How much does a Chick-fil-a franchise cost?
HOW IS IT ONLY $10,000?!
Chick-Fil-A is a rare breed in the franchise industry for several reasons.
In short, to become a franchisee, you might as well enter the lottery…and then give most of your winnings back….but you’re still winning the lottery!
Why it’s so Cheap
Typically a franchise cost will involve a franchise fee averaging $50,000 plus any build out costs if they have a physical location, marketing fees, and everything else needed to get the business going. For Chick-Fil-A, these total costs range from $315,000 to $1,750,000.
Chick-Fil-A however has done something very different. Instead of having a franchisee pay for all of these costs and then collecting a 3–15% royalty, they shoulder the costs on their own, for a franchise fee of $10,000.
They do this to make even more money on the backend and to get the most qualified operators.
Like most other food franchises franchises Chick-Fil-A cannot be owned as an investment business, you must own it and operate it full time. If the franchise does allow it, the franchisee would hire the best operator because those people wouldn’t have the funds to get this kind of business going. This franchise is made extremely affordable so someone who’s been in the food business for a very long time could become an owner/operator.
**Be careful only thinking about food franchises in general, my top answer on Quora cautions against it:Is owning a fast food franchise worth the time and money invested?
Due to this huge investment on their end, Chick-Fil-A allocates a percentage of their “Base Operating Service Fee” (BOSF) to royalties. The BOSF is 15% of gross sales AND 50% of all Net Profit. Instead of buying the blueprint with most franchises, you’re just being a tenant in their business.
For a very high performing restaurant like Chick-Fil-A currently is, this will still leave you plenty of money for a good income after very long hours. I typically advise away from the food industry when it comes to franchising for a wide variety of reasons. If you’re giving them half of your net profit, when the company hits hard times, you will get hit much harder.
As I recommend franchises for investors, I get asked about Chick-Fil-A very often. People see the lines around the block so it has to be a good investment, right?
First off, as with most franchises, if you see them in your city and they’re doing well, odds are you’re way too late to get involved. Active investors look at new concepts that are entering their geographic area and keeping an eye out for new concepts that are successful in other parts of the country that they can bring in.
So what if there is availability in your city? Now we have to see if you’re THE fit for what they seek in a franchisee.
Any good franchise is extremely selective when it comes to who they select to expand the brand. As much as potential investors are researching a franchise, the franchise is doing their due diligence on you. One bad franchisee can ruin the brand and tarnish their reputation. Franchises are not in the business of selling franchises, they’re in the business of collecting royalties, for a very long time.
Their success is directly tied into yours.
In summation, it costs very little to get involved, it’s extremely difficult to be selected (less than half of a percent) as a franchisee, and, if you do get it, expect long hours and big checks to corporate.
Do your research on other franchises and especially in other non-food industries before getting involved in anything. You don’t buy the first house you walk into because it looks nice.
Please upvote for applause if you made it this far and enjoyed it, feel free to reach out over LinkedIn to chat all things franchising, check out Semfia if you want specific franchise recommendations, and read some more franchise answers on Quora.