Chick-fil-A Franchise Fee and Cost Only $10,000? (2023)
This article is based on a video originally recorded on Vetted Biz Youtube Channel
The Chick-fil-A Franchise develops quick-service restaurants throughout the United States. The Chick-Fil-A menu specializes in a boneless breast of chicken sandwiches. Chick-Fil-A is also famous for its waffle fries and a wide variety of sauces. Franchised operators (independent contractors) run most of these restaurants. In this article we will talk about Chick-Fil-A Franchise Fee and all you need to know.
This article provides insight into Chick-fil-A’s franchised units. There are currently 2,704 U.S. Chick-fil-A restaurants, of which less than 80 are managed by Chick-Fil-A or its direct affiliates. Franchisees or licenses largely operate Chick-Fil-A restaurants. Generally, licensees operate in airports and non-traditional locations.
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Want to Buy Chick Fil A Stock? Sorry They Are Privately Owned
Chick-Fil-A is a Georgia corporation formed on March 23, 1964, and uses the trade name Chick fil A. S. Truett Cathy, the Founder, opened his first restaurant, the Dwarf Grill, in Hapeville, Georgia, in April 1946. Now, Dan Cathy has been the Chief Executive Officer since November 2013 and was the Assistant Secretary since June 2001. At this time Chick-Fil-A stock is privately owned and they have no plans to offer shares to the public. Many restaurant brands like Mcdonald's, Chipotle, and Starbucks allow their consumers to own stock in their company.
Chick-fil-A Franchise Fee Is Only $10,000
Chick-Fil-A Franchise Fee charges $10,000 for the initial fee and $5,000 for any additional franchise unit. Of the initial fee of $10,000, $5,000 is considered working capital and can be received back at the end of the term under the franchisor’s discretion. It is rare for a Chick-Fil-A franchise owner to operate more than two locations.
Chick-Fil-A Franchise Fee: Cost for 2023
The total investment necessary to begin the operation of a franchised Chick-fil-A restaurant business is from $219,055 to $2,912,697. However, the Chick Fil A franchise is only responsible for $10,000 of the Chick-Fil-A Franchise Fee. Chick Fil A corporation will invest up to $2 million or more to build the restaurant! This helps overcome traditional financial barriers of entry for potential franchisees, but opening a Chick-Fil-A is very competitive.
Chick Fil A Franchise Cost Breakdown
|Initial Franchise Fee||$10,000|
|Opening Inventory||$19,000 - $93,050|
|First Month's Rent of Equipment||$750 - $5,000|
|First Month's Lease / Sublease of Premises||$2,500 - $85,800|
|First Month's Insurance Expense||$310 - $11,510|
|Additional Funds||$186,495 - $2,707,337|
Disclaimer: These costs, besides the initial franchise fee, are paid by being deducted from Gross receipts after the restaurant opens. Chick-Fil-A once the loan is paid off will allow you to become a full owner and reduce its stake to its royalty and marketing fees. They will also allow you to then open additional franchises. The costs have variability depending on the location and existing status of retail space. Chick-fil-A’s estimate is based on its own experience in establishing similar operations.
Chick-Fil-A Franchise Opening and Operating Requirements
It is important to remember how competitive it is to open a franchise. In fact, it is easier to be accepted to Harvard than it is to open a Chick-Fil-A! Only about 0.4% of applicants are actually approved to open a Chick-Fil-A. Meanwhile, 5% of applicants to Harvard are accepted.
Additionally, if you are considering opening a location, you are required to work 60-70 hours per week operating your restaurant. While Chick-Fil-A helps provide financial resources when first getting started it is important to remember the time commitment expected by owners once their location opens.
When applying you should expect a serious vetting process like any other franchise. You should expect interviews, credit checks, and speaking with other operators. If you become an owner you will be constantly evaluated. The company will award you the right to open more locations if you are performing well. It takes between 18-24 months to open a standard Chick-Fil-A franchise. During this time many new owners shadow veteran stores to be able to hit the ground running once their Chick-Fil-A opens.
Requirement: Close on Sundays
Additionally, it is important to know that all Chick-Fil-A locations are required to be closed on Sundays. The Cathy family is christian and believes that all employees in addition to executives should have the right to rest and worship on Sunday if they so choose.
