Chick-Fil-A is an iconic American fast food chain. Its reputation is built on delicious chicken dishes and dipping sauces. The restaurants frequently have long drive-thru lines, sometimes wrapping around the block. The sheer volume of business that Chick-Fil-A has in a year is extremely attractive to potential investors. A Chick-Fil-A, based on its reputation alone, has become a focal point of potential franchisee interest.
You might be preparing to invest in starting your own business. It may be a dream of yours to finally run a place of your own or start a profitable venture. However, as you are getting to invest, you might be concerned about the risk profile of different business opportunities. Going the franchise route might be attractive, as franchises usually have a proven business model, support network, and more benefits to franchising. This is especially true with a good franchisor.
As you explore your options for franchising, you are probably keeping in mind what your budget is. You might also be looking for the most profitable franchises in your budget range. If this is your first business, you might be looking for cheap franchises to start. In all, you are in the right place for your franchise information needs. In this post, we will review the Chick-Fil-A brand, the pros and cons of the Chick-Fil-A franchise, the requirements for becoming a franchisee, the Chick-Fil-A franchise cost, the profitability of a Chick-Fil-A restaurant, the term of agreement and renewal, and the overall application process. We’ll cover the following topics in detail in this post:
If you are interested in opening a Chick-Fil-A, a little bit of brand history might add some context when making your franchising decision. Chick-Fil-A is a quick-service restaurant fast food chain, serving a variety of chicken dishes to customers. It was founded with its first standalone location in 1967 by Truett Cathy, tracing its roots back to Hapeville, Georgia, on the outskirts of Atlanta.
The fast food chain operates in 48 states with over 2,900 locations. It has grown to reach astounding success in America. It was founded on Christian values, which are reflected today in that the brand is closed on Sundays. Moreover, they provide fish dishes during Lent in a way to help those who want to fast. The company has been in some controversy in the past for stances taken against same-sex marriage.
The company serves a variety of chicken sandwiches, chicken nuggets, fries, salads, ice cream, shakes, sodas, and many custom dipping sauces. They have become famous for their dipping sauces, great food, and long lines. Shortly, Chick-Fil-A is famous for being successful.
Advantages of Owning a Chick-Fil-A
If you are considering opening a Chick-Fil-A, you should be aware of the many advantages of Chick-Fil-A franchise opportunities.
The first and most obvious advantage is the Chick-Fil-A brand. Franchising with Chick-Fil-A means getting access to selling their products. Whether it is their famous seasonal milkshakes, chicken nuggets, chicken biscuits, or chicken sandwiches, being a franchise owner of Chick-Fil-A means tapping into their established popularity. You will already have a dedicated customer base when it comes to running a Chick-Fil-A. You should get a lot of business and you will have a favorable spot in competition against other brands. Chick-Fil-A is a great franchise option out of its sheer popularity.
Another great aspect of Chick-Fil-A is the startup costs. As a prospective franchisee for a franchise business, you might be worried about the costs it takes to set up and operate a franchise. No need to worry. The corporate costs to start a Chick-Fil-A are very low. The total investment costs for the real estate, construction, and equipment of the location are largely handled by corporate. All you generally need to do is be ready to be a successful franchise operator and pay the low corporate fee and partial startup costs. The earnings you have will ultimately be affected, but the initial investment you need to make is very low.
One of the other great things about the Chick-Fil-A franchisee application process is that you do not need to have experience in fast food restaurants. They will still potentially accept you as long as you meet the requirements of a qualified candidate and select you to be a licensee of a new franchise.
If you are concerned about the potential training needed to run a Chick-Fil-A, Chick-Fil-A has got you covered. Chick-Fil-A has a multi-week training program that they make available to franchisees to understand the day-to-day operations of the fast food franchise. This will help your grand opening go off well and help you understand the intricacies of running a Chick-Fil-A. This can help lead your Chick-Fil-A restaurant franchise to success.
One of the other main advantages of franchising with Chick-Fil-A is having Sundays off. Sometimes being a franchisee can feel like you are working every day of the week. Indeed, you have a business on the line, and you want to make sure that everything is going well. By having a mandated break on Sundays, you can find time to relax and enjoy your personal life outside of your business.
