If Dan Cathy would have kept his bless-ed mouth shut, I wouldn’t have written this post about his Chick fil A franchise being for the birds.
In a nutshell, the food franchise he runs is an empire. And, speaking of birds, even a Cardinal knows that it’s an empire.
Furthermore, for people interested in the franchise costs for a Chick fil A, you need to know that it’s among the lowest cost, most bizarre franchise systems in the world.
In. The. World.
Why The Chik fil A Franchise Is For The Birds
These are the reasons:
1. The Chik fil A franchise fee is only $10,000. $10,000. Wait. Let’s try that again. How much does a Chick fil A franchise cost?
Again, the franchise fee for franchising one Chik fil A is only $10,000.
In contrast, almost every other franchise opportunity currently being offered in the United States has a franchise fee of around $35,000. But there’s more. There are several other things that make the entire Chick fil A franchising cost low.
Things that make the opportunity a non-franchise in my eyes.
Chick fil A: Costs For This Non-Franchise
-
- Potential “franchisees” only pay a $10,000 franchise fee
- Franchise operators don’t own a thing
- Franchise operators have no equity in “their” business
- Operators are not allowed to own any other businesses
- Chick fil A chooses the location
- Chick fil A owns the location
As a matter of fact, Chik fil A restaurants are not really “franchise businesses.” Instead, they’re company stores with an Operator in place who pays a $10,000 fee to manage the business and share in the profits.
Chick fil A Franchise | Franchise Costs For Chick fil A
Dan Cathy’s franchising system isn’t even a distant cousin to the typical franchise system seen today all over the world. The low $10,000 Chik fil A franchise cost is the giveaway here. For example, as I said, the average franchise fee for any other franchise is around $35,000. And the total investment cost is close to $200,000 on average. But there’s more.
If you were to buy a Chik fil A franchise, theoretically you would have an opportunity to build equity. Equity = good.
For example, imagine how you would feel, if after working your tail off-and building your franchise business up for 10 years or so, you could sell it and deposit a check for $600,000 into your checking account. Go ahead. Close your eyes and imagine it.
The $600,000 you just made…that’s called equity. Really. That’s what my friend, Carol Roth, who’s background includes investment banking says, too.
Or, maybe you decide that instead of cashing in, you want to keep things in the family. In other words, you want to pass it on to your heirs. No problem. Just do it.
But, if you “owned” a Chick fil A franchise, you aren’t allowed to do that.
In other words, once your “franchise” agreement is up, it’s up. You can’t sell the business to a family member…or anyone else. Would you like to know why?
Because you don’t own a thing when you’re a Chick fil A franchise owner.
Simply put…
You Bought Yourself a J O B
That’s right. Sometimes (in franchising) you actually are buying a job*.
Like when you write a check for $10,000 to Chick Fil A.
*A high-paying job, supposedly. I read somewhere that the average Chik fil A operator makes around $200,000 a year.
I was going to point out a few other key differences between a real franchise business and a fake hybrid franchise business model, but I’m way too aggravated to do that now, so I hope you’ll forgive me.
But, if you want to learn more about the greatest business model ever invented, when it’s done the right way, read this franchise article.
What I’m Angry About
Today, I’m angry about the fact that Chick fil A, the food franchise with well over $3 billion dollars in revenue, can get away with calling their “opportunity” a franchise.
That’s because a true franchise business allows people to invest in their own business and have something to show for it when they’re ready to exit it.
A true franchise business is a partnership. (Careful, Joel…the word “partnership” may be considered a dirty word in Chick fil A’s uptight kitchens.)
Finally, I hope I’m not the only one in my industry who feels that Chick fil A is an embarrassment to the franchise industry-because of their butchering of the original and current franchise model.
As a matter of fact, they should be thrown out of whatever franchise association they’re members of. But, not for religious reasons. I’m not going there, again. (Probably) But, I did go there in this post about the President of Chick fil A.
More About Chik fil A
Finally, here’s a video I did about the Chik Fil A “franchise.”
Chik fil A Franchise Score:
The score is very low, because Operators have no ownership (their name is not on the lease) AND they have no equity-they cannot sell the business.
Additionally, in my view, Chick fil A is not a franchise.
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After reading the comments, I find it ironic that after you request to listen to others opinions on the topic, as if your open to other views on the issue, you then outright oppose any ideas not coinciding with your own.
