Chick-fil-A Franchise: Pros, Cons, Costs and Earnings

Chick-fil-A is one of the most recognizable names in fast-food, making it a popular choice for aspiring franchise owners. Known for its chicken sandwiches, “my pleasure” culture and notoriously low-cost franchise fees, the franchisor sees tens of thousands of applicants who want to own a Chick-fil-A franchise every year.

Are you considering applying to become a Chick-fil-A franchise owner? Here are a few pros and cons to consider.

The Pros of Buying a New Chick-fil-A Franchise

1. Low Initial Investment

One of the major pros of owning a Chick-fil-A franchise is the investment versus the profit. Unlike many fast food chains, which can run franchisees hundreds of thousands or even millions of dollars, all it takes to open a Chick-fil-A is a $10,000 franchise fee. The brand also has no requirements for minimum net worth or liquid assets.

2. High Revenue Potential

On average, a Chick-fil-A franchise generates $8.1 million in annual sales, according to data from finance platform SharpSheets. Of course, this varies from location to location. Franchises in malls, for instance, see a decrease to $2.7 million, while non-mall units have an average annual sales figure of $8.6 million, resulting in an earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.3 million — a 15% margin.

3. Extensive Training Program

Before opening, franchisees can feel confident about running their business due to the brand’s extensive training. During a multi-week program, they will learn everything about running the business, including hiring and training employees and how to deliver Chick-fil-A’s outstanding customer service.

4. Strong Brand Recognition

Chick-fil-A franchisees also benefit from strong brand recognition and a loyal customer base. In fact, the brand has taken the number one spot on the American Customer Satisfaction Index for the past nine years.

5. Better Work-Life Balance

With the brand being famously closed on Sundays, Chick-fil-A franchise owners might also experience a better work-life balance than if they were franchising with another fast-food brand.

The Cons of Buying a New Chick-fil-A Franchise

1. Highly Competitive Application Process

If the opportunity sounds too good to be true so far, here are a few considerations to keep in mind. First off, Chick-fil-A is extremely competitive to be accepted into. As of 2019, approximately 60,000 potential franchisees apply for ownership of a Chick-fil-A franchise each year; only 1% of these applicants are approved.

Those who are selected to be franchisees must have full-time availability for day-to-day operations of the restaurant, meaning this is not a passive opportunity. If you’re looking to add another brand to your portfolio, a Chick-fil-A franchise is not the business for you.

2. Steep Royalty and Profit-Sharing Structure

And while the investment is one of the cheapest in the business, Chick-fil-A charges a 15% royalty and takes 50% of all profits for franchisees. This is a much steeper structure than other quick-service brands, which typically range around 4% to 6%

3. Limited Operational Control

There is also less control involved with opening a Chick-fil-A franchise. For selected operators, the brand manages the majority of the startup process, such as selecting the restaurant site and distributing necessary equipment rentals.

Pros of Buying an Existing Chick-fil-A Franchise

1. Established Customer Base

An existing Chick-fil-A franchise comes with an established reputation, loyal customer base, and a proven track record. This means franchisees can hit the ground running, benefiting from existing brand recognition and customer loyalty.

2. Steady Cash Flow

Purchasing an established franchise means you gain immediate access to a steady stream of revenue. With a functioning business, there is less risk compared to opening a new location, as you inherit a proven, income-generating model.

3. Streamlined Operations

Buying an existing franchise allows you to bypass the complexities of setting up operations from scratch. Staff, systems, and processes are already in place, providing a smoother transition and potentially quicker profitability.

4. Experienced Management Team

If the current management team is retained, you benefit from their experience and operational knowledge. This support can be invaluable as you navigate the initial stages of ownership.

Cons of Buying an Existing Chick-fil-A Franchise

1. Higher Purchase Price

Unlike starting from scratch, buying an existing franchise typically requires a higher initial investment. The price reflects the established revenue, reputation, and customer base, which could be a barrier for some investors.