In all, there are many benefits to franchising with Chick-Fil-A. It is important that you consider all of the criteria which are important to you when selecting your ideal franchise to apply for. Chick-Fil-A has some great advantages due to its unique business model. However, you should be prepared to be sure of what is best for you when it comes time to decide if Chick-Fil-A’s franchise model is the one for you.
Disadvantages of Owning a Chick-Fil-A
Part of deciding whether to apply for a Chick-Fil-A franchise is understanding the disadvantages to both the brand and the business model. The setup of the Chick-Fil-A franchise system is noticeably different from that of more traditional forms of franchises.
Starting with the business model of Chick-Fil-A, one of the downsides for you would be the potential for future growth. You are not allowed to get a second location of Chick-Fil-A or expand to a multi-unit franchise. This is because you take the position of an operator of a franchise. Since corporate Chick-Fil-A theoretically owns the location, you are unable to own any Chick-Fil-A locations, preventing you from starting another and earning the profits from that too.
Stemming from the last point, you will actually own no equity. You will only get a cut of the earnings from the Chick-Fil-A location that you operate. So, you might begin to think of franchising a Chick-Fil-A location as more of a job than an investment. Indeed, in many ways, the role of the operator looks like a job.
For example, an additional disadvantage of the Chick-Fil-A franchising model is that you will have to run the Chick-Fil-A, hands-on and full-time. Corporate Chick-Fil-A bans you from pursuing other business opportunities. This diminishes the wealth generation capacity of running a Chick-Fil-A. Moreover, you are not able to choose the location of the Chick-Fil-A that you franchise/operate. As a result, you have very little flexibility and decision-making. Owning a Chick-Fil-A franchise will reduce your flexibility and not add to it.
There are some additional aspects of Chick-Fil-A that may also affect your profitability. While being closed on Sundays can be a positive in that you can relax, it will also reduce your earnings. Since you do not have a decision in this matter, your ability to seek profit is limited. Moreover, the negative press related to Chick-Fil-A might be reducing its sales. That will also prevent you from making as much as you might otherwise would. These decisions are controlled by corporate, and they would not be made by you at the franchisee level.
One other disadvantage to Chick-Fil-A is the competition that it faces. Restaurants like Wendy’s, Burger King, McDonald’s, KFC, and more in the quick service restaurant and chicken fast food space will be competing with Chick-Fil-A. While Chick-Fil-A’s products might be better, these other fast food chains will represent competition for Chick-Fil-A. An unfortunate aspect of the Chick-Fil-A model is that you are unable to choose the location that you franchise. As a result, you may get assigned to an overly-competitive market and be deprived of the revenue from an environment where there is less competition.
In all, there are some serious downsides to Chick-Fil-A. The uniqueness of the business model warrants you to think about what is important to you in a franchise. This includes contemplating the amount of money you are trying to spend, the returns you are seeking, the role you want to play, and the future you want to have related to any potential future franchise units.
Requirements for Opening a Chick-Fil-A
Once you have considered the potential upside and downside of a Chick-Fil-A franchise, it is time to move on to consider whether you will be eligible to apply for a Chick-Fil-A franchise.
Traditionally, a franchise will require net worth and liquid assets requirements to qualify for a successful franchise application. In the case of Chick-Fil-A, they do not require this before applying. This is likely because they treat the franchise process as something separate from other franchise opportunities.
They do not want their restaurants to be considered as a business investment or as an opportunity to make money for a portfolio. Instead, Chick-Fil-A wants someone who is committed to becoming an operator. Thus, rather than talking about the strict requirements of Chick-Fil-A in their franchisees, it might be better to talk about some of the qualities and experiences that you could represent in your application to improve your chances of being accepted.
This is especially important, as Chick-Fil-A famously only accepts less than 1% of applications to operate a franchise. This is a competitive process, which is why it is important to make a good application to Chick-Fil-A to operate a franchise. You want to be sure that you give this application your best shot.
The first recommendation is to be ready to communicate your commitment to being an operator. Since you will need to accept this as a full-time position and refuse other business opportunities, you should be ready to commit yourself to the Chick-Fil-A brand if accepted. Make sure that you are ready for this decision in conversations with Chick-Fil-A corporate.
