Opening a restaurant is a very difficult thing to do. It takes a lot of money to get started. You need to open in a good location with lots of traffic. And you have to know who your potential customers are and why they would patronize you. And you must become a brand, which can take years to accomplish. It’s why most people opt to become franchisees of better-known restaurants. So, what is the cost of franchising a Chick-fil-A restaurant?
My dream to start my own restaurant would have been gourmet subs. I would have used the finest in freshly made bread to house a chicken cordon bleu chicken breast with a fancy mustard sauce. And I would have called it “Dream Heroes.”
Don’t steal my idea.
Anyway, getting a loan to open a business is a difficult and most prohibitive process. Then I would have had to worry about sourcing my own supplies and developing a customized supply chain network to keep operations flowing.
Where would I open it? And just because you open a business does not mean that everyone will rush through the doors. I would have to develop a marketing plan to attract customers.
People are loyal to brands – I would have to give them a reason to patronize Dream Heroes.
The point is that it can take years of effort, planning, and financing to open a restaurant. And that is why most aspiring restauranteurs opt to open a franchise.
Franchising a Chick-fil-A Restaurant
Well, it turns out that franchising a Chick-fil-A restaurant is at the very least a very easy thing to do.
All you need to become a Chick-fil-A franchisee is $10,000.
Yes. That’s it. $10,000.
But anything that sounds too good to be true usually is in the end. While all you need is $10,000 to become a Chick-fil-A franchisee, there are a lot of conditions involved.
And you also need to understand how hard it is to successfully run a restaurant. About 60% of restaurants close within the first year of operations. And over 80% of restaurants close down after five years of operations.
Still, it’s relatively easier franchising a Chick-fil-A restaurant than most other big-name brand franchisors.
So, before we explain why it costs $10,000 and only $10,000 to open a Chick-fil-A, it’s easier to start explaining how much it costs to open other franchises.
Opening a Franchise
When you apply to open a franchise, you are basically licensing the name of the franchisor to open your own restaurant.
As a franchisee, you won’t be able to open the restaurant on your own terms. You will have to run the franchise according to the signature rules of the franchisor. And every Franchisor has its own signatures rules for running a franchise.
Firstly, you need to have a lot of money just to walk in the door. The big brand franchisors won’t even look at your application unless you have a net worth of $500,000 to $5 million.
These franchisors include:
- Arby’s
- Bojangles
- Burger King
- Church’s Chicken
- Dairy Queen
- Jack in the Box
- KFC
- Pizza Hut
- McDonald’s
- Sonic
- Taco Bell
- Wendy’s
Want to open a Wendy’s? You need to have a net value of at least $5 million! And you must have at least $2 million in financial liquidity.
And at least a half to a third of your net worth has to be liquid. Franchisors don’t want to worry about being liable for a franchisee’s development and financing.
If you don’t have the money to even open the franchise, how can you run it full-time for years?
You need to worry about the financing inventory, real estate. Restaurant equipment, building licensing, permits, and fees, and everything else on your own.
Then, you have to pay a one-time franchise fee of $50,000 or more for the privilege of being a franchisee. The franchise fee could be more or less depending on the franchise.
The franchisor will then take anywhere between 4% to 8% of your franchise’s monthly sales.
And that is not even the end of most franchisor rules and regulations, but it is the main gist.
So, what is the cost of franchising a Chick-fil-A restaurant?
Costs of Franchising a Chick-fil-A Restaurant
There are several reasons why franchising a Chick-fil-A restaurant is relatively simpler than applying for other franchises.
You will need anywhere between $343,000 to $2 million to open a Chick-fil-A. And that is not even including the $10,000 franchise fee.
However, Chick-fil-A will finance and cover all opening costs. Still, it is not a charity – you will need a net worth of $343,000 to $2 million for Chick-fil-A to cover your start-up costs.
So, all you will owe is $10,000!
But that isn’t it.
Chick-fil-A will then own your restaurant, equipment, and property. It charges a 15% monthly royalty fee. And Chick-fil-A takes 50% of all profits generated but its franchisees.
Still, each Chick-fil-A franchise generates over $4.2 million annually in revenue.
And Chick-fil-A franchises are ultra-competitive. Over 60,000 potential franchisees apply annually but Chick-fil-A only chooses 80. And that is a 0.13% acceptance rate.
Your odds of getting into Stanford University, becoming a Secret Service agent, or working for Goldman Sachs is better than franchising a Chick-fil-A restaurant.
Reassess your business plan before you consider opening a Chick-fil-A franchise so you don’t end up with a lot of wasted effort.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.