There is a lot that Chick-fil-A has done right. Earnings per store or AUV’s (average unit volumes) are at the top of the QSR50 at 4.4 million. To put that into perspective the average unit volume of a Subway store is a paltry $422,000. So average Chick-fil-A locations earn literally 10 times what an average Subway earns! For those of you who follow our channel you know I am not a fan of Subway, but if I had to choose between the two I would invest in a Subway before Chick-fil-A even despite the earnings. I’ll reveal why in a moment.
Chick-fil-A also has a very low franchisee dropout rate at less than 5% and many operators are with the company for 20 years or more. Employee turnover is also low at only 60% compared to typical food industry attrition rate of over 100%. Chick-fil-A really seems to take excellent care of their employees and provides incentive programs for hard workers that show initiative to move up the ladder. Considering how effective this is it’s surprising how few other companies offer this.
The corporate office doesn’t hide the fact they are a Christian organization that believes in traditional marriage and family values. They recently received some negative feedback for opposing same sex marriages and sending millions to organizations that lobby against it.
Chick-fil-A was actually started as the Dwarf Grill in 1946 and opened by S. Truett Cathy. The first Chick-fil-A opened in 1967 and the organization has a long history and extensive experience in franchising.
So at face value for many people we have the American Dream! - Christian values, closed on Sundays , 4 million dollars annual volumes per store, happy employees, low franchisee turnover AND did we mention a super low franchise fee of only $10,000! Admittedly for many owners Chick-fil-A franchise is a dream come true.
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However the business model is not for everyone and we’ll explain why. It should be noted that conspicuously absent from the Chick-fil-A owner lists are investor groups, single investors, brokers, sports celebrities or anyone looking to build a franchise empire. Why is that?
Let’s look at those Top 6 reasons you may not want to buy a Chick-fil-A:
1.You absolutely need to be at the store and run the store. The store becomes your life. One of the benefits of franchising is the ability to eventually or even initially operate your store in a passive or absentee capacity, meaning it will still operate and generate revenue while you are doing other things. Some franchises are better at this than others but being able to have your business operate while you run other businesses, work a career, travel or whatever else is a major benefit of franchising. Business models like Chick-fil-A where franchisees are required to work in the store are considered by many as “buying a job” as opposed to actually owning a business. You are expected to work in the business rather than on the business.
2. You are not allowed to operate multi units or any other businesses. Recently we uploaded a video featuring a young college student and already owns and operates 3 franchises between classes and after school. We see many people building franchise empires either through multi-units or master franchising. With Chick-fil-A you can not own multi units. We have heard there are a few operators in the system that own a couple of stores but apparently franchisees need to be an owner for over 10 years and have your store in the top 1/3 to be considered. That’s a slow empire!
3. You own nothing and build no equity. This one is huge. In a typical franchise arrangement after you have spent years working hard and building up a business when it’s time to retire or move on you can typically sell that business or pass it on to your family. Successful franchises can be worth millions. In the case of Chick-fil-A however you own nothing and because you have no equity in the business you have nothing to sell. Ownership is always retained by corporate - not you. So are you really an owner? Its interesting that on Chick-fil-A’s own website they they don’t refer to franchisees as owners but as “operators” - and many states have tried to have Chick-fil-A re-classify operators as employees not franchise owners and therefore entitled to employee benefits.
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4. Chick-fil-A tells you where you will open the store. If you are not prepared to move to where the next store is slated to open you will likely wait a long time.
5. Low earnings. Now Chick-fil-A is quite secretive regarding their facts and figures so information is difficult to come by, but it appears that the general consensus is that owners receive between 5%-7% of the gross. So let’s put that in perspective at 5% if your store does 1 million you would receive $50,000, 2 million you receive $100,000, at 3 million $150,000 and at 4 million you would receive $200,000. So that would put the average store owner Chick-fil-A earnings at $200,000 per year at 5% and $240,000 per year at 6%. Now a quarter million a year is a pretty good salary, but from a franchise ownership perspective only receiving 6% of the gross is quite low.
6. Your chances are virtually zero to ever get one. Now again numbers are hard to come by but from what we have heard Chick-fil-A receives about 20,000-50,000 applications per year, and awards only 60-100 locations. So the chances of you ever actually getting one, (even if you are a Christian family man who agrees to abide by their corporate prayer policy) are slim to none. If you don’t have solid references, verifiable family history, roots in the community and strong moral values - slim to none.
Depending on your perception there are two ways to look at the situation. One, that the company is giving hard working, strong valued people an opportunity to earn pretty darn good money and live a solid Christian valued lifestyle! As we initially stated they do have a lot of great things going for them. Another way to view it is that Chick-fil-A is using hard working folks, retaining the majority of the store earnings and disallowing expansion or growth by owning other businesses or more locations. But let’s be honest - would each store be so successful if owners were focusing on other businesses? Unlikely. Based on their success it would appear Chick-fil-A has made all the right decisions. Also, the majority of Chick-Fil-A franchise owners love what they do, and are very happy with their decision. And kudos to them for making the cut and working in a business they enjoy.
There is no right answer to the question: “What is the best franchise?” Depending on your goals, dreams, budget, objectives and even religious views Chick-fil-A could be a terrible choice or the greatest franchise opportunity out there. We don’t make the decisions we just give you the facts. If you think you would make a great Chick-Fil-A franchise owner you can apply here: https://www.chick-fil-a.com/franchising/franchise if you need help finding a franchise click below. Thanks for visiting!
Nigel Gildon editor:Nigel Gildon is the editor of Chef Wayne’s Big Mamou: Chef Wayne’s Big Mamou. He has worked in the publishing industry for many years and has a passion for helping new authors get their work into the hands of readers. 63 Liberty Street * Springfield, MA 01003