Another part of you that you should highlight is your desire to have a hospitable restaurant and passionately make service a part of the experience at a prospective Chick-Fil-A restaurant. If you have past experience or professional stories that can corroborate this perspective, you should make sure to mention them during the application process. You want Chick-Fil-A to know that you would be an excellent restauranteur who aligns with their values in operating a restaurant.
Part of Chick-Fil-A’s model is that they value hard work, leadership, and risk management. If you can think of examples that demonstrate your hard work, your leadership in restaurant, team, or company settings, and your risk management, this would be a great representation to make on your application. It will help put you in a good position for corporate looking for an experienced person with the know-how to make a Chick-Fil-A franchise operate smoothly and profitably.
Chick-Fil-A also provides a guide of qualities that their franchisees should have in the application process. This includes being entrepreneurial, of good character, and having financial integrity. You can demonstrate your entrepreneurship through a discussion of your past, your interests, and your desires to operate a Chick-Fil-A location efficiently. Your good character might also be something that you can highlight, especially if your values intersect with the goals, history, or background of Chick-Fil-A. Having financial integrity might mean that you can provide examples of your financial responsibility, excellent credit score, or stated value of the importance of being financially integral.
In all, there are less stringent requirements for being a Chick-Fil-A franchisee and more suggestions about what an ideal candidate should look like. This includes how they might generally present a positive image of themselves for their application. This is important if you intend on getting accepted into this highly selective position.
Cost of Starting a Chick-Fil-A
With the background of an ideal Chick-Fil-A operator out of the way, you might be interested in the cost of starting a Chick-Fil-A franchise. Usually, when discussing franchises, there are two sets of costs that a franchisee needs to worry about. These include corporate costs and overall investment costs. The first are costs paid to corporate to establish and continue the franchisor-to-franchisee relationship. The second are costs paid to build, equip, and operate the business.
Beginning with the corporate costs, you will need to pay a franchise fee to the franchisor. In this case, the initial franchise fee to Chick-Fil-A is $10,000. They call this an initial financial commitment. In other words, this fee is used to vet you as a committed operator. It will also help to pay for your training and the other expenses associated with onboarding you to your Chick-Fil-A location. Comparatively, this initial franchise fee is extremely low with industry standards.
This makes starting a Chick-Fil-A extremely accessible. If you do not have a lot of capital, franchising with Chick-Fil-A can be a great option for you. However, your growth options will be limited due to the inability to expand to other franchises.
Chick-Fil-A has a set of ongoing fees which help fund their ability to keep the option of becoming a franchisee quite cheap. The first is for real estate, construction, materials, and equipment. The fee for this is 15% of sales. This is the rent of the equipment which you are using. This fee is certainly not standard in the franchising industry. However, due to the unique model of Chick-Fil-A, this fee is part of the business model of franchising.
This is not the only ongoing fee that Chick-Fil-A has. They also take a part of your pre-tax profit. Chick-Fil-A will take 50% of your pre-tax profit earnings. This means that you will then have to pay taxes on the earnings which they do not take before you can pocket them. Of course, this makes the deal pretty good for Chick-Fil-A. It makes the amount of profit that you take home smaller. Again, this is not a standard in the franchising industry. However, Chick-Fil-A’s popularity and business model have allowed them to be able to set up a model like this.
Since Chick-Fil-A pays for the real estate, construction, and equipment costs, you are not left with much that you have to pay in terms of the total initial investment. You just need to be prepared to accept the terms of the agreement. Arguably, that might be the largest cost involved in the process.
How Profitable is a Chick-Fil-A?
One of the most critical factors that might play into your decision-making is what the earnings are like for a Chick-Fil-A franchisee/operator. This can allow you to assess whether the sacrifices are worth it in the long run when you have limited expansion and equity opportunities.
There are estimates that the average Chick-Fil-A operator can take home $200,000 in earnings. This is a pretty nice amount of money for many. However, you need to remember that an operator requires a lot of hands-on work and the process to franchise a Chick-Fil-A is pretty long, selective, and cumbersome to navigate.