Bet you wouldn’t be bad mouthing Chick Fil-A if it was jewish owned and closed on sabbath
Or, would I?
JL
It seems to me that the point of this article points out that your concern does not lie so much on the fact that Chick-fil-a declares their Free standing units to be franchises, as much as it seems to be that you have a legitimate issue with the fact that the company was founded on Christian/ family values.
The business model differs from other companies, true; however, I am struggling to find the issue with that?
The Chick-fil-a corporation is a private family company founded on Christian values that relies on its units to produce enough business to continue to grow. The end result is the same as any other company.
It is, in fact, VERY difficult to become a CFA owner/ operator. Yes, the initial price is incredibly low; however, that investment does not promise a position. In fact, more people are turned away than not. Perhaps 50 of the initial 7,000 applicants are chosen annually. It takes a certain type of individual to run a CFA, and if done correctly, that individual reaps the benefits.
Some operators make more than others. How can that be if each operator pays money to get the same job? CFA puts the potential operators through a grueling process so that they can see whether or not these applicants have the ability to properly run a business. So when the time comes for the applicant to GET a CFA, the responsibility of keeping it afloat rests on his/ her shoulders. The owner/ operator decides who to employ, chooses what marketing technique to use for their particular location, whether or not they should remodel to attract more customers, etc. If ran properly, some operators make well over $1 Million annually. If ran improperly, the store closes. If wise investments are made, the owner/ operator will have the ability to hand money down to their heirs.
Like i said, the end result is the same; however, the path taken is different. This is CFA’s business model and we have all seen that it has succeeded and will continue to do so.
Additionally, Chick-fil-a has never tried to hide the fact that they are a Christian/ family company (and will never turn down anyone who disagrees with their values… that’s part of what has made them such a success)… So what is the big deal?
So, John….
Do you work for corporate? Or, are you an employee at the PR agency that CFA works with?
JL
no doubt.. i agree .. none of YOUR DAMN BUSINESS.. you dont like it.. do it your way.. of course all you can do is bitch how bad others are making money.. jump in a creek asshole….
what franchise did you start? instead of running off of the shirt tails and failures of others.. i want to see your record.. ?
I don’t really think it is any of your business how they operate. That is the method Chick Fil A has chosen to operate and they don’t try to hide it. They have full disclosure to the operator so if both parties agree why do you care? I have yet to hear from any operators that aren’t making money and lots of it. Also, No one cares about your religious bigotry and I am sure Chick Fil A could care less if you show up at their establishment.
Randy,
It IS my business, since I’m IN the franchise business.
Not only do I disagree with what I feel is a discriminatory policy on awarding franchises, I disagree with the fact that they use the word, “franchise” in their literature.
JL
The oil companies have been using this franchising model for decades. The ‘franchisees’ lease the equipment and property owned by the oil company, must purchase fuel from the oil company and abide by the franchisor’s rules and regulations. Fedex Ground have a similar program, as well. So this is not unique to Chic Fil A.
However the biggest benefit (from your stats) is the ROI.
$5k for a $200k ‘job’ is a pretty good investment, considering the amount of time and energy it would take to build a similar business on your on. So being awarded a Chic Fil A franchise is a bargain!
Hi Don,
The thing is, CFA isn’t awarding franchises. If they were, the franchisees-the operators, would be actual Owners.
They don’t own a thing.
JL
I understand the argument. And I understand your issues with paying $5000 to have a job. I however disagree with you. My question is, if you invest into another franchise where you have equity are you ever guaranteed not to lose your money? Are you guaranteed to make money? I know a lot of franchise owners that don’t make as much as an operator does and they have a lot more risk involved. All I’m saying is Chic Fil A makes no claims to ownership, but that is a great income with little risk. You know If Chic fil A puts up the money and has control it minimizes dumb mistakes for people who have never ran a business. What’s wrong with that? Other than your biased view toward the company’s core values.
Stephen,
You already know my basis for one of my arguments.
The other one has to do with Chik-fil-A calling their business a franchise business. It’s really not.
Thanks for popping by!
