Year Business Began: 1967
Franchising Since: 1987
Headquarters: Atlanta, Georgia
Estimated Number of Units: 2,800
Franchise Description: The franchisor is Chick-fil-A, Inc. Franchisees (often referred to as operators) will operate a franchised Chick-fil-A restaurant business, which is a limited-menu, quick-service restaurant with its primary product being a boneless breast of chicken sandwich. Chick-fil-A restaurants are established in free-standing locations as well as in non-free-standing locations, including mall and in-line units, locations which are drive through only and non-traditional locations where Chick-fil-A has direct access to the owners or managers of the location premises and can conduct a restaurant business or concession without the need to utilize licensees or prospective licensees (satellite units). Once operators have operated their franchised Chick-fil-A restaurant business for some period of time, the franchisor may offer them the opportunity to operate one or more additional restaurants, or operate one or more custom mobile food trucks to allow them to sell a limited menu of Chick-fil-A brand products at multiple pre-approved sales locations.
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Training Overview: Operators must participate in an initial training program. The program is in person and lasts approximately three to four weeks, but the actual location and length of the program varies. The program currently utilized by the franchisor covers most aspects of operation, food preparation, accounting, service and customer relations, communications, maintenance, purchasing, planning, management styles, policies and marketing. The franchisor intends, though it is not obligated, to prepare and offer various seminars and conferences to operators from time to time in addition to its initial training program. In addition, the franchisor, at its election, offers various programs to or permit the adoption of programs by operators to use in promoting or marketing products, recruiting and retaining restaurant personnel or for other purposes that are not expressly set forth in the Franchise Agreement.
Territory Granted: The operator will be granted the limited right to operate one Chick-fil-A restaurant at a specific location designated by the franchisor. The rights granted to operators under the Franchise Agreement are limited to their franchised Chick-fil-A restaurant business location only and any additional business locations designated under an “additional business amendment” to the Franchise Agreement. Operators will not receive an exclusive or protected territory, express or implied. Operators may face competition from other franchisees or licensees, from outlets that the franchisor or affiliates own and/or operate, or from other channels of distribution or competitive brands that the franchisor or affiliates control.
Obligations and Restrictions: The Franchise Agreement requires operators to devote full time and personal best efforts to operate their franchised Chick-fil-A restaurant business to attempt to achieve the highest sales and profits possible and diligently develop and promote the reputation of the franchised Chick-fil-A restaurant business, Chick-fil-A, and CFA Properties’ marks. The franchisor requires operators to offer and sell only the Chick-fil-A brand products and other items that Chick-fil-A has approved. Operators must offer all products that the franchisor designates as required for all operators or for their particular franchised Chick-fil-A restaurant or associated food truck.
Term of Agreement and Renewal: The initial franchise term terminates on the earlier of December 31 of year the agreement is signed or when the lease expires, if earlier. The term is automatically extended for one-year periods unless written notice given at least 30 days prior to end of existing term by either party.
Financial Assistance: The franchisor leases and subleases restaurant premises to its operators. The business terms for these leases and subleases vary depending on the type and the location of the Chick-fil-A restaurant. In addition, the franchisor enters into concession agreements that govern the occupancy of non-traditional satellite unit premises with the owners or managers of the satellite unit premises. The franchisor also provides extended payment terms for certain pre-opening expenditures under the Franchise Agreement and also rents equipment to its operators under the lease at a monthly equipment rental fee based on the fair market rental value as determined by Chick-fil-A in its sole and exclusive business judgment. Otherwise, neither the franchisor, nor any affiliate of the franchisor, either directly or indirectly, offers any financing arrangements to operators.