It is also important to remember that this statistic represents an average of what one could expect to earn. The exact earnings will depend on your unique situation. This includes how well you run your Chick-Fil-A location, as well as the location you get, your crew, the market environment, and many other factors. You could end up making more or less. To get a better idea of your likely earnings, it may be worth consulting corporate Chick-Fil-A.
Term of Agreement and Renewal for a Chick-Fil-A
Before deciding to enter into an agreement with Chick-Fil-A, you might be wondering how the terms of the agreement work and what the renewal period and cost may be. Indeed, the term of agreement and renewal are unique to Chick-Fil-A and reflect the unique business model that they have chosen.
The term of agreement for a Chick-Fil-A ends either on the last day of the year or when the lease is set to expire. The earliest of these two options leads to the expiry of the agreement. However, the agreement is set up for automatic renewal. From publicly available information, there are no charges for renewal. This renewal lasts for a one-year period. The only way that this period does not renew is if written notice is given at or more than 30 days before the end of the current term. Keep in mind that this notice can be issued by either party.
This agreement is shorter than a typical term of agreement by a lot. This is likely to be able to provide both you and the franchisor the ability to stop the agreement if they are dissatisfied with the current situation.
Process of Starting a Chick-Fil-A
If you are serious about becoming in charge of a Chick-Fil-A location, you need to get the application right. Learning more about the application process can help you understand what you need to do at each step of the way. This can help you plan your answers, practice your answers to questions, and understand what is generally required of you as a prospective operator of a Chick-Fil-A location.
The first step is rather simple but nonetheless important. If you are interested in becoming a Chick-Fil-A operator, you need to head to the site and fill out a Chick-Fil-A application. It is important to be honest with the answers you give and try to communicate the recommended qualities in answers where they are relevant. You should properly express your experience, passion, availability, and desire to run a Chick-Fil-A location that shows you are well-studied and able to become an operator.
The next step is an interview. The interview is an important part of the operator hiring process as Chick-Fil-A wants to get to know that they are selecting the right candidates for them. Logically, the $10,000 franchise fee is not a lot of money, so the majority of the questions that they ask you will not focus on whether you can financially meet your obligations to start the Chick-Fil-A franchise. Instead, the questions will likely focus on your experience, your character, and your goals.
Following the recommendations in this post will put you on a good footing during this process. You should do your best to recall relevant experience. This is especially true if you worked in the quick service restaurant industry, but it can also be true for relevant managerial or leadership positions and experience. You should have specific examples on hand to recall when asked about your past.
Regarding your character, you should make sure that your values, background, and beliefs align with the values of the company. Chick-Fil-A is looking for compatible candidates to be operators of the company, so it is critical that you communicate the similarities and cohesiveness of you as a candidate. Doing your homework on researching the history of the company can help you recall specific moments in the history of the company that you find influential, interesting, exciting, or just to present yourself as knowledgeable and committed.
Your goals should also be presented in a way that aligns with the desires of Chick-Fil-A. Meaning, you should be specific that your goals are to grow along with the location of the Chick-Fil-A you will operate. You should communicate that you will be a hands-on operator looking to achieve maximum efficiency. Chick-Fil-A does not want a passive investor-type operator, so it is best to make it clear that you want what they want.
If you have done well in the interview process, you will move on to the formal decisions you need to make on continuing with the Chick-Fil-A brand. Chick-Fil-A will provide you with a financial disclosure document (FDD) that outlines the financial obligations and performance of Chick-Fil-A franchises. This information is important in quantifying the decision you will make as well as providing you with the legal and logistical information you need on which to base your decision.
Once you sign, you are ready to go. You will make your payment and begin the multi-week training program. Chick-Fil-A will educate you on all the ins and outs of the operation of a location. You will learn both the processes of the business and important tools to make it operate more efficiently and drive profits for your location. After all, that means more money in your pocket.
After training comes the grand opening. Get ready to do well in your new role as an operator of a Chick-Fil-A franchise. All your hard work will now continue, and your payoff will be proportional, assuming all else goes well. Running a Chick-Fil-A franchise can be challenging and at times take away more money than you would like. However, these low startup costs make running the franchise more accessible, and possibly, an option for you.
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