Chick-fil-A Franchise Costs
Chick-fil-A is a popular restaurant franchise famous for its chicken sandwich. Franchises take a lot of the guesswork out of starting a business, but the downside is that they can be expensive.
The total initial costs to open a Chick-fil-A franchise will range from $295,412 to $2,431,608. But it’s important to understand that Chick-fil-A franchises work very differently from other franchises because you might find yourself feeling less like a business owner and more like a manager.
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Chick-fil-A franchise overview: what to know
Chick-fil-A is known for its fast-food fried chicken sandwiches, which the founder — Truett Cathy — began selling in 1946. Today, there are over 2,600 Chick-fil-A restaurants operating across North America, and it’s still owned by the original Truett family. The company maintains a pronounced religious bent, which may or may not be to your preference.
Compared to most franchise businesses, Chick-fil-A keeps a pretty tight grasp on your business. In fact, the company doesn’t even refer to its franchisees as business “owners” — but instead refers to them as “operators,” and that’s a more apt term given that the only thing you really own as a Chick-fil-A franchisee is the right to operate a franchise location and reap some of the profits.
Nearly everything else is controlled by the company, including where your store should be located. Chick-fil-A is the one who purchases and renovates the store you’ll be running, installs all of the equipment, and retains ownership of all of the physical things. As a franchisee, you’ll only ever be able to pay monthly rent for these things to Chick-fil-A, along with a litany of other monthly fees.
Chick-Fil-A franchise costs
Startup costs for Chick-fil-A franchises are relatively low. That’s because, unlike other franchises, Chick-fil-A actually purchases the real estate and all of the equipment required to open the business, and then leases them to you via monthly rent payments.
That’s good and bad. On one hand, it makes it easier for the average person to get started with a Chick-fil-A franchise, and that’s exactly who the company is targeting. On the other hand, you won’t have any equity in your business — you won’t own anything yourself, other than the right to operate the franchise.
Chick-fil-A’s fees can be split up into three different buckets: those you’ll need to pay before or right after the restaurant opens, ongoing costs and various charges for miscellaneous odds and ends.
Initial franchise fees
Here’s what you can expect to get started. Note that you’ll only need to be able to pay the initial fee yourself — everything else you can pay out of your first few months’ worth of revenue or from borrowed funds. Keep in mind that this will lower your own take-home profit, however:
- Initial fee: $10,000
- Opening inventory: $18,028 to $94,560
- First month’s equipment rental: $750 to $5,000
- First month’s rent: $1,475 to $85,800
- First month’s insurance: $282 to $11,165
- Additional funds for other store-opening costs: $264,877 to $2,225,083
Ongoing franchise fees
Once you’re up and running, Chick-fil-A will charge you other ongoing fees:
- Base operating service fee: 15% of sales per month
- Equipment rental: $750 to $5,000 per month
- Advertising fee: 0% to 3.25% per month
- Rent: $1,475 to $85,800 per month
- Insurance: $282 to $11,165 per month
- Hardware/software support and high-speed internet: $9,500 to $20,000 per year
- Cash handling system services: $85 to $450 per month
Possible additional fees
Finally, Chick-fil-A may require you to pay certain other fees on a case-by-case basis, as lined out in its Franchise Agreement. These include:
- Occupancy charge: 8% to 50% of sales, for businesses operating as concessions
- Advertising support and services fee: $100 per hour if you need assistance
- Additional franchise fee: $5,000 if Chick-fil-A offers you the chance for a second location
- Business services fee: $300 per month, if Chick-fil-A requires you to purchase certain services
- Food truck usage fee: $2,200 to $2,750 per month if you’re operating a Chick-fil-A food truck, plus other costs
- Food truck insurance fee: $320 to $400 per month, if you’re operating a Chick-fil-A food truck
- Fines: Various fines for breaking the terms of your contract
- Indemnification: You’ll be personally required to pay for any lawsuits or other damage if someone sues Chick-fil-A
- Operating services fee: Paid monthly according to a preset formula
- Credit card and gift card processing fees: Paid as you incur these fees according to whichever processing company Chick-fil-A selects
- Highway signage: Varies
- Interest on late payments: Pay the maximum interest rate allowed under your state’s laws (1.25% per month if your state doesn’t specify this)
- Reimbursement of cost of performance: If the company needs to come in and run your restaurant for you because of your own mismanagement, it’ll bill you for it
- Liquidated damages holdover: If your contract ends and you don’t vacate Chick-fil-A’s location in time, you’ll owe fees equal to double the base rent plus an additional charge
As you can see, the initial costs for a Chick-fil-A franchise are relatively low, but the ongoing costs are actually quite high. Chick-fil-A also makes it easy to get started because it doesn’t have any net worth or liquid asset requirements, unlike most other fast food chain franchises.