I actually work for Chick-fil-A, and while I am not the operator of my store, I am a high level manager. Obviously knowing the “owner” of the store, I can tell you that he and all the other operators know exactly what they are. They know they don’t own a thing. The restaurant is leased to them for 5 years I believe, and as long as they don’t run it to the ground, or decide to leave themselves, it’s theirs to keep. However, they also don’t have to spend any of their money on any renovations needed, or in the case of any of the machines break down, basically on anything the restaurant may need fixing on. It’s extreamly difficult to get selected as an operator, but your basically set for life if you do get selected. Anyways, I can tell you they don’t mind a single bit if they really don’t “own” anything or if it really isn’t their restaurant, I’m sure no one would mind when they’re making $200,000 per year working on the days and hours they feel like, with no debt to the restaurant.
In short, yes this is a very good opportunity, even if it’s not technically a franchised restaurant. 99/100 would gladly take that job.
Hi DC,
Thanks for the insight, but I have to make one correction to what you wrote.
The business is not “theirs to keep.”
When the contract is over, it’s over.
Correct me if I’m wrong.
The Franchise King®
I don’t see the problem. I’m 53 married no kids, and I have no problem with prayer. I cut them a check for 5 grand my wife and I make $190-$200k a year for let’s say 10 years. I pay off my house the first year and that leaves me with power bill, water bill, trash pick up and gas for the vehicles. I invest the rest for 9 years along with compounded interest. Let me tell you brother, I’ll be glad to let them have the business back while my wife and I travel all over with a big damn smile on our face. Just my .02 worth. Hey honey pack the bags::))
Kevin,
That of course, is in a perfect world.
And, it’s a total long shot to get approved.
So, lotsa luck. Fun to talk about.
But, in reality, it’s almost impossible to even GET a franchise from them.
And, for most people: A fast food operation is too much to handle.
The Franchise King®
if it is tuff to get a franchise.. then why speak upon it… jealous they didnt give you a chance??
So, NOW your point is that, “It is too difficult to get a Chick Fil A franchise.”? Really? And your second criticism is that, “A fast food operation is too much to handle.” Seriously?
There are scores of large franchises which experience 10% to 20% franchisee failures each year, so isn’t it a GOOD THING that Chick Fil A is the most careful company in the world at ensuring its operators are competent to succeed?!
Dang, it sounds good to me. Maybe that operator who “only” makes 200K a year can SAVE some of that income and live frugally; invest $ 50 to 100K/year for 10 to 15 years?? Not too shabby. Buy a job where I can close on Sunday and not have phone calls 24/7? Hmmm….where do I sign up?
Sounds like an article my son would write after he pooped his pants (he gets cranky but he can’t help it he’s only 1). That being said, an adult/self-proclaimed author/advisor should be better at articulating his feelings than my infant. What you really meant to say is that you disagree with Dan Cathy’s moral viewpoints. So why didn’t you write an article about that?
The great thing about Chic-fil-A is that the cost to get into it is only $5,000. In comparison, Taco Bell asks for a $45,000 fee plus whatever liability you take on to “own” your building. $5,000 let’s alot of people in the door that could never afford $45k. And what’s so bad about “buying yourself a job?” Isn’t that what you do when you go to medschool? Yeah, only it cost 40x that amount and takes 6 years or more before you start seeing income only to bring in the same amount on average.
That being said, if you’re really that worried about them mis-using the term “franchise”… get a life.
Thanks for your comment.
I invite you to try to get a franchise awarded from that company.
An absolute long shot to begin with.
It’s a good marketing ploy, though.
And the article kind of IS about me disagreeing with their way of doing business.
The Franchise King®
This is a terrible and sarcastic article. There are better ways to get a point across about Chik-Fil-A’s business model. However, they are upfront about who posses ownership so I can’t really see what you’re complaining about. Find another business venture if you are looking for true ownership.
Wow – Joel wants tolerance – but of course for his views only. Chik Fil A – so evil isnt it? Why? Because they have the audacity to hold a view that differs from US pop culture (so classy to take direction from moral compasses such as Obama, Alec Baldwin and Bill Maher/hollywood) and whose principles have transcended time and government. You all remember the Gov Huckabee Support Traditional Marriage day? Record day for Chik with Americans FLOODING its locations. The Gay kiss in day – virtually NO one showed but those that did were still welcome by the “intolerant” Chik fil a – funny how those Christians have a serving heart for all people. In fact they are welcoming everyday. The gay mafia and Joel wants to ban anyone who disagrees with their extreme view of a family unit yet cry for tolerance. Is that American? Free Spech, the right to dissent, to worship freely without the government tinterfereing? THAT is America. Time for Joel and everyone else to understand tolerance is a two way street and tolerance of Christians and persons of faith of whom over 75% of Amercians still identify and are clearly set forth in the US constitions FIRST ammendmant. Joel, if you want to live in a land where every brain must adhere to one thought or where diverse religious exercise of dissent are barred might I suggest Noth Korea, Iran or perhaps Saudia Arabia as place for your next franchise venture? Im sure it was an oversight but you didnt mention that these awful values have caused Chik Fil A to be the most profitable quick serve franchise in the insdustry despite being close 52 days more a year? If you arent sure why go to McDonnalds, etc and then stop by a CHik and tell me if you cant honestly see a bit of a difference in service and product.
