Key points:
- Chick-fil-A’s $10,000 franchise fee is one of the lowest in franchising, but operators don’t own their business or build equity.
- Chick-fil-A locations generate some of the highest average sales in fast food, but corporate controls nearly all major business decisions.
- For those who want true ownership, asset building, or multi-unit growth, there are a number of other highly rated food franchises that offer more control and long-term wealth potential than Chick-fil-A’s operator model.
Chick-fil-A receives over 40,000 applicants each year. With a Chick-fil-A franchise fee of only $10,000; it initially seems like a great investment. But there are strict Chick-fil-A franchise requirements and a lengthy approval process, resulting in a less than one percent acceptance rate.
The franchise fee isn’t the only cost involved. So, how much does it cost to open a Chick-fil-A franchise? And is it worth it in the long run? Here are some reasons why the franchise is such a hot commodity, and why it may be a less than favorable choice.
How Much Does it Cost to Open a Chick-fil-A Franchise?
Chick-fil-A has been rated for having the best chicken sandwich by numerous food blogs year after year. Where does the company rank in terms of value of investment and what are the Chick-fil-A franchise requirements? This is where things get a little fuzzy.
The initial franchise fee for a Chick-fil-A is only $10,000. This is relatively low, as the industry average is upwards of $40,000 for franchises such as Taco Bell and McDonald’s. But when you compare Taco Bell or McDonalds to Chick-fil-A, you aren’t comparing apples to apples.
The Chick-fil-A franchise fee is so low because the company wants to maintain ownership of the franchise, and make all purchasing decisions (we will get into this more below). The initial investment is right within the industry average, and ranges from $427,000 to $2.3 million.
How Much Does a Chick-fil-A Make?
The typical Chick-fil-A restaurant produces average unit revenues of $9.4 million. This is astonishing, seeing as close competitor Popeye’s averages $1.7 million per franchise location, and quick-service restaurant (QSR) industry leader McDonald’s averages just under $4 million. That said, gross sales and net operating income are two very different things, and the profit margins in the QSR sector are very, very slim—often in the 5 to 10 percent range for even the best operators.
Franchise Business Review’s latest research on food franchises found that the typical franchisee in the food and beverage segment will take home an average annual income of $131,000—and the top-rated food franchises average 25 percent higher than that. While Chick-fil-A doesn’t publish any operator earnings numbers, Franchise Business Review estimates that the average restaurant operator earns a very respectable income in the range of $150,000 – $200,000.
Advantages of a Chick-fil-A Franchise
The Franchisor Does a Lot of the Work
If you’re interested in a business that essentially runs itself, where you have minimum involvement in background operations, Chick-fil-A is the one for you. The franchisor takes care of most of the dirty work: choosing a location, purchasing the real estate, funding construction, and purchasing the necessary equipment. The franchisor also covers oversight of accounting, service and customer relations, maintenance, and marketing.
Turnover Is Low
There’s little risk, which is a dream come true for any businessperson. The retention rate for Chick-fil-A operators (franchisees) has sat at 96 percent for over 50 years. Many Chick-fil-A franchisees love what they do and strive to ensure that their employees are happy, as well. Lynnae Schneller, who owns a location in Tacoma, Washington, says that Chick-fil-A has “Connected her family and community in a new way.”
Related: See This Year’s Top Food Franchises
Chick-fil-A Food for Thought
There are many reasons a franchise may not be the right opportunity: you don’t agree with their policies and values, you dislike the product…the list goes on. However, the information below could pose serious barriers to prospective Chick-fil-A franchisees. Don’t let it discourage you, though, as there are plenty of other options on the market today. (We’ll share some top-rated options later in the article.)
No Chick-fil-A Multi-unit Franchises
While this may be the case with some franchises, most offer the option to own several locations. Chick-fil-A does not, and only allows for a single unit per franchisee. This can mean less profit, as you’re limited to only one location. (Certain high-performing, proven operators are offered the opportunity to own up to three locations, but only in select cases.)