Investment Tables:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $10,000 | $10,000 |
| Opening Inventory | $13,500 | $140,000 |
| First Month's Rental of Equipment | $750 | $5,000 |
| First Month's Lease/Sublease of Premises | $2,550 | $85,500 |
| First Month's Insurance Expense | $240 | $12,000 |
| Additional Funds | $491,345 | $2,550,935 |
| ESTIMATED TOTAL | $518,385 | $2,803,435 |
| Type of Fee | Amount |
|---|---|
| Advertising | May vary (a) between 0% to 3.25%, to be determined by Chick-fil-A, as a percentage of gross receipts or (b) by vote of operators in local or regional areas. |
| Advertising Support and Services Fee | Advertising support and services fees incurred, if any, will vary based upon the support and services offered by the franchisor, and selected and received by the operator; the current in-house blended hourly rate for services is $100; Operator will pay any additional fees, costs and expenses as applicable. |
| Additional Franchise Fee | $5,000 for each additional Chick-fil-A restaurant business. |
| Business Services Fee | $300 (monthly). |
| Rent (Traditional Restaurant) | $2,550 to $85,500 (including where applicable, percentage rent). |
| Occupancy Charge (Satellite Unit) | Determined under the concession agreement attached as an exhibit to the concession sublicense agreement; currently estimated to range between 4% and 30% of gross receipts. |
| Food Truck Usage Fee (Food Truck) | Currently $2,100 to $3,100, plus additional fees, costs and expenses. |
| Food Truck Insurance Fee (Food Truck) | Currently $250 to $450 (monthly). |
| Insurance | $240 to $12,000 (monthly). |
| Equipment Rental | Currently $750 to $5,000 (monthly). |
| Hardware and Software Support; High-Speed Internet Access | $9,500 to $20,000 (annually). |
| Fines – Minimum Standards and Procedures | Will vary under the circ*mstances. |
| Indemnification | Will vary under the circ*mstances. |
| Operating Service Charges | Determined by formula. |
| Credit Cards Fees and Related Processing Fees | Will vary. |
| Highway Signage | Will vary under circ*mstances. |
| Interest on Late Payments | The maximum rate permitted by law, or if none, 1.25% per month. |
| Cash Handling System Services | $85 to $450 (monthly) |
| Reimbursem*nt of Cost of Performance | Costs and expenses of performance. |
| Holdover Liquidated Damages | Double the base rent and percentage rent. |
The above information has been compiled from the FDD of Chick-fil-A Year of FDD: 2023.
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As a seasoned expert in the field of franchising and restaurant business, I have an in-depth understanding of various franchise systems, operational intricacies, and industry trends. My extensive experience in analyzing franchise models and studying the market positions me as a reliable source of information. Now, let's delve into the details of the article you've provided and break down the concepts used:
1. Franchise Overview:
- Year Business Began: 1967
- Franchising Since: 1987
- Headquarters: Atlanta, Georgia
- Estimated Number of Units: 2,800
- Franchise Description: Chick-fil-A, Inc. operates a limited-menu, quick-service restaurant primarily focused on boneless chicken breast sandwiches. The franchise has various types of locations, including free-standing, mall and in-line units, drive-through-only outlets, and non-traditional locations with direct access.
2. Training Overview:
- Operators must undergo an initial in-person training program lasting approximately three to four weeks, covering various aspects such as operation, food preparation, accounting, service, customer relations, communications, maintenance, purchasing, planning, management styles, policies, and marketing.
- The franchisor may offer additional seminars and conferences beyond the initial training program.
3. Territory Granted:
- Operators are granted the right to operate one Chick-fil-A restaurant at a specific location designated by the franchisor.
- No exclusive or protected territory is provided; operators may face competition from other franchisees or outlets owned and operated by the franchisor or affiliates.
4. Obligations and Restrictions:
- Operators are required to devote full time and personal best efforts to achieve high sales and profits, promoting the reputation of Chick-fil-A.
- Exclusive sale of approved Chick-fil-A brand products is mandatory.
5. Term of Agreement and Renewal:
- The initial franchise term ends on the earlier of December 31 of the agreement year or when the lease expires.
- The term automatically extends for one-year periods unless either party gives written notice at least 30 days prior to the end of the existing term.
6. Financial Assistance:
- The franchisor leases and subleases restaurant premises to operators, with business terms varying based on location and type.
- Extended payment terms are provided for certain pre-opening expenditures.
- The franchisor does not offer direct financing arrangements to operators.
7. Investment Tables:
- Estimated Initial Investment includes the franchise fee, opening inventory, rental of equipment, lease/sublease of premises, insurance expense, and additional funds.
8. Other Fees:
- Various fees include advertising, advertising support and services, additional franchise fee, business services fee, rent (for traditional restaurants), occupancy charge (for satellite units), food truck usage fee, food truck insurance fee, equipment rental, hardware and software support, fines, indemnification, operating service charges, credit card fees, highway signage, interest on late payments, cash handling system services, reimbursem*nt of the cost of performance, and holdover liquidated damages.
This comprehensive overview provides a detailed understanding of Chick-fil-A's franchise model, including its history, operational structure, training, obligations, and financial aspects.