love the article Joel, especially the tone. I get this question about buying a Chick-Fil-A franchise frequently too. if someone is looking for some sort of control in their life, (typical motivation for self employment) then this is not the business for them. However, I really like their chicken sandwich.
Abe,
Thanks. They have a good product.
Too bad i’ll never taste it again.
I haven’t gone there for over a year.
And, don’t plan to ever again.
JL
they dont want your business.. no problem
And you’re not really a “King” either. Just sayin….
So what should somebody get for 5 grand? I love how that is not said in the article. We are to assume 5k gets you the same as 500K for a large Mcdonalds. Apparently the chic fil a fee and model don’t put money in the pocket of franchise consultants.
Reading the comments and articles I don’t quite understand the argument. What exactly is someone supposed to get for 5 grand?? The author talks about getting a 600 grand check when you sell a franchise. What did you have to put up for that?? 5 grand??
“Beyond the lure of family, the chain is attractive to entrepreneurs who prefer less risk and have less upfront cash to invest.
Unlike most companies that franchise, Chick-fil-A pays for the real estate and the building – a huge chunk of the cost of most franchisees. Owner-operators like the Lawsons basically lease the restaurant, paying the company a $5,000 franchise fee and a share of profits and sales.
In return, the average operator’s yearly income exceeds $200,000, said Jerry Johnston, head of Chick-fil-A’s public relations.
That’s a lot less than a McDonald’s franchisee typically brings home, but then opening up a McDonald’s can cost more than a million dollars. In a McDonald’s, the franchisee is investing in the real estate, erecting the building, buying all the equipment, said Alisa Harrison, a spokeswoman for the International Franchise Association. “You are the owner of everything A to Z in the store,” she said.”
Chick-fil-A’s deal with its operators hasn’t changed since Mike Lawson signed on 37 years ago with company founder S. Truett Cathy.
Read more here: http://www.newsobserver.com/2012/06/24/2153624/chick-fil-a-keeps-it-in-the-family.html#storylink=cpy
How many chik fil a operators do you advise?? That’s what I thought. Zero.
It’s a freaking lottery system.
That’s how this “franchise” has been set up.
They choose a few “operators” every year. Ones that espouse “Christian” values and agree to go to Church on Sunday.
And, Cathy owns them after they sign on. They can’t sell their business because it was never theirs to begin with.
Do the operators make $200k a year. Some of them probably do. That’s a good thing!
But, a $5k investment? C’mon. These folks are buying a well-paid job. That’s all it is.
To call it a franchise is a disgrace to the franchise industry.
JL
Sounds like you are over compensating for something here Joel !! The average Chick-fil-A operator earns $190K per year for a one time $5K investment. Poll some of you other franchisees and see what their ROI is? Make sure to post you results along with this trash you’ve posted.
So let’s see here, they pick a successful high traffic location, build a turn key store with one of the most successful , if not the most successful business models in history for you, you give them $5K and you earn $190K per year. Yes Joel, that has scam written all over it.
As for the religion, its like the radio; if you dont like what you hear turn it off. You Moron.
If it was only that easy, Bill.
Just “give” them $5k, and earn $190,000 a year.
There are plenty of strings attached. And, it’s the religious ones that are offensive.
And, I do turn them off. With my wallet.
The Franchise King®
you wallet does not matter, because of all the folks i know that search the Chik stores out to make sure we support them…
“squeeze me?”
Chick-fil-A is establishing the modern franchise model. In our current “progressive” economy, only the rich can afford to purchase a traditional franchise. Isn’t the idea behind franchising to reward those who work hard?
Your complaint is that for $5,000 Chick-fil-A partners do not have the same equity potential that they would if they paid $1.5 million for a McDonald’s franchise? Really? You are clearly missing the big picture. Maybe you don’t realize how much of a traditionalist you are.
