Why is Chick-fil-A Widely Popular Among Potential Franchisees?
It will cost you almost nothing to start a Chick-fil-A outlet- but there’s a catch, and we will discuss it in depth. Chick-fil-A is one of the leading fast-food chains in America. And guess what? It is also one of the cheapest franchises to start off with. The following are a few facts:
- As a Chick-fil-A franchisee, you will have to pay only $10,000 for starting out your very own outlet. The franchisor will cover all the start up charges, including real estate buildouts, deposits, and purchasing equipment.
- Chick-fil-A corporate will also lease you all equipment for an ongoing fee that is around 15% of sales and 50% of the remaining pretax profit.
- Currently, this leading fast food franchise business opportunity gets over 20,000 applications from new candidates every year. Among them, Chick-fil-A only selects 75 to 80 franchisees each year.
- Chick-fil-A is incredibly popular because it is not just one of the most successful fast food chains of America; but is also one of the lowest cost investments in franchising. The company’s sales bolstered up from $1 billion to a whopping $10 billion by 2018. These figures gave it a bigger status than Chipotle and KFC combined. Owing to its massive popularity, Chick-fil-A is also the fifth-largest fast food chains in the US. According to Technomic, the revenues of this chain is more than any other fast food joint of the country.
Despite being staggeringly successful, A Chick-fil-A franchise investment is only $10,000! There are no minimum net worth requirements for prospective franchisees. This makes it a lower investment than any other leading fast food franchise investment in the US. For example, the investment in a McDonald’s franchise is between $1-$2.2 million. This includes a franchise fee of $45,000 along with a minimum liquid asset requirement of $500,000. Investing in a Taco Bell, like investing in McDonald’s, requires an investment of between $1.2 and $2.6 million. Chick-fil-A believes that money should never be a barrier to opening a fast food outlet. Instead of prioritizing on funds, they search for the best franchisees possible. So Chick-fil-A is always on the lookout of individuals who have strong business acumen, a true entrepreneurial spirit, and a burning passion to serve and assist others.
But is there any catch? Well, there is a small one. Although the costs of starting up a Chick-fil-A outlet is low, the royalty fees are higher than McDonalds and KFC. McDonalds, for instance, charges a royalty fee of 4% of the gross sales, along with an additional rental fee. According to a report from the Service Employees, International Union, most franchisees pay around 10.7% of their revenues as rent costs. Chick-fil-A does not allow the majority of its franchisees to start multiple outlets. Chick-fil-A franchisees become “owner-operators” as opposed to “semi-absentee” franchisees because they are limited to one unit, can’t afford to hire a manager, and can’t really scale.
Chick-fil-A only chooses 75-80 new franchisees from the 20,000 applications they receive every year! For sending in the application, candidates will have to submit a form via the company’s website. You have a better chance of winning the lottery than becoming a Chick-fil-A franchisee.