6 Reasons Why Not to Buy Chick-fil-A Franchise

Since its inception in 1946, Chick-fil-A has achieved remarkable things. The restaurant chain has more than 2,000 locations, generating expected sales of $13 billion in 2021, and is the market leader in the satisfaction of customers. On the other hand, Chick-fil-A Operator selection process is more selective than the admissions processes at the nation’s most prestigious universities.

Actually, Chick-Fil-A does not offer franchises; they only provide contracted operator arrangements. You can never own the building, the equipment, or any other fixed assets.

You start as a Chick-Fil-A employee and advance to store manager status by building a strong reputation and showing dedication. Store managers then become store operators who earn income based on sales and revenue.

A Chick-fil-A franchise fee costs almost $10,000, but at the same time, you pay all lease and labor costs out of pocket, along with 15% royalty fees and 50% profit. On top of that, you need to work 60 hours a week managing the store. If you can put together the money, time, and passion and pass the grueling three-month interview process, you can own an 18% cut of a restaurant that’s projected to bring in over $53,285 average base pay.

The franchise owner has the opportunity to procure settings in non-freestanding and free-standing restaurant locations.

The other investment opportunities available to franchisees are in-line and mall units that are non-traditional along with drive-through only sites.

If you’re about to decide to buy the Chick-Fil-A franchise, we can help you to make that decision. We aren’t here to push any one company over another. We want to make sure you have the facts and data you need to make an informed decision, and we provide it for free. Here are red flags to be considered for not buying the Chick-Fil-A franchise.

Top reasons why buying Chick-Fil-A Franchise is not a good option.

Chick-fil-A is an appealing option for two primary reasons: their solid client base and the income generated by that loyalty. But, before you initiate buying a Chick-fil-A, let’s check out their drawbacks.

#1 Control of Franchisor Makes You Operator Not Owner

The biggest complaint about Chick-Fil-A franchising is that it offers stringent regulations that restrict franchisees from exploring their creativity and business sense. It is because the franchisor controls everything and makes franchisees the franchise “Operators” and not the “Owners.”

The franchisor retains the ownership and pays for everything from inventory to real estate and takes about 15% of sales and 50% of any profit.

#2 Not Working on Sunday Can be Loss Of Opportunity

There are higher chances of revenue loss as the restaurant chain is closed on Sundays when most people prefer to dine out. Also, the franchisees should be hands-on operators, i.e., they must be capable of dealing with customers, training employees, and flipping burgers, making it the unsuitable franchisee option for passive investors.

#3 It’s Tough to Get Your Application Approved for Chick- Fil- A Franchise

A Chick-fil-A franchise is challenging to buy. Despite receiving more than 20,000 franchisee applications every year, it acknowledges around 75 to 80 new franchises every year. It implies that only around 0.4 percent of applicants are accepted. If becoming the Chick-Fil-A operator is challenging, you must know what it takes to beat the competition and get a chance in 1% of Chick-Fil-A franchisee applicants.

#4 Buying Chick Fil Franchise means Being  Available at all time

Becoming a Chick-fil-A franchisee requires full-time dedication and commitment. The franchisee applications are rejected if they actively pursue other business enterprises. The franchisees are expected to be actively engaged in growing and running a single restaurant location. That’s why people criticize that Chick-Fil-A does not recruit franchisees but hire employees as it covers the majority of the startup costs and has much control over every franchise, making franchisees feel more of an employee than the business owner.

Operators must undergo the necessary training program that often spans for a few weeks. Hence, the franchisees should have the capital and time to complete the extensive training program.

#5 Strong Financial History is Must To Apply

The franchisor will run credit reports of franchisees as the credit history would provide them with their financial health and how perfectly the franchisees can manage personal finances. Besides, there should not be any previous bankruptcy filings.

#6 Allegation for Secret Menu Markups Has Affected Consumer Sentiments

Chick-Fil-A is facing a proposed class-action lawsuit over its disguised pricing. The suit, filed by two New York City consumers, alleges that the food chain is engaged in untruthful and deceptive practices by failing to disclose additional pricing for delivery menu options and a flat delivery fee.

Chick-Fil-A restaurant-Too Good to Fit In

Chick-fil-A is among America’s most popular and influential fast-food restaurant chains. According to a study, the average Chick-fil-A restaurant location generates $4.4 million in annual sales, which is $1.7 million additional than Whataburger, the next most delicate restaurant chain. Even though it is closed each Sunday, Chick-fil-A fast-food chain makes much more for each restaurant location than Starbucks, Subway, KFC, Jersey Mike’s, and McDonald’s combined.

Besides, the initial franchise investment cost is much lower than any other restaurant’s franchisees across the globe.

The major initial franchisee cost to buy a Chick-Fil-A food-chain franchisee is as follows:

• Initial franchise fee- $10,000
• Additional funds- $2,225,083
• Insurance expense for first month- $11,165
• Opening Inventory- $94,560
• Rental of equipment for the first month- $5,000
• Sublease or lease of premises for the first month- $85,800

Conclusion

Chick-Fil-A is considered a well-known and highly profitable company and commands 15% of sales and 50% of any profit at its restaurant chain locations. Even though the initial franchise fee is merely $10,000, the franchise owners are operators as the franchisor has complete control over all franchisee locations. Besides, stringent requirements and several allegations, are a few factors to consider before buying a Chick-Fil-A franchise.

Sources:

https://www.franchise.city/chick-fil-a-franchise

https://www.nrn.com/quick-service/chick-fil-names-andrew-cathy-new-ceo

https://1851franchise.com/how-much-does-a-chick-fil-a-franchise-cost-2715278#stories

https://www.foxbusiness.com/retail/how-much-average-chick-fil-a-made-2020

https://www.chick-fil-a.com/inside-chick-fil-a/five-myths-about-becoming-a-chick-fil-a-franchisee