Chick-fil-A has managed to establish itself as a highly successful fast-food chain. With impressive average unit volumes (AUVs) of $4.4 million, the company outperforms competitors like Subway by a staggering margin. However, before jumping on the Chick-fil-A bandwagon, it’s important to examine all aspects of owning a franchise. In this article, we will uncover the truth about Chick-fil-A franchise ownership, including the financial prospects and potential drawbacks.
The Success Story: Why Chick-fil-A Stands Out
Chick-fil-A’s track record is certainly impressive. Aside from its remarkable AUVs, the company boasts a franchisee dropout rate of less than 5% and has many operators who have been part of the Chick-fil-A family for over two decades. Moreover, Chick-fil-A’s employee turnover rate is a mere 60% compared to the industry average of over 100%. These statistics paint a picture of an organization that values its employees and rewards hard work with exciting growth opportunities. It’s surprising that more companies don’t adopt similar practices.
Sticking to Values and Experience
Chick-fil-A proudly identifies as a Christian organization with a strong belief in traditional marriage and family values. While this dedication to its beliefs has attracted some negative attention, the company remains steadfast in its principles. Founded in 1946 as the Dwarf Grill and later rebranded as Chick-fil-A in 1967, the company’s extensive history and franchising experience are testaments to its enduring success.
The Dream or the Reality?
At first glance, owning a Chick-fil-A franchise seems like a dream come true. The company’s combination of Christian values, a Sunday closure policy, high annual sales figures per store, happy employees, and a remarkably low franchise fee of only $10,000 make it an enticing prospect for many. However, it is essential to consider the business model’s suitability for individual aspirations.
The Top 6 Reasons Chick-fil-A May Not Be for You
Reason 1: The Store Becomes Your Life
With Chick-fil-A, running the store is a full-time commitment. Unlike other franchises that allow for passive or absentee ownership, Chick-fil-A franchisees are expected to actively work in their stores. Consequently, some may perceive owning a Chick-fil-A franchise as “buying a job” rather than truly owning a business.
Reason 2: Limited Expansion Opportunities
Chick-fil-A restricts franchisees from operating multiple units or engaging in other business ventures. While some individuals thrive on building franchise empires or investing in various industries, Chick-fil-A’s model does not accommodate these ambitions. Only a select few operators, who have been with the company for over a decade and maintain highly successful stores, are considered for multiple locations.
Reason 3: No Equity, No Ownership
One crucial aspect to consider is the lack of equity in a Chick-fil-A franchise. Unlike traditional franchise arrangements where you build equity and can sell or pass on the business, Chick-fil-A franchisees do not own any equity. Corporate ownership is retained, with the franchisees referred to as “operators.” This distinction has led to legal debates in several states, questioning the classification of Chick-fil-A operators as employees rather than franchise owners.
Reason 4: Limited Control Over Store Location
Chick-fil-A dictates the location of each franchise store. If you are not prepared to relocate to where the next store is planned, you may face a potentially lengthy wait.
Reason 5: Moderate Earnings
While Chick-fil-A keeps its earnings figures under wraps, estimates suggest that franchise owners receive between 5% and 7% of the gross revenue. At 5%, the average store owner would earn around $200,000 per year based on the sales volume. Although this may seem like a decent salary, it is significantly lower compared to other franchise opportunities.
Reason 6: Slim Chances of Becoming a Franchisee
The odds of securing a Chick-fil-A franchise are incredibly slim. With an estimated 20,000 to 50,000 annual applications and only 60 to 100 locations awarded, the competition is fierce. Even if you align with Chick-fil-A’s corporate values, possess solid references and a rooted family history, success is far from guaranteed.
Weighing the Pros and Cons
Chick-fil-A’s franchise ownership presents a paradox. On one hand, it offers hardworking individuals the chance to earn a considerable income while embracing Christian values. On the other hand, it limits expansion opportunities and retains the majority of the store earnings. However, it is worth noting that most Chick-fil-A franchise owners genuinely enjoy what they do and are content with their decision.
Determining the ideal franchise opportunity depends on your unique goals, dreams, budget, objectives, and personal beliefs. Chick-fil-A may be an exceptional choice for some, while others may find it less appealing. As an impartial observer, our goal is to provide you with the facts, allowing you to make an informed decision. If you believe you have what it takes to be a successful Chick-fil-A franchise owner, you can apply here. For more franchise options, visit Garrity Traina.