Are you so stuck on Chick-fil-A founders’ traditional values, that you can’t see the value of their progressive business model; a model which enables so many to climb one rung higher out of the muck and mire into which political progressives have flung them? Aren’t you worried that you are exposing your intolerance?
Did you miss that Chick-fil-A states clearly on their website that “this is not the opportunity for you if you are seeking an investment or equity position in a business.”
Bottom line, investing $5,000 to partner in a business that will yield an almost instant and turnkey six figure profit for the partner is generally considered a positive thing. But i guess 20,000 applicants per year vying for 70 openings with an overall 95% satisfaction rate isn’t enough for the “King of Franchising” to raise his thumb in blessing. Hidden agenda much?
This is like someone who has never purchased real estate, posting a blog about how Joint Tenancy is not the same as Sole Ownership and therefore stinks … everyone reading is thinking the “expert” might not be.
Tom,
Chik Fil A hasn’t established any type of “Modern franchise model.” Don’t give them credit for something that isn’t there.
They sell these partnerships because they want total control over their stores.
They get 20,000? applications a year because it’s a cheap way to kind of but not really be your own boss.
It’s not because they’re brilliant businesspeople.
They do have a good product.
But, because of their religious views and views on all things 2014, i don’t go there anymore and won’t.
Traditional Values. Really?
I’d go with backwards.
JL
They’re ‘brilliant’ because it’s working.
I don’t like them because they try to shove THEIR religion down MY throat.
JL
Same thing. That’s what the guy with the funny mustache said about the religious people he didn’t like.
and what kind of shit are you trying to prove…?
are you Gay.. i bet you are..
I have read through all the comments. I am a Single Female Christian Women and I was turned downed from being an operator because I am single. I have over 20 years experience in the restaurant business and I have also owned my own catering company. It’s sad when one states they are a Christian…yet judges people. He wants people to live a Christian based life according to the Bible and yet he excludes himself.
“Truett Cathy is extremely particular in who he selects as franchise operators. He wants married workers, he would like them to have attended Christian-based relationship-building retreats and Chick-fil-A will even interview family members of prospective operators. They would like to learn more about candidates and their relationships at home. “If a man can’t manage his own life, he can’t manage a business,” says Cathy.”
I agree with everything Joel is stating. It’s an opportunity. I was willing to invest $5000 to run a successful business and manage my money for my retirement. I may Not be able to have other businesses, however I can and would have still invested.
I am Glad to know that Truett Cathy is a Perfect Man that has a Perfect Family. Maybe someday I will see him walk on water.
Amazing.
Thanks for sharing.
JL
Sounds like someone is upset because they were not chosen out of the 20K+ applicants. If you did some research you would realize there are a number of single women and men that have Chick fil a stores. It wasn’t because you are single. It was something else. With such a competitive applicant pool, there are plenty of people that have tons of restaurant experience. And Franchise King, just because you don’t share someone’s view doesn’t mean it is ‘backward.’ Talk about intolerant.
Actually Mr Cathy has admitted the fact that he looks to hire married men or women because “if a man can’t manage a family, he can’t manage a business.” And while they don’t necessarily need to be Christian, they must hold Christian values, and participate in prayer groups and relationship retreats. It doesn’t matter if I agree with it or not, but it is true.
She should post the “rejection” letter then. Word for word.
You are professing to be a Christian yet assume all this about the company and slander them the way you are on line? I would truly recommend you examine yourself to see if you are in the faith. You should instead thank God for the opportunity you had to interview and believe that it was God’s will that you did not get the store. God works all things together for those who love him and are called according to his purpose. So if you are truly a child of His you should repent and know that your life is in his hands and you should not slander a company whether they are Christian or not.
and of course.. you don’t include your name so we could check.. it def appears there were other reasons you didn’t gain franchise..
Hello I am only 22 and I have 6,000 $ and I want to flip it into a business opportunity! So I can gain profit long term. A guy talk to be about a franchise, but after reading it. I rather not waist the time or something I want have to show for when it’s all over. Help any suggestion?
Considering that outside the first $5,000, one doesn’t have to raise, borrow or spend the initial investment (roughly 2-3 million) to open up a CFA, I say it’s a fair deal to trade for less equity on the back end. Besides all that, if operators are happy, and CFA is happy, and people are buying those sandