The average Chick-fil-A franchise has low startup fees and makes nearly $8.7 million in sales. Learn how to open one.

The average Chick-fil-A franchise has low startup fees and makes nearly $8.7 million in sales. Learn how to open one.

Chick-fil-A: A Low Fee, High Potential Fast-Food Franchise

Chick-fil-A is a fast-food chain that has established itself as one of the most successful in the United States, offering franchise opportunities at a remarkably low cost compared to its competitors. However, potential franchisees should carefully consider the restrictions and ongoing fees that come with this opportunity.

Success and Low Startup Costs

In 2022, Chick-fil-A reported sales of $18.8 billion, a 12.8% increase from the previous year, making it one of the highest-grossing fast-food chains in the country. The chain’s non-mall locations generate an impressive average of $8.7 million in sales annually, which is more than double the sales of a typical McDonald’s restaurant[^1^]. Mall locations still perform well, with average sales of $3.7 million[^1^].

Unlike many other major fast-food chains, Chick-fil-A offers a low franchise fee of $10,000 to open a new restaurant. This fee is significantly lower than those required by McDonald’s, which considers Chick-fil-A its biggest rival. McDonald’s franchisees must pay between $1.5 million and $2.5 million in startup costs, including a $45,000 franchise fee[^1^].

Potential Taco Bell franchisees also face similar high fees, with a $45,000 franchise fee and startup costs ranging from $1.4 million to $2.5 million for a traditional restaurant[^1^].

While the total costs to launch a franchised Chick-fil-A restaurant range from $518,385 to $2,803,435, it is worth noting that the company leases real estate, restaurant construction, and equipment to the franchisee, easing the upfront capital investment[^1^].

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The Catch: Ongoing Fees and Restrictions

Although Chick-fil-A offers a relatively low franchise fee, the ongoing fees are higher compared to many competitors. From the first day of operation, franchisees must pay a “Base Operating Service Fee” equal to 15% of sales, as well as an additional fee of 50% of net profits. In contrast, McDonald’s charges an ongoing monthly service fee equal to 4% of gross sales[^1^].

Rent is another ongoing cost for franchisees. McDonald’s franchisees pay an average of 10.7% of sales in rent costs, while Chick-fil-A caps its rent charges at 6% of sales[^1^].

With these higher ongoing fees, Chick-fil-A franchisees end up paying more to the company over time compared to the upfront costs of opening the franchise.

Restrictions and Control on Franchisees

Chick-fil-A imposes several restrictions on its franchisees that may affect potential profits and ownership. Firstly, franchisees are generally prohibited from opening multiple units, limiting their potential for expansion and increasing profits. However, the company does select a small number of franchisees to operate multiple units[^1^].

Furthermore, franchisees are not allowed to own or work in any other fast-food business within a five-mile radius of their Chick-fil-A location. This restriction is aimed at ensuring franchisees’ involvement in day-to-day operations and encouraging their active participation in the local community[^1^].

Another notable limitation is that franchisees are unable to sell their Chick-fil-A business. The company does not allow any transfers or sales, even in the case of family inheritance or disability[^1^]. Additionally, Chick-fil-A reserves the right to terminate a franchise agreement without cause with 30-days notice or with cause for various infractions, including labor union activity, opening the restaurant on Sundays or Christmas Day, or causing damage to the brand’s reputation[^1^].

The Application Process

Despite the potential challenges and restrictions, the opportunity to become a Chick-fil-A franchisee is highly sought after and competitive. Each year, Chick-fil-A receives over 40,000 franchise applications but selects only 75 to 80 new franchisees annually[^1^].

To apply, candidates must submit an expression of interest form through the company’s website. Surprisingly, previous Chick-fil-A experience is not a requirement, as around 40% of newly selected franchise operators have no prior connection to the company[^1^]. In addition to interviewing the candidates, Chick-fil-A may also interview their friends, family members, and business partners.

Once selected, franchisees undergo an extensive multi-week training program that includes approximately 160 hours of classroom training. This comprehensive training equips franchisees with the necessary skills and knowledge to successfully operate their own Chick-fil-A restaurant[^1^].

Conclusion

Chick-fil-A offers a franchise opportunity with a comparatively low upfront fee and the potential for substantial sales revenue. However, potential franchisees should carefully consider the ongoing fees, restrictions on ownership and operations, and the company’s control over the business. The highly selective application process adds to the competitiveness of becoming a Chick-fil-A franchisee. Ultimately, aspiring franchisees must weigh the potential for success against the limitations imposed by the franchise agreement.

• Chick-fil-A
• Fast Food
• Retail