Chick-fil-A Licensed Units

What specific performance or operational issues led to the 6 franchisor-initiated terminations in 2022, 8 in 2023, and 5 in 2024? Can you provide anonymized case studies?

The royalty rate of 10.0% is notably higher than the typical 5.0-6.0% range for quick service restaurants. How is this rate justified relative to the services and support provided?

All 6 litigation cases over 3 years involved the franchisor as defendant. What were the primary claims in these cases, and have they been resolved or settled?

Support & Training scores 82, below the typical 90.0-100.0 range. What specific training deficiencies were identified, and what improvements are planned?

The Investment Cost score is 52, significantly below the typical 69.0-78.0 range. What are the primary capital and operating cost challenges identified?

Since the franchise fee is $0 (versus typical $25,000-$37,500), what are the true upfront costs to establish a licensed unit, and are there any additional or hidden fees?

The Non-Compete clause is only 1 year, below the typical 2-year standard. Can you explain the reasoning for this shorter restriction period?

Territory is not exclusive and no encroachment protection exists. How does the franchisor prevent cannibalization between licensed units in nearby geographic areas?

The license agreement contains a prohibition on transfers with no right of first refusal. Can you explain the business rationale for preventing unit transfers entirely?

The license agreement shows zero renewal options. What happens to a unit owner when the initial license term expires? Is renewal automatic, and on what terms?

Franchisees must purchase all products and ingredients from CFA or pre-approved suppliers. What pricing controls are in place to protect unit profitability from supplier cost increases?

The Ongoing Fees score is 54, below the typical 60.0-62.0 range. What fee structure issues were identified, and are there any additional fees not disclosed in the royalty rate?

Can you provide a breakdown of the 6 terminated units by closure reason (underperformance, compliance violations, system closure, etc.) and geography?

What is the actual Item 19 performance data showing for units by age, location type, and other relevant segments? How many units reported data?

The license agreement grants the franchisor operational control requiring purchases from approved suppliers. Are there penalties or restrictions for non-compliance?

System growth is 3.16% annually, but terminations remain elevated. What is the franchisee acceptance rate for new licensed unit opportunities versus termination trend direction?

Are there any pending or recently settled litigation cases related to royalty disputes, product quality, or franchisee terminations?

Given the lack of territory exclusivity and no encroachment protection, how many licensed Chick-fil-A units operate within a typical operating radius?

The franchise fee of $0 is unusual. Are there any performance guarantees, buy-back provisions, or exit clauses tied to this structure?

What is the median tenure of terminated units—are these newer units struggling to succeed or established units being terminated for other reasons?