Chick-Fil-A is also famous for providing among the highest wages for its employees. Chick-Fil-A typically pays about 11% above the national average for fast-casual restaurants. This on top of being closed on one weekend day allows the brand to be able to attract a large number of applicants to work at its restaurants. This is a major benefit to franchisees as many other chains since the start of the Covid-19 pandemic have struggled to have a large enough team.
Chick-Fil-A Menu and Facts
Many people do not know that Chick-fil-A has a breakfast menu. The breakfast menu offers a variety of chicken and egg-themed sandwiches. However, the most famous part of the business are the chick fil sauces. These sauces can now even be purchased in grocery stores across the country. The customer service at Chick-fil-A is also a staple to the brand with employees famously saying “my pleasure.”
Chick Fil A nutrition information is listed on the menu with Chick Fil A calories. Additionally, there are healthy alternatives to fried chicken sandwiches including chick-fil-a salads! You can expect to pay anywhere from $4.99 for a sandwich to $12.00 for a meal.
For those with a sweet tooth, there are a wide variety of milkshakes and cookies for dessert. Chick Fil A catering is also super popular! People love the nugget trays for holidays and events. There is also Chick-Fil-A delivery, which is outsourced through doordash. Be sure to download the Chick-Fil-A app to earn rewards points. People often ask when Chick-Fil-A is open, remember the company is closed every Sunday for religious reasons.
Facts About Chick-Fil-A Franchise
Here are some other facts about the Chick-Fil-A franchise:
1- Chick-fil-A's signature menu item, the Chick-fil-A Chicken Sandwich, was created by the company's founder, S. Truett Cathy, in the 1960s.
2- The name "Chick-fil-A" is a play on the words "chicken filet," as the sandwich was originally made with a boneless chicken breast filet.
3- Chick-fil-A is the largest chicken restaurant chain in the United States, and it is also one of the fastest-growing fast food chains in the country.
4- Chick-fil-A is known for its exceptional customer service, and its employees are trained to use phrases like "my pleasure" instead of "you're welcome" to enhance the customer experience.
5- Chick-fil-A's cow mascot is named "Eat Mor Chikin," and it was created in 1995. The cows in the "Eat Mor Chikin" campaign were created to encourage customers to eat more chicken instead of beef.
6- Chick-fil-A has a unique "Chick-fil-A Sauce" which is a combination of honey mustard, barbecue sauce, and ranch dressing. It is a popular choice for dipping the chicken nuggets and sandwiches.
7- Chick-fil-A also has a cow appreciation day every year, on which customers dressed like cows receive free chicken sandwiches.
8- Chick-fil-A is also known for its charitable giving, through its WinShape Foundation, which focuses on education, marriage, and foster care programs.
How Does Chick-Fil-A Differentiate Itself from the Competition?
Chick-fil-A differentiates itself from its competitors in a number of ways. One of the most notable ways is through its exceptional customer service. Chick-fil-A is known for its friendly and attentive customer service. Employees are trained to use phrases like "my pleasure" instead of "you're welcome" to enhance the customer experience. The company also places a strong emphasis on cleanliness and maintaining a welcoming atmosphere in its restaurants.
Another key way that Chick-fil-A sets itself apart is through the quality of its food. The company is known for its high-quality chicken sandwiches and nuggets. The company uses high-quality ingredients and prepares its food using a proprietary pressure cooking process that results in juicy, tender chicken. The unique taste of the chicken sandwiches and nuggets is one of the reasons for the chain's popularity.
Marketing That Differentiates
Chick-fil-A's branding and marketing campaigns are also different from its competitors. The company uses a catchy "Eat Mor Chikin" slogan and cows as their mascots to promote the brand. The company's advertising campaigns featuring the fictional character named "Ann" who is a representation of the restaurants spicy fried chicken is well known among customers.
Chick-fil-A also offers unique menu items, which sets it apart from other fast food chains that primarily offer burgers and fries. The company's menu is not limited to just chicken sandwiches and nuggets; they also offer different sandwiches, salads, sides, and desserts that are unique to the chain.
