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Chick Fil A Franchise Fee & Cost Is Just $10K (2022)

Written by: Patrick Findaro
Last Updated: April 21, 2022
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This article is based on a video originally recorded on Vetted Biz Youtube Channel

Contents

What is a Chick Fil A franchise?

The Chick fil A Franchise 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. Now, Dan Cathy is the Chief Executive Officer since November 2013 and was the Assistant Secretary since June 2001.

This article provides insight into 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.

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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 the operation of a franchised Chick fil A Restaurant business is from $582,360 to $2,025,400. However, the Chick Fil A franchise 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 the 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:

chick fil a logo

The corporation pays for the land, construction, and equipment of the restaurant. Therefore, it rents or subleases the property to the franchisee for 15% 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.

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.

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 freestanding 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

 201920182017
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 fess754,102,047641,162,823573,638,081
Rental income897,441,035637,440,008549,780,435
 3,339,311,7092,723,582,5892,358,629,060
Other sales, including sales from company-operated restaurants294,905,377218,216,503202,750,120
Other income156,669,70660,914,23079,521,138
Total revenue and income3,790,886,7923,002,713,3222,640,900,318
    
Costs and expenses   
Cost of sales, including cost of sales from company-operated restaurants201,865,424148,677,870165,897,271
Selling, general, and administrative expenses2,251,276,6521,916,816,6541,623,797,051
Depreciation and amortization395,047,922324,512,479279,699,876
Interest48,152,03012,391,7373,823,627
Total costs and expenses2,896,341,9382,402,398,7402,043,217,825
Earnings before contributions, scholarships, and income taxes894,544,854600,314,582597,682,643
Contributions and scholarships38,509,24341,452,61555,120,520
Earnings before income taxes856,035,611558,861,967542,561,973
Income taxes185,915,210124,358,50299,027,078
Net earnings670,120,401434,503,465443,534,895
    
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 taxes6,963,000(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


 Chick fil A is a 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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