Chick-Fil-A franchise process
As you might expect, due to Chick-fil-A’s low startup costs, the company gets a lot of interest from potential franchise owners. However, because Chick-fil-A controls far more about your business than a typical franchise would, relatively few people actually get the chance to own a Chick-fil-A franchise.
If you are interested in tossing your hat in the ring, here’s how the process of opening a new franchise will work:
1. Fill out the application
First you’ll complete an application, similar to any other job. However, you’ll also be required to submit information about your personal finances and your preferred geographical location. Chick-fil-A picks and prepares the store location for you, so you’ll want to make sure you’re not signing up to run a restaurant in Iowa if you live in California.
2. Prepare for the interviews
If you happen to live in an area where Chick-fil-A wants to open a new restaurant and your application shows you’re a hard worker, you may be invited to the next stage of interviews. These might happen in person or virtually, and it gives Chick-fil-A a chance to make sure that you’re the right person to run a business for them.
3. Attend a multi-week training
If you’re selected as a franchisee, you’ll need to attend a blended virtual and in-person training that generally lasts three to four weeks. This training doesn’t cost you anything but you’re not paid for it, either. This training covers topics like food safety, restaurant security, how to use the equipment you’ll be renting from Chick-fil-A, employment law and more.
4. Prepare for your grand opening.
Chick-fil-A will handle all of the real-estate- and property-related issues, including purchasing a restaurant and outfitting it with everything you need to step right in and get started, including a billing system to charge you rent for everything. However, it’ll be up to you to hire a team, purchase all of your starting inventory from your assigned vendor and buy insurance.
Chick-Fil-A franchise pros and cons
Chick-fil-A doesn’t work like most other franchises. It’s easier to get started if you’re within an area in which Chick-fil-A wants to open a location, but beyond that Chick-fil-A places a lot more costs and restrictions on you than other franchise opportunities:
Extremely low start-up costs: only a $10,000 initial franchise fee.
High median sales volume per store: $6,884,271 in 2020.
Turnkey business model makes business ownership relatively accessible.
No property or equipment purchases necessary to start.
Very high ongoing costs.
Potential lost revenue from required closures every Sunday.
Opportunities only available in certain geographical locations. No rights to an exclusive territory.
You must work full-time at that location; you can’t be a passive investor and you’re not able to open any other business.
Location and inventory choices are determined by the parent company. .
You can’t buy your property or equipment, only rent them from Chick-fil-A.
Chick-fil-A has a history of anti-LGBT controversies which may alienate potential customers.
You can’t sell or transfer the business to someone else.
Can’t operate as an LLC or other entity unless you agree to remain personally liable for everything.
Franchise alternatives to Chick-Fil-A
Given Chick-fil-A’s strict vision and requirements, it may not always be the best fit if you’re an aspiring franchise owner. By contrast, here are the costs to get started with a few other alternatives:
- Initial fee: $45,000
- Total investment: $1,314,500 to $2,306,500
- Liquid assets: $500,000 or higher
- Initial fee: $25,000
- Total investment: $534,000 to $2,063,500
- Liquid assets: $350,000 or higher
- Initial fee: $35,000
- Total investment: $1,117,000 to $3,464,000
- Liquid assets: $3,000,000 or higher