2. Inherited Operational Challenges

Every business comes with its challenges. Purchasing an existing franchise means taking on any existing operational issues, such as underperforming staff, outdated equipment, or a location that’s not performing at its potential.

3. Limited Control Over Brand Image

When you buy an existing franchise, you inherit the current brand image and business practices. If the previous owner had made mistakes or failed to implement best practices, you may face difficulties in shifting the business to meet your standards.

4. Transition Period

Even with an established location, the transition period can be tricky. You will need to build rapport with the staff, manage customer expectations, and learn the specifics of the franchise’s operations, which can take time.

FAQ: Franchising With Chick-fil-A

Here are the answers to some frequently asked questions about owning a Chick-fil-A franchise.

Why is Chick-fil-A such a successful franchise?

Outstanding customer service, grade A top-quality food, and well-thought-out locations make Chick-fil-A a successful franchise. By consistently creating a positive dining experience with efficiency, the brand has built a solid reputation and gained a loyal customer base over the years. For potential franchisees, this presents the opportunity to leverage Chick-fil-A's well-established brand presence.

What are the benefits of owning a Chick-fil-A franchise?

One of the biggest pros of buying a Chick-fil-A franchise include the incredibly low initial franchise fee compared to other fast-food brands. A strong corporate support and ongoing operational guidance help franchisees succeed at every stage of the business process. Furthermore, a proven business model with high sales-per-unit averages is a potentially profitable opportunity for entrepreneurs looking to invest in a successful and well-established brand.

How does Chick-fil-A support its franchisees?

Chick-fil-A supports its franchisees by providing comprehensive training programs, ongoing mentoring, and marketing guidance. It takes care of the key business aspects including real estate and construction of outlets at a strategic location so that franchisees can focus on managing and improving the daily operations on the floor.

What are the unique selling points of Chick-fil-A?

A thoughtfully curated menu with focus on fresh ingredients and a values-driven approach are some of the greatest unique selling points of Chick-fil-A franchise. The company uses fresh chicken, hand-cut, marinated in a special mixture of seasonings. Overall, their brand identity is built around community, giving each individual a positive dining experience.

What are the challenges of owning a Chick-fil-A franchise?

One of the primary cons of owning a Chick-fil-A franchise is its highly selective application process, which accepts less than 1% of applicants every year. In addition, the brand controls the key business decisions such as location and expansion, providing a limited ownership to franchisees.

What are the downsides of the Chick-fil-A business model?

One of the downsides of the Chick-fil-A business model is that the franchisees need to share a significant portion of their profits with the company. This may limit the financial independence many potential franchisees expect.

How does Chick-fil-A's corporate culture impact franchisees?

Chick-fil-A’s corporate culture is built around strong values and operational standards, which help maintain brand consistency and quality. Here are some of the core values of Chick-fil-A’s corporate culture:

Flexibility: The company runs outlets in different locations by catering to the needs of the local community.
Caring Work Culture: They invest in people by providing opportunity to diverse talent as well as compensating their team generously.
Customer-First Approach: They are consistent in providing unique and positive dining experiences to customers.
Stewardship: They manage resources responsibly and invest in the betterment of the community.

Potential franchisees may find the strict focus on these principles limiting, especially when it comes to making localized adjustments. However, it is a great opportunity for those seeking comprehensive support from the ground up.

What are the limitations of the Chick-fil-A menu?

One potential con of buying a Chick-fil-A franchise is its focus on chicken-based items. While the menu is incredibly popular, it could limit growth opportunities in markets where customers are looking for a wider variety of food options, including plant-based choices.

Evaluating the Pros and Cons

While the benefits of buying a new or existing Chick-fil-A franchise are certainly attractive, ownership comes with its own set of challenges. Aspiring franchisees should carefully evaluate the pros and cons of owning a Chick-fil-A franchise to determine if it aligns with their financial goals, lifestyle, and long-term business ambitions. With careful consideration, you can decide whether this iconic brand is the right fit for your entrepreneurial journey.

To learn more about owning a Chick-fil-A franchise, check out these related articles:

The Pros and Cons of Owning a Chick-fil-A Franchise