Under what condition will the Chick Fil A agreement terminate automatically?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
14. Default; Termination.
- a. The rights granted under this Agreement are contingent upon the Franchise Agreement, this Agreement, and the Food Truck Lease, being in full force and effect and the Operator otherwise being in good standing at the effective date of this Agreement and at all times during the term of this Agreement. If prior to the expiration of the term of this Agreement, the Franchise Agreement is terminated or expires with respect to the Business or the Food Truck Lease is terminated or expires, this Agreement will automatically terminate or expire at the same time. If the Franchise Agreement is in default at the effective date of this Agreement or at any time during the term of this Agreement (and has not been terminated), such default will also constitute a default by the Operator under this Agreement, and Chickfil-A may terminate the Operator's rights under this Agreement or suspend such rights until the default is cured.
- b. This Agreement and the rights granted hereunder may be terminated by Chick-fil-A for a default by the Operator under this Agreement or a default of the Food Truck Lease, without also terminating the Franchise Agreement, provided that Chick-fil-A, in the exercise of its sole and exclusive business judgment, shall have the right at its election to also terminate the Franchise Agreement as to the Business and one or more or all of any other of the Businesses operated under the Franchise Agreement by providing written notice to the Operator pursuant to the terms of the Franchise Agreement. Subject to Section 15, this Agreement and the rights granted under this Agreement, will terminate automatically upon the Food Truck Lessor or Chick-fil-A taking possession of the Food Truck following the expiration or termination of this Agreement or the Food Truck Lease. The Operator's obligations under this Agreement and the Food Truck Lease will survive until the Operator has fully performed the same. Notwithstanding anything to the contrary in this Agreement, the Operator further acknowledges and agrees that Chick-fil-A has the right, in Chick-fil-A's sole and exclusive business judgment, to terminate this Agreement and/or the Food Truck Program at any time for any reason or for no reason.
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, the agreement will automatically terminate under specific conditions related to the Franchise Agreement and the Food Truck Lease. Specifically, if the Franchise Agreement is terminated or expires with respect to the Business, or if the Food Truck Lease is terminated or expires before the term of the agreement ends, then the agreement with Chick Fil A will automatically terminate at the same time.
This contingency highlights the interconnectedness of the various agreements a Chick Fil A operator must maintain. The continued validity of both the Franchise Agreement and the Food Truck Lease are crucial for the Delivery Kitchen Agreement to remain in effect. If either of these foundational agreements falters, the Delivery Kitchen Agreement automatically ceases, which could have significant operational and financial implications for the operator.
Furthermore, if the Franchise Agreement is in default at the effective date of the agreement or at any point during its term, this default also constitutes a default under the Delivery Kitchen Agreement. While this does not lead to automatic termination, Chick Fil A has the option to terminate the operator's rights under the Delivery Kitchen Agreement or suspend those rights until the default is resolved. This provision underscores the importance of maintaining good standing in all aspects of the franchise operation to avoid potential disruptions or termination of the Delivery Kitchen Agreement.
It is also important to note that Chick-fil-A retains significant discretion, as they can terminate the agreement and/or the Food Truck Program at any time, for any reason or no reason. This clause gives Chick-fil-A broad latitude in managing its franchise relationships, adding a layer of uncertainty for the operator. Prospective franchisees should carefully consider these termination conditions and seek clarification from Chick-fil-A regarding the specific circumstances that could lead to termination.