What are 'Service Fee Offsets' for a Chick Fil A franchise?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
me to time during the calendar year when and to the extent subsequent Aggregate Operating Profit is sufficient to cover the Base Profits;
- (k) "Service Fee Offsets" is a floating amount that is zero at the beginning of each calendar year and is (i) increased from time to time during the calendar year by the amount of all Base Operating Service Fees that you do not pay to Chick-fil-A; and (ii) decreased from time to time during the calendar year when and to the extent that you pay the previously unpaid Base Operating Service Fees to Chick-fil-A; and
- (l) "Extra Offsets" is a floating amount that is zero at the beginning of each calendar year and is: (i) increased from time to time during the calendar year by the amount of all Extra Profits retained by you but not covered by the Aggregate Additional Profit; and (ii) decreased from time to time during the calendar year when and to the extent subsequent Aggregate Additional Profit is sufficient to cover the Extra Profits.
Source: Item 6 — OTHER FEES (FDD pages 27–40)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, 'Service Fee Offsets' are defined as a floating amount that starts at zero at the beginning of each calendar year. This amount (i) increases during the year by the amount of all Base Operating Service Fees that the franchisee does not pay to Chick-fil-A, and (ii) decreases during the year when the franchisee pays the previously unpaid Base Operating Service Fees to Chick-fil-A.
In simpler terms, if a Chick Fil A franchisee is unable to pay the full Base Operating Service Fee in a given month, the unpaid amount is tracked as a 'Service Fee Offset'. As the franchisee's financial situation improves and they are able to make payments towards these outstanding fees, the 'Service Fee Offset' decreases accordingly. This system allows Chick Fil A to track unpaid fees while giving the franchisee an opportunity to catch up on payments as their business becomes more profitable.
The FDD also mentions that the franchisee pays Chick-fil-A from the Aggregate Operating Profit of the restaurants for each calendar month, an amount equal to the sum of the Aggregate Base Operating Service Fee and the Aggregate Additional Operating Service Fee, and retain for yourself an amount equal to the sum of the Base Profit, Extra Profit and any Aggregate Additional Profit in excess of Extra Profit, less any Extra Offsets (not to exceed the Aggregate Additional Profit for the month). To the extent that your Aggregate Operating Profit for a month is not sufficient to fund all of these payment and retention items, you must disburse your Aggregate Operating Profit in the following order, until it is exhausted.