Chick-fil-A Franchise Disclosure Document Analysis

Either Party May Terminate Without Cause on 30 Days' Notice

Chick-fil-A may terminate the Franchise Agreement at any time without cause upon just 30 days' written notice, and the Operator has the same right. This means the Operator's entire business can be ended with minimal notice and limited compensation.

Source: p.50

50% of Net Profit Fee Leaves Operator With Minority Share of Earnings

In addition to a base fee equal to 15% of gross receipts, Chick-fil-A takes 50% of the restaurant's net profit each month as an Additional Operating Service Fee, meaning the Operator retains only half of what the restaurant earns after all expenses.

Source: p.14

Mandatory Affiliate Purchases Create Substantial Cost and Rebate Exposure

Operators must purchase an estimated 37%–68% of all supplies and services from Chick-fil-A-approved or -designated suppliers, including affiliates CFA Supply (distribution) and Bay Center Foods (lemon juice), whose pricing markups are set at each affiliate's sole business judgment.

Source: p.25