Finally, Chick-fil-A is known for its strong community engagement, frequently hosting events and supporting local organizations in the communities where its restaurants are located. This sets it apart from other fast food chains that have a more transactional relationship with their customers.
Chick-Fil-A Franchise Fee and Costs (Ongoing):
The corporation pays for the land, construction, and equipment of the restaurant. Therefore, it rents or subleases the property to the franchisee for 15% of sales plus 50% of pretax profit remaining (Paid Monthly).
Also, it leases all software which is $9,500 – $20,000 per year for high-speed internet access. If a franchisee is late on making their loan payment they will incur a 1.25% interest fee. Franchisees should also expect to pay a small commission anytime a customer uses the Chick-Fil-A rewards app.
Local Advertising Payment
Chick-fil-A has not charged an advertising fee since 1989 but has the right to charge up to 3.25%. Or if agreed upon by certain local and regional areas an advertising fee may be enforced. That said, Chic-Fil-A spent $156 million on advertising up from $130.9 million in 2020. This is of great benefit to franchise owners considering the long history of them not being charged for advertising.
Chick Fil A Licensed Restaurant Sales Figures:
AS OF DECEMBER 31, 2021, THERE WERE APPROXIMATELY 2,704 DOMESTIC CHICK FIL A RESTAURANTS, 393 LICENSE UNITS, 2,311 FRANCHISED UNITS, and 76 were being operated by Chick-Fil-A or its affiliates.
2,038 of the 2,311 domestic Chick-fil-A franchises were open at least one calendar year, while 15 of these were satellite units.
The remaining non-satellite units are used for financial performance for the 2021 year.
There are 187 mall units, and their sales figures are indicated below:
Median Annual sales volume: $2,541,021
Average Annual sales volume: $3,224,721
Highest Annual Sales Volume: $14,665,022
Lowest Annual Sales Volume: $949,465
*34% of mall units had an annual sales volume of at least $3,200,000
While the mall locations have performed very well over the last couple of years it is important to note that Chick-Fil-A has closed approximately 50 mall locations since 2018. This means that not all malls perform well. In an economy focused on staying at home e-commerce has caused many malls to close and lose many tenants. Chick-Fil-A as a result is strategic about which malls they grant franchises to open in. If you are to open a franchise in a mall Chick-Fil-A will help find the best strategic storefront in the mall. Chick-Fil-A prides itself on assisting franchisees to get off the ground on all fronts from financing, to having the proper mentors in place across all the different types of locations.
Chick-Fil-A Franchise Fee: Franchisor Income Statement
Consolidated Statements of Comprehensive Earnings - Years Ended December 31, 2019, 2018 and 2017
|Revenue and income||3,790,311,709||4,321,122,548||5,764,153,899|
|Income from restaurants|
|Base operating and business service fess||$1,687,768,627||$1,916,655,067||$2,342,515,371|
|Additional operating service fess||754,102,047||867,326,016||1,193,220,121|
|Other sales, including sales from company-operated restaurants||294,905,377||397,365,698||874,091,667|
|Total revenue and income||3,790,886,792||4,321,122,548||5,764,153,899|
|Costs and expenses|
|Cost of sales, including cost of sales from company-operated restaurants||201,865,424||285,129,981||657,296,489|
|Selling, general, and administrative expenses||2,251,276,652||2,312,826,054||2,736,729,381|
|Depreciation and amortization||395,047,922||517,009,027||585,642,930|
|Total costs and expenses||2,896,341,938||3,171,795,898||4,067,630,507|
|Earnings before contributions, scholarships, and income taxes||894,544,854||1,149,326,650||1,696,523,392|
|Contributions and scholarships||38,509,243||39,361,003||64,393,513|
|Earnings before income taxes||856,035,611||1,109,965,647||1,632,129,879|
|Other comprehensive (loss) earnings, before tax|
|Postretirement medical plan||(20,956,170)||(29,791,901)||(19,632,610)|
|Foreign currency translation||(234,204)||556,701||(12,534)|
|Derivate financial instruments||(5,780,760)||(6,314,104)||6,322,420|
|Other comprehensive (loss) earnings, before income taxes||(29,891,480)||(168,890,068)||(53,447,881)|
|Other comprehensive (loss) earning, before income taxes||(22,928,480)||16,367,470||(17,274,308)|
Chick-Fil-A Franchise Fee: Income Statement Key Insights
Chick fil A is a very profitable business for the franchisor with retained earnings of $1.25 Billion in 2021. Compared to $670 million in 2019, Chick Fil A saw an increase of 47% from 2020 to 2021. This highlights that Chick-Fil-A is rapidly growing and that the Chicken themed fast-casual restaurant is being widely accepted by the public. Revenue over the past five years has increased 56% at non mall locations meaning popularity continues to increase.
