Chick Fil A Franchise Fees: Why are so Cheap? | Franchise Coach (2024)

Chick-fil-A is one of the most popular chicken sandwich fast-food chains in the United States, and it’s no secret why. Their sandwiches are delicious, and their waffle fries are to die for. But there’s one aspect that often goes overlooked: Chick-fil-A franchise fees are incredibly cheap.

For example, while it costs millions of dollars to open a McDonald’s franchise, it only costs around $10,000 to open a Chick-fil-A. Granted, the company does have strict requirements for its franchisees.

So why are Chick-fil-A franchise costs so cheap? What’s the catch?

Read on to find out more.

1. The company has strict requirements for its franchise operators

Chick-fil-A requires its franchisees to be “hands-on“ operators. This implies that they are in charge of the day-to-day operations of their restaurants and do not have to pay royalties or marketing fees to the parent company.

As a result, chick-fil-a can keep its prices low while still passing those savings on to customers.

2. The cost of the opening is much lower than other fast-food restaurants

Few things in life are as satisfying as biting into a juicy chick-fil-a sandwich. The combination of tender chicken, savory spices, and crispy bread is simply unbeatable. Fortunately for fast-food lovers, chick-fil-a is one of the most affordable franchise opportunities to open.

Chick-fil-A’s initial franchise cost is around $10,000, which is significantly lower than the average fast-food franchise.

In addition, the corporation will pay for the land, construction, and equipment needed for a restaurant. They will then rent it to the franchisee for 15% of sales plus 50% of the pretax profit remaining every month. Consequently, startup costs are minimal in exchange for above-average monthly payments.

3. Chick-fil-A is a very popular chain with strong customer base

Chick-fil-A has long been a popular fast-food chain, thanks to its tasty food and affordable prices. One reason why the chain can keep its prices low is due to its strong customer base.

Chick-fil-A has developed a devoted following of consumers who return again and again, providing the company with a reliable stream of income. As it generates significant revenue per year, this enables Chick-fil-A to invest in high-quality ingredients and exceptional customer service, which encourages customers to return.

Furthermore, Chick-fil-A’s emphasis on healthy eating alternatives has made it a favorite among families, who are constantly seeking inexpensive yet nutritious meals. As a consequence, they can maintain affordable prices while still pleasing their clients.

4. The restaurant chain only has a limited number of locations.

This makes it difficult for the company to expand rapidly, which limits its overhead costs – the reason why its franchise fees are low.

In 2023, the United States will be home to a total of 2,704 Chick-fil-A restaurants, with fewer than 80 of them being overseen by Chick-fil-A or its direct affiliates.

So why does Chick-fil-A have such a limited number of restaurants? There are a few reasons.

• Chick-fil-A is a privately-owned company. That means that it doesn't have to answer to shareholders and can make decisions based on what it believes is best for the business.
• They only licenses its restaurant locations to operators who are willing to sign a pledge to operate the restaurant according to Chick-fil-A's standards. That means that a franchise owner has less flexibility when it comes to things like menu offerings and hours of operation.
• A Chick-fil-A operator must also agree to open their restaurants in select markets where the chain believes there is enough demand for its products.

Furthermore, franchisees are not permitted to sell their locations or hand them down to the next generation. They can not open multiple locations either.

5. Chick-fil-A is a restaurant chain with a limited menu

Chick-fil-A is a simple fast-food chain with a limited menu. This allows the company to keep its costs low and pass on those savings to customers.

The chain’s menu consists of chick-fil-a sandwiches, salads, wraps, and sides. While this may seem like a limited selection, it’s actually perfect for customers who are looking for a quick and easy meal.

The simplicity of the menu also allows franchisees to focus on providing excellent customer service, which is one of the company’s core values.

FRANCHISE FEE

The new franchise operator of Chick-fil-A pays 10,000 for the initial fee to the Franchisor. This low initial investment fee of Chick-fil-A covers the establishment of a franchise connection and some initial services.

When a franchise agreement is executed, the franchisee pays this fee in full. The Chick-fil-A franchise cost mentioned above is constant and thus should be prepared even before the application process.

START-UP INVENTORY

This is the total dollar worth of a company’s current inventory in stock at the start of an accounting period. It includes both the cost of the raw materials used to make the sandwiches as well as the cost of the packaging and other necessary supplies. Initial inventory can be sold to generate income.

INITIAL EQUIPMENT RENT

The rental fee will be based on the fair market rental value as determined by Chick-fil-A in its sole and exclusive business judgment, excluding any applicable sales, use, or property taxes depending on the type of location. The leased goods will be classified according to unit type.

REAL-ESTATE FIRST MONTH’S RENT

They allow leases and sublease traditional restaurant premises to their Operators. The business terms for these leases and subleases vary depending on the location of the Chick-fil-A Restaurant.

PREMISE INSURANCE

The Chick-fil-A operator shall comply with all applicable insurance and indemnity provisions, including any minimum insurance requirement.

SUPPLEMENTAL FUNDS

Their operators should always have ready-to-use supplemental funds for further use. Allocations should be made in order to prepare for any unforeseen occurrences that might happen in that local outlet.

That’s not all! The franchisor also requires that the operator have a minimum net worth. Adequate capital is essential to ensure that you as a franchisee have the financial capability to run the business.

Understanding this information is required to balance whether you’ll venture into this business or not. The complexity of the application process, the total investment amount, and other operating factors should be considered.

As you might expect, due to Chick-fil-A’s low startup costs, the company gets a lot of interest from potential franchise owners. However, because Chick-fil-A controls far more about your business than a typical franchise would, relatively few people actually get the chance to own a Chick-fil-A franchise. If you are interested in tossing your hat in the ring, here’s how the process of opening a new franchise will work:

1. Fill out the application

First you’ll complete an application, similar to any other job. However, you’ll also be required to submit information about your personal finances and your preferred geographical location.

Chick-fil-A picks and prepares the store location for you, so you’ll want to make sure you’re not signing up to run a restaurant in Iowa if you live in California.

2. Prepare for the interviews

If you happen to live in an area where Chick-fil-A wants to open a new restaurant and your application shows you’re a hard worker, you may be invited to the next stage of interviews.

These might happen in person or virtually, and it gives Chick-fil-A a chance to make sure that you’re the right person to run a business for them.

3. Attend a multi-week training

If you’re selected as a franchisee, you’ll need to attend a blended virtual and in-person training that generally lasts three to four weeks. This training doesn’t cost you anything but you’re not paid for it, either. This training covers topics like food safety, restaurant security, how to use the equipment you’ll be renting from Chick-fil-A, employment law, and more.

4. Prepare for your grand opening.

Chick-fil-A will handle all of the real estate and property-related issues, including purchasing a restaurant and outfitting it with everything you need to step right in and get started, including a billing system to charge you rent for everything.

However, it’ll be up to you to hire a team, purchase all of your starting inventory from your assigned vendor, and buy insurance.

Chick-fil-A franchise fees are low because it wants dedicated operators to adhere to its brand guidelines. They offer franchise opportunities for individuals interested in joining their successful fast-food chain known for its chicken-focused menu, exceptional customer service, and significant revenue per year.

To become a company franchisee, you are required to have a certain amount of liquid assets and a minimum net worth. Because of this, the initial franchise fee is lower in comparison to other quick service franchises.

However, this does not imply that running a Chick-fil-A restaurant is a cheap option. Even though franchisees invest money and time in their businesses, they must still make a significant initial investment in terms of time and money.

However, if you are prepared to work hard, Chick-fil-A may be the right franchise for you.