A Chick-Fil-A Franchise Costs only $10,000 and Makes 4.5 Million - What's the Catch?

now before we begin we did a chick-fil-a franchise review a few years ago same as we've reviewed dozens of franchises over the years and we got crazy comments for chick-fil-a unlike any other video we have ever done here's a small sampling of some of the warm comments that we received on that video chick-fil-a should sue you biased libtard even in new york city the liberals line up to eat there these evil country-hating losers can't handle it this guy is a this person is a coward his story is insanity on stilts i will expose this for the fraud that he is now keep in mind all we did was review chick-fil-a right we took facts from various sources and we put them up there that was it so these are the kind of comments that we received and never ever on any other franchise review have we had comments like that now not sure why this happens you can let us know your theory in the comments down below anyway i just wanted to give a psa beforehand if a video on youtube that's talking about chick-fil-a is going to send you into a rabid rage just click away now so what's the deal with buying a chick-fil-a how much does it cost how much can you make all that other good stuff well chick-fil-a restaurants on average earn more than any of the other major fast food brands now according to the qsr 50 an average chick-fil-a restaurant generates 4.5 million dollars a year now that's the average a lot of locations are higher than that an average mcdonald's to put this in context generates 2.9 million a year burger king generates 1.4 million dollars a year on average and an average subway franchise only generates 410 000 and those are gross figures now the highest earning chick-fil-a non-satellite restaurant that's not in a mall location earned an incredible 17 million dollars so it sounds great right and even better to become a franchise owner in the chick-fil-a system it only costs 10 000 now compare that to mcdonald's that's going to cost you between 1.3 to 2.3 million to open up a location a burger king is going to cost you up to 3 million and a subway is going to cost you as much as hundred and seventy thousand dollars so why doesn't everyone just buy a chick-fil-a and why do people even consider buying other franchises well the chick-fil-a franchise model is quite different than other franchises out there there's a number of reasons why it's different number one most franchises that are out there allow you to own and operate other businesses as long as they're not in direct competition with your franchise chick-fil-a they want you to be an active owner operator and work directly in your location and that's why you'll never see a celebrity invest in a franchise like chick-fil-a is they're not going to allow you to install a remote manager to run your location they want you there to take care of that location now obviously the strategy has worked their locations are highly successful but if you want a passive or semi-passive type situation chick-fil-a not a good option number two you're not going to build any equity in this business so in a traditional franchise agreement again yes you've got to invest a lot more money for sure but you can build that business up and eventually sell it potentially for millions of dollars with chick-fil-a because they're providing most of that money for the stores which is likely you know millions of dollars for the larger locations they retain the equity and the ownership so if you decide to leave the business for whatever reason you just walk away you don't receive any equity share number three chick-fil-a has received a fair amount of flack for their allegedly anti-lgbtq stance now based on that the company has actually been rejected from opening stores in airport locations like san antonio and buffalo now as our world is seemingly becoming more polarized on either side political pushback is possible that it might increase in the future number four owners do not get paid in the chick-fil-a franchise system like a typical franchise owner so in most cases a franchise owner outside the chick-fil-a system they receive a hundred percent of the revenues then they pay royalties ranging from about six to eight percent some are more some or less so if you make a million dollars you typically pay sixty to eighty thousand dollars to the franchise company and royalties now there's other fees and expenses of course we're not going to get into those right now but chick-fil-a corporate because they are the actual owners of the store they kind of switch those numbers around so how much do chick-fil-a franchise owners actually make well it's difficult to get actual numbers but it's estimated that owners receive between five to seven percent of the gross so instead of you paying the franchise a small royalty you get paid a small royalty from chick-fil-a so those amounts would put the average chick-fil-a store owner earnings at about 225 000 a year at five percent and about 270 000 a year at six percent and let's face it that's not a bad return on ten thousand dollars number five does it really only cost ten thousand dollars well yes and no because beyond the franchise fee which is the ten thousand dollars you also need to carry your business until it reaches profitability so the initial franchise fee yes ten thousand dollars and that's all you need to take out of pocket to get started in here from their franchise disclosure document this is right from chick-fil-a the ten thousand dollar initial franchise fee is the only initial out-of-pocket investment that you'll be required to make to begin operation of your franchise chick-fil-a business but on top of that 10 000 you're also going to need to pay for your opening inventory to pay for the rental equipment to pay for your lease your insurance the utilities employee payroll all that other good stuff now the actual estimate taken again from the chick-fil-a disclosure document states it will cost you between 295 000 to 2.4 million to open up your chick-fil-a now remember the lower number is likely representing a smaller location maybe a satellite store or a mall type store if you've got a larger location it's going to be a lot more money now as per chick-fil-a's documents those expenses come from your revenue so you don't need that money up front to actually open the store as it's going to be deducted from the money you're making out of your business so if you're fine with the politics you're fine with the equity the revenue arrangement all that other good stuff you've got ten thousand dollars and you'll want to open up a chick-fil-a now keep in mind they receive thousands of applications every single year people suggest up to twenty thousand applications received every year and they only open around a hundred restaurants a year these are the actual numbers in 2018 they opened 102 stores 20 19 149 stores in 2020 they only opened 74 new franchise locations now some applicants we've read have had to wait over a decade before they were accepted and of course thousands upon thousands of people are never accepted at all and this makes chick-fil-a one of the most difficult franchises to acquire so it might not be for everyone but most chick-fil-a owners out there they're very happy with their decision they love the culture they love the business and the franchise and employee satisfaction rates are some of the highest in the industry if you want to apply for a chick-fil-a franchise in the usa canada or puerto rico you can go to their website i put that link down below another famous franchise that's only going to cost you ten thousand dollars to buy and is much easier to acquire is steak and shake what's the catch with that franchise i'm gonna put that link to that video above and are atm businesses profitable and are they a good business i'll put that link down below please like and subscribe and thank you for watching

Channel: Franchise City

Views: 954,448

Keywords: Chick-fil-A, franchise, cost, earnings, franchie.city

Id: wv5byMsuzBE

Length: 8min 5sec (485 seconds)

Published: Sun Jul 18 2021