay to yourself or, if you are approved to form and use an entity, the entity pays to you as compensation for services;
  • (2) any salary paid to any member of your family, to the extent the salary exceeds normal wages for similar work; and
  • (3) the "Base Operating Service Fee" (as defined below) and the "Additional Operating Service Fee" (as defined below);
  • "Aggregate Operating Profit" for a calendar month is the sum of the Operating Profit for the month of all restaurants operated by you;

• (c) "Base Profit" for your first restaurant (the "Initial Business") for each calendar month is $1,000; you are not entitled to Base Profit with respect to any additional restaurant;

• (d) "Base Operating Service Fee" for a particular restaurant for each calendar month is the amount by which 15% of the Gross Receipts for the month exceeds the monthly equipment rental payable and business services fee for the calendar month. Chick-fil-A allocates a portion of the Base Operating Service Fee as a royalty for the sublicense of intellectual property. "Aggregate Base Operating Service Fee" for a calendar month is the sum of the Base Operating Service Fee for the month of all restaurants operated by you;

• (e) "Net Profit for Initial Business" of the Initial Business for each calendar month is the difference between: (i) the Operating Profit for the month; and (ii) the sum of: [A] the Base Operating Service Fee for the month, [B] the Base Profit for the month, [C] the Base Profit Offsets, and [D] the Service Fee Offsets at the effective date of computation; "Net Profit for Additional Business" for a particular additional business (an "Additional Business") for each calendar month is the difference between: (i) the Operating Profit for the Additional Business for the month and (ii) the Base Operating Service Fee for the Additional Business for the month;

• (f) "Additional Operating Service Fee" as to a particular restaurant for each calendar month is (i) in the case of the Initial Business, 50% of the Net Profit for Initial Business for the month or (ii) in the case of an Additional Business, 50% of the Net Profit for Additional Business for the month;

Source: Item 6 — OTHER FEES (FDD pages 27–40)