Chick-fil-A has been involved in a number of controversies over the years. Some of the most notable controversies include:
1- LGBT rights: Chick-fil-A has been criticized for its support of organizations that oppose same-sex marriage and LGBT rights. The company's CEO, Dan Cathy, publicly stated his opposition to same-sex marriage in 2012, leading to protests and calls for boycotts of the chain.
2- Political donations: Chick-fil-A has also been criticized for its political donations, which have gone to organizations that have been criticized for their stance on LGBT rights.
3- Discrimination accusations: Chick-fil-A has also been accused of discrimination in the past. In 2011, an African American employee filed a lawsuit against the company, claiming that he was subjected to racial discrimination and retaliation.
4- Animal welfare: Chick-fil-A has been criticized by animal welfare activists for its treatment of chickens and use of antibiotics in its chicken supply.
5- Anti-Unionization stance: Chick-fil-A has been criticized for its anti-unionization stance and for allegedly firing employees who try to organize unions.
It's worth noting that Chick-fil-A has made efforts to address these controversies in recent years. The company has announced that it will stop donating to organizations that have been criticized for their stance on LGBT rights and has also announced plans to phase out the use of antibiotics in its chicken supply. Chick-fil-A also publicly stated that they respect the rights of employees to unionize.
Chick-Fil-A competes in the fast-food market against big brand companies such as McDonald‘s, Burger King, Wendy’s, and KFC. Chick Fil A franchisees (“Operators”) also compete against other nearby Chick-fil-A locations. However, only 9 chain restaurants reported higher unit sales than Chic-Fil-A in 2021. The Unit Volume has grown by nearly 33% over the past five years despite the number of units dropping by 5%.
Kentucky Fried Chicken
Kentucky Fried Chicken (KFC) is a fast food restaurant chain that specializes in fried chicken. Harland Sanders founded it in Corbin, Kentucky in 1930. Sanders began selling fried chicken from a roadside restaurant, which he operated out of a gas station. He developed a secret blend of 11 herbs and spices, which he used to season his chicken, and it quickly became popular with customers.
In 1952, Sanders began franchising the concept, and the first KFC franchise opened in Salt Lake City, Utah. The chain continued to expand rapidly, and by the end of the decade, there were over 600 KFC locations in the United States. KFC went public in 1966 and was listed on the New York Stock Exchange. In the 1970s, KFC expanded internationally, opening its first location in Canada and in the UK. Today, KFC has over 22,000 locations in more than 145 countries and territories around the world.
KFC is known for its "finger-lickin' good" fried chicken, which is made using Sanders' original recipe of 11 herbs and spices. The chain also offers a variety of sides, such as mashed potatoes, coleslaw, and biscuits, as well as sandwiches and wraps. KFC also continue to innovate and add new menu items, such as grilled chicken and salads, to cater to the changing taste of customers.
KFC is one of the most popular fast food chains in the world, and it is known for its iconic Colonel Sanders logo and its distinctive red-and-white striped design. The company has also been a part of the Yum! Brands, Inc. which also owns other fast food chains such as Taco Bell, Pizza Hut and Wing Street.
KFC has been around since 1952 and is one of the largest global brands. In fact, KFC is one of the top 20 most popular franchises! You can expect to pay anywhere from $1,442,550 – $2,771,550 to open a KFC. KFC also charges a much higher initial franchise fee of $45,000.
Since KFC has been in business for so long it has been able to expand to over 20,000 locations across 145 countries. Colonel Sanders may just be the most recognizable face in the world creating a high demand for franchisees to open locations.
