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Chick Fil A Franchise Fee & Cost Only $10k in 2022?

Written by: Patrick Findaro
Last Updated: December 7, 2021
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What is Chick Fil A franchise?

The Chick-fil-A principal business is the development of a system of retail quick-service restaurants specializing in a boneless breast of chicken sandwich. Most of these restaurants are operated by franchised operators who are independent contractors.

It 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. Dan Cathy now is the Chief Executive Officer since November 2013 and was the Assistant Secretary since June 2001.

This article provides insight about Chick-fil-A’s franchised units. There are currently 2,493 domestic Chick-fil-A restaurants, of these 2,085 are franchised operated. While the remainder is 382 licensed units and 26 operated by the company.

Chick-Fil-A Franchise Fee is $10,000

Chick-fil-A 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.

Chick-Fil-A Franchise Cost

The total investment necessary to begin operation of a franchised Chick-fil-A Restaurant business is from $582,360 to $2,025,400. However, the Chick-Fil-A franchisee is only responsible for $10,000. Chick-Fil-A corporate will invest up to $2 million or more to build the restaurant!

Chick Fil A Franchise Cost Breakdown

Initial Franchise Fee$10,000
Opening Inventory$17,830 – $57,860
First Month’s Rent of Equipment$750 – $5,000
First Month’s Lease / Sublease of Premises$1,900 – $67,200
First Month’s Insurance Expense$255 – $8,950
Additional Funds$552,125 – $1,876,390

Disclaimer: These costs, besides the initial franchise fee, are paid by being deducted from Gross receipts after restaurant opens. The costs have variability depending on location and existing status of retail space. Chick-fil-A’s estimate is based on its own experience in establishing similar operations.

 Ongoing Franchise Costs and Fees:

Since the corporation pays for the land, construction and equipment of the restaurant, it rents or subleases the property to the franchisee for 15% sales plus 50% of pretax profit remaining (Paid Monthly).

 It leases all software which is $9,500 – $20,000 per year for high-speed internet access.

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.

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Chick-Fil-A License Sales Figures:

As of December 31, 2019, there were approximately 2,493 domestic Chick Fil A restaurants, 382 license units, 26 company owned units, and 2,085 franchised units, and 382 license units.  1,877 of the 2,085 domestic Chick-fil-A franchises were open at-least one calendar year, while 14 of these were satellite units. The remaining 1,863 non-satellite units are used for financial performance for the 2019 year. There are 230 mall units, and their sales figures are indicated below: Median Annual sales volume: $2,127,168 Average Annual sales volume: $2,569,472* Highest Annual Sales Volume: $10,149,525 Lowest Annual Sales Volume: $182,602  *34% of mall units had annual sales volume greater than $2,500,000*   There are 1,633 free standing or drive through only units, and their sales figures are indicated below:  Median annual sales volume: $6,417,073 Average annual sales volume: $6,565,233 Highest Annual Sales: $12,457,069 Lowest Annual Sales: $380,280 *34% had annual sales volume greater than $6,950,000*  

Chick-Fil-A Franchisor Income Statement

Consolidated Statements of Comprehensive Earnings – Years Ended December 31,2019, 2018 and 2017

2019 2018 2017
Revenue and income
Income from restaurants
Base operating and business service fess $1,687,768,627 $1,444,979,758 $1,235,210,544
Additional operating service fess 754,102,047 641,162,823 573,638,081
Rental income 897,441,035 637,440,008 549,780,435
3,339,311,709 2,723,582,589 2,358,629,060
Other sales, including sales from company-operated restaurants 294,905,377 218,216,503 202,750,120
Other income 156,669,706 60,914,230 79,521,138
Total revenue and income 3,790,886,792 3,002,713,322 2,640,900,318
Costs and expenses
Cost of sales, including cost of sales from company-operated restaurants 201,865,424 148,677,870 165,897,271
Selling, general, and administrative expenses 2,251,276,652 1,916,816,654 1,623,797,051
Depreciation and amortization 395,047,922 324,512,479 279,699,876
Interest 48,152,030 12,391,737 3,823,627
Total costs and expenses 2,896,341,938 2,402,398,740 2,043,217,825
Earnings before contributions, scholarships, and income taxes 894,544,854 600,314,582 597,682,643
Contributions and scholarships 38,509,243 41,452,615 55,120,520
Earnings before income taxes 856,035,611 558,861,967 542,561,973
Income taxes 185,915,210 124,358,502 99,027,078
Net earnings 670,120,401 434,503,465 443,534,895
Other comprehensive (loss) earnings, before tax
Pension plans (2,920,346) 8,408,382 (15,423,961)
Postretirement medical plan (20,956,170) 15,449,244 (7,287,440)
Foreign currency translation (234,204) 350,474 (17,907)
Derivate financial instruments (5,780,760) (2,695,630)
Other comprehensive (loss) earnings, before income taxes (29,891,480) 21,512,470 (22,729,308)
Income taxes 6,963,000 (5,145,000) 5,455,000
Other comprehensive (loss) earning, before income taxes (22,928,480) 16,367,470 (17,274,308)
Comprehensive earnings $647,191,921 $450,870,935 $426,260,587
 

Income Statement Key Insights:

  Chick-fil-A is very profitable business for the franchisor with retained earnings of $647 million in 2019. Compared to $450 million in 2018, Chick-Fil-A saw an increase of 30% from 2018 to 2019. This is a good indication of high growth as a company overall.

Competition:

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 and

Conclusion:

Chick-Fil-A offers people the opportunity to be a part of a business that has high gross annual sales and a reliable franchisor that mastered the chicken sandwich and has been doing so since 1964. While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in Food and Beverage Industry. Analysis Provided by: Brooks Gammill Vetted Biz Intern

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Download our guide! See how Chick-Fil-A compares to its franchise peers and explore alternatives in healthy fast food.



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