Chick-fil-A Franchisees Must Be Free of Any Other Business Ventures
The company wants their franchisees to be completely hands-on, and devoted solely to their Chick-fil-A franchise. In other words, if you’re a serial entrepreneur, this isn’t the right franchise for you. Chick-fil-A requires all prospective franchisees to “divest yourself of all non-passive business opportunities to pursue a Chick-fil-A franchise.” They don’t give a clear reason for this, but one could conclude that the company isn’t interested in creating conglomerates and values quality over quantity.
Strong Company Values
Much has been written about the culture of a Chick-fil-A franchise. Having restaurants closed on Sundays is just the beginning. The company has a long history based on conservative, religious values. Some find this appealing and one of Chick-fil-A’s greatest assets as a company. While others would rather be part of a more open, accepting culture. Company culture and values are clearly important to explore when considering any franchise investment.
A Very Selective Process
It’s no secret that a Chick-fil-A franchise is hard to obtain. Chick-fil-A only accepts 100 to 115 franchisees from the 40,000 who apply every year. That means only 0.0025 percent of applicants are chosen. (Your kid’s chances of getting into Harvard are better!). Aside from this, they will not choose franchisees who:
- Are seeking a passive investment in a business (What is passive investing? Check out this blog post on Investopedia.)
- Want to sell property to Chick-fil-A
- Want to choose the specific location for their franchise
Related: See This Year’s Top Food Franchises
Renting vs. Owning a Chick-fil-A franchise
Chick-fil-A has one of the lowest investment requirements in the QSR sector, but that is because, as one of their operators, you don’t actually own the business. In most cases, the land, the building, and the equipment are owned by Chick-fil-A corporate, which they lease to their operators. It’s really more like renting vs. owning a home. At the end of your franchise agreement with Chick-fil-A, you don’t own anything—which for many entrepreneurs, is a deal-breaker.
“Chick-fil-A is a very different franchise animal,” says Franchise Business Review founder Eric Stites. “Sure it’s cheap to get in, but it’s also nearly impossible, and you don’t own the business, Chick-fil-A corporate does. For many people, the choice of going into business is about building long-term wealth through equity… building a valuable asset that you can ultimately sell or pass on to your family. That’s not the case with the Chick-fil-A franchise opportunity.”
If you’ve found that Chick-fil-A isn’t the right franchise opportunity for you, here are some good alternatives. All of them can be found on our Top Food Franchises list, which recognizes the best food franchise opportunities based on owner satisfaction.
Alternatives to Buying a Chick-fil-A Franchise
Pizza Factory
With 100 locations based in five states throughout the West Coast, the Pizza Factory franchise system is adding franchise locations in key markets nationwide. A family-focused business, Pizza Factory started the “No Bully Zone” program and partners with community organizations to raise awareness and end bullying. The startup investment ranges from $323,000 to $740,000, and the franchise fee is $25,000.
FBR’s independent survey of Pizza Factory franchisees showed that 88 percent of franchisees agree that the franchisor acts with a high level of honesty and integrity, and 89 percent are likely to recommend this brand to others. Pizza Factory makes their full franchisee satisfaction survey results available on our website. You can download a free copy here.
Church’s Texas Chicken
If you’re absolutely determined to open a chicken franchise, Church’s Texas Chicken could be a good bet. With over 875 franchise locations, they’re still actively expanding. The initial investment is between $645,000 and $1.8M depending on the location and footprint. The franchise fee is $20,000 with a minimum cash requirement of $1M.
East Coast Wings and Grill
East Coast Wings and Grill is not a Quick Serve establishment. However, the investment is a bargain compared to others in the industry. The total initial investment for an East Coast Wings and Grill franchise is in the range of $408,368 – $1,232,845, which is rather low in comparison to similar restaurants (Buffalo Wild Wings, for example, has a minimum initial investment of $2,450,000 – $4,883,000). The franchise fee is $40,000, and the average net (per unit) sales as of 2023 were $1,802,000 with a 15 percent net operating margin.
The Bottom Line
The food and beverage franchise segment offers many viable options to prospective franchisees, many of which are profitable and manageable. Chick-fil-A is a highly sought-after franchise to own, and while it may be the right option for some, it’s certainly not for everyone. We hope we have made your decision-making a bit easier, and if you want to learn more about the food and beverage segment, please check out our list of Top Food Franchises.
