Success Franchise AdvisorsOwn a Chick-fil-A Franchise for $10,000?
Own a Chick-fil-A Franchise for just $10,000?
In the last week alone I have had two clients ask me about owning a Chick-fil-A franchise and even heard the cost for owning one debated on a business radio show. The main question was, “why does it cost over a million dollars to own a McDonald’s franchise but only $10,000 to own a Chick-fil-A franchise? I clearly understood the question from my clients but frankly was a little frustrated that a business radio show could not answer the question which motivated me to write this article, hopefully shedding some light on the topic.
Many of us have driven by, or through a Chick-fil-A at lunchtime and said to ourselves, “dang I need to own one of these!”. I mean after all, not only are they busy as can be but can get more customers through a drive-thru in less time than just about any fast food restaurant. All with outstanding customer service and rarely ever screw up the order. In fact I don’t know if Chick-fil-A has ever screwed up my order and I don’t know if any other fast food drive-thru has ever not. Would you believe that the Chick-fil-A close to my house in Wake Forest, NC is so busy during most lunch days they actually created an extra lane in the street and have local cops directing traffic. All while a semi-rival chicken chain, PDQ is across the intersection and may have 8-10 cars in the line at any time.
So we Google, we read and to our surprise, the investment to open most fast food franchises such as a McDonald’s, Wendy’s, Taco Bell, etc. is anywhere from $1mil to $4mil. The big difference in this swing of investment is commonly if you purchase vs. lease the land, but still big numbers. But wait… to open a Chick-fil-A is just $10,000? And my understanding is currently Chick-Fil-A franchises commonly generate twice the revenue as most of the other major fast food chains. How can this be???
Good news and bad news… Good news first… Yes, you can be a Chick-fil-A franchisee for around $10k! Bad news second… You don’t really own it. There’s the catch. In its most simplest form, unique to almost all franchise models, Chick-fil-A franchisees don’t actually own the restaurant. Wendy’s franchisees, McDonald’s franchisees, Taco Bell franchisees, Subway franchisees, all own their businesses. Building, equipment, inventory, sometimes land… belongs to the franchisee. They put up the money, they own it. And in most cases they employ managers and employees that run the day to day operations. Rarely do they throw on a uniform and go run the drive thru, mop the floors or flip the burgers. In the case of a Chick-fil-A franchisee, Chick-fil-A corporate puts up all the money and owns the business… Building, land, equipment, etc. and the franchisee runs the business. So where most fast food restaurant owners are pretty much investors, Chick-fil-A franchisees are more employees of the company, most often serving as the general manager and are working at their location for 40-60 hours a week. The franchisee and corporate split the profits.
While most of the major fast food chains take a weekly royalty from each franchisee of anywhere from 3%-8% of gross sales, the Chick-fil-A model, according to my research takes a royalty of 15% of gross sales and then after the royalty splits the net profits with the franchisee 50/50. Considering most Chick-fil-A’s generate over $3mil a year in revenues this can still be a very handsome income for the franchisee, but it more resembles a job than an investment. So as you are reading this you may be thinking, “hell I am still interested!” and for many you should be as there is no doubt most Chick-fil-A’s kill it! I am not trying to rain on the parade but one more thing to keep in mind… each year Chick-fil-A receives over 60,000 applications to become a franchisee and each year they award about 80. To put that in perspective, that is a lower acceptance rate than the Secret Service or Harvard. What’s more, a good portion of that 80 each year that are awarded are awarded within, IE: to people that currently work at a Chick-fil-A. The concept is quite genius actually. Ever wonder why at most fast-food drive thru’s, excellent customer service can be somewhat hit or miss while more times than not your experience at a Chick-fil-A can rival checking into a 4 star hotel? This ambitious opportunity that if interested, maybe one day the company I work for may actually invest in me to operate my own location leads to an amazing culture. Not to mention to become a Chick-fil-A franchisee involves some of the most rigorous training of any franchise. Not just on how to cook chicken sandwiches and waffle fries but on systems, leadership, culture and so on. I mean after all, how many businesses do you know that literally invest over a million dollars in what is basically a manager?
So when I am asked, “how can I become a Chick-fil-A franchisee for just $10,000?”, my answer is, go to work at one and be the most amazing employee they have ever seen for many years… Then throw your hat in the ring year after year and pray. And yes, another thing about Chick-fil-A is being a strong faith based company, prayer can actually help.
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