Although you must have a high net worth of 1,500,000 with liquid assets of at least $750,000. KFC charges between 4-5% royalty fee, and 5% for marketing. KFC is one of the most expensive franchises to open within the food and beverage industry, but has the potential to be highly profitable, just like Chick-Fil-A. The average franchised-owned franchise earns at least $1,159,852 in revenue annually. Would you believe that over 43% of KFC locations perform better than this?
KFC is famous for its traditional fried chicken menu. It offers a variety of different chicken bucket sizes for family dinners. Although the brand has adapted to compete with Chick-Fil-A and has begun to sell chicken sandwiches. The brand even offers 7 different sauces and cleverly started marketing its most famous sauce as KFC sauce.
Popeyes Louisiana Kitchen is a fast food restaurant chain that specializes in Southern-style fried chicken. Ai Copeland founded it in New Orleans, Louisiana in 1972 by Al Copeland. The first Popeyes restaurant's name was "Chicken on the Run," and it was in the New Orleans suburb of Arabi. The restaurant served traditional Southern-style fried chicken, but it struggled to compete with the many other fried chicken restaurants in the area.
In 1976, Copeland changed the name of the restaurant to Popeyes, after the character "Popeye Doyle" from the movie "The French Connection." He also revamped the menu to focus on spicier, Cajun-style fried chicken. These changes helped to set Popeyes apart from its competitors and the restaurant began to gain popularity.
First Steps on the Franchise World
Popeyes began franchising in 1976, and by 1983, there were over 500 Popeyes locations in the United States. The chain continued to expand rapidly, and by the 1990s, it had become one of the largest fried chicken chains in the country.
Today, Popeyes has over 3,000 locations in more than 30 countries around the world. The chain use "Louisiana Fast" style of cooking, which combines traditional Southern-style recipes with bold Cajun flavors. Along with its famous fried chicken, Popeyes also offers a variety of sides, such as red beans and rice, Cajun fries, and biscuits. The restaurant also offers different sandwiches, seafood and sides that are unique to the chain.
Popeyes is also known for its advertising campaigns featuring the fictional character named "Ann" who is a representation of the restaurants spicy fried chicken. Popeyes has also been a part of the Restaurant Brands International Inc. which also owns other fast food chains such as Burger King and Tim Hortons.
Popeyes has recently made a big push in the Chicken Sandwich market to directly compete against Chick-Fil-A. The brand has a long history of providing similar meals to KFC as it opened its first location in 1972. The cost to open a franchise ranges between $423,800 and $3,545,800. It charges a standard royalty fee of 5% of gross sales, and an above-average marketing fee of 4% of gross sales.
Peak of Hype
Popeyes, has a strict vetting process that an individual must have a net worth of at least $1 million, and liquid capital of $500,000. While Popeyes is expensive, Chick-Fil-A’s ongoing fees and costs are much higher.
Back in 2018, Popeyes led a marketing campaign that hyped up its soon-to-be-released chicken sandwich. The company was blown away as it could not provide them at a fast enough rate to franchisees. On its launch day people were waiting for hours hoping to get their hands on one. This success continued as in the first 7 months of 2019 after it launched the company had sold over 2.3 billion chicken sandwiches bringing in over $10 billion in sales. Popeyes has been growing rapidly and has more than doubled in size over the past 15 years.
Popeyes, KFC, and other famous competitors have been around for some time. It is also important to recognize new threats within the industry. Chicken-themed restaurants are opening across the country to try and gain market share against Chick-Fil-A.
Chicken Guy (the Guy Fieri Chicken Restaurant)
Chicken Guy! is a fast food restaurant chain that specializes in fried chicken tenders and sandwiches. Guy Fieri founded the restaurant in 2018. The first Chicken Guy! location opened at Disney Springs in Orlando, Florida.
The concept of Chicken Guy! is to offer high-quality, fresh, and delicious chicken tenders and sandwiches. The chicken tenders are made with all-natural, antibiotic-free chicken that is marinated in a blend of spices, then breaded and fried to perfection. The sandwiches are made with the same high-quality chicken and topped with unique and flavorful sauces and toppings.
Chicken Guy! also offers a variety of sides, including mac and cheese, coleslaw, and fries. Additionally, the restaurant features a selection of signature sauces and dry rubs that customers can use to customize their meals.
Since the opening of the first location, Chicken Guy! has expanded to multiple locations across the United States, including in Las Vegas, Nevada, and Myrtle Beach, South Carolina. The chain also has plans to expand further in the future.
As a restaurateur, Guy Fieri is well known for his appearances on the Food Network, particularly on the hit show "Diners, Drive-Ins and Dives". The chef is known for his energetic and outgoing personality, and his passion for great food and good times. The same passion and dedication can be seen in Chicken Guy! as the restaurant aims to provide a fun and delicious dining experience to its customers. On top of the celebrity marketing power, Guy Fieri brings, Robert Earl serves as the company’s chairman.
Robert Earl is the Chief Executive of Earl Enterprises which has a number of major subsidiary companies. These include Planet Hollywood, Buca di Beppo, Bertucci’s, EOS, Brio Italian Grille, Bravo Italian Kitchen, TooJay’s, Seaside on the Pier, Café Hollywood, and Tequila Taqueria. A major executive committing to be the Chairman of Chicken Guy demonstrates that the company could expand rapidly. Additionally, Earl Enterprises offers an experienced team to help grow Chicken Guy at an accelerated rate.
Chicken Guy Menu:
The Chicken Guy Menu offers all-natural ingredients at an affordable price. Customers love that Chick-Fil-A offers a variety of sauces. Well, Chicken Guy has 22 different sauces! This includes a similar spicy mayo that competes against the world-famous Chick-Fil-A sauce. Chicken Guy has even opened a location in Disney Springs, which will grant it brand exposure. A typical sandwich ranges anywhere from $6.99 to $7.pp. Meanwhile, for a combo meal you can expect to pay between $11.49 to $12.49 making it on par with competitors' prices.
While Chick-Fil-A provides financing to help franchisees open their location, the ongoing fees can be extremely expensive. 15% of sales plus 50% of pretax profit remaining (Paid Monthly), can truly be overwhelming for many potential franchisees. Chicken Guy simply charges a 6% royalty fee, 4% Marketing fee, and a brand fund of 2% (capped at $30,000 annually). Additionally, since Chicken Guy is a young company it is not nearly as competitive to open a location. The expected cost of a Chicken Guy franchise is between $767,5000 and $1,482,500 while Chick-Fil-A can range anywhere from $219,055 to $2,912,697 (paid over time).
Dave’s Hot Chicken
On the other hand, is Dave’s Hot Chicken! This up-and-coming franchise brings a Nashville twist to the Chicken-Themed fast-casual sector! Dave’s Hot Chicken started as a parking lot stand in West Hollywood and has grown to over 60 locations. The company has even sold over 500 franchise agreements and is expecting to open 75 new locations within the next year alone. That’s a lot of Nashville-themed chicken!
NBA star Kris Humphries has even committed to open 10 locations himself giving the brand celebrity influence. This gives the brand major marketing privileges to be able to compete against Chick-Fil-A and rival chicken start up Chicken Guy.
Dave’s Hot Chicken comes in at the lower side of start-up costs ranging between $585,800 - $996,500. Dave’s Hot Chicken charges industry-standard fees of 5% Royalty and 2-3% marketing. When thinking about opening a Chick-Fil-A franchise it is important to evaluate the alternatives on the market, especially a younger franchise such as Dave’s Hot Chicken or Chicken Guy.
Dave’s Hot Chicken is famous for its simple combo meals. Customers are able to choose from multiple sliders, and tenders. They even allow you to customize your spice level from No Spice to the reaper, which has a disclaimer label.
Chick-Fil-A Franchise Fee: Conclusion
Chick-Fil-A offers the opportunity to be a part of a franchise business that people really desire. The company helps remove financial barriers to entry by providing up to $2 million in a loan. Additionally, once becoming an operator Chick-Fil-A rewards owners who master both the Chick-Fil-A sandwich as well as operating their location. It is important to have realistic expectations when applying for and operating a Chick-Fil-A franchise. Opening a Chick-Fil-A is one restaurant franchise that people really desires given the history of success and limited immediate start-up costs. While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in the Food and Beverage Industry.
Did this make you hungry? You are probably asking yourself where is the closest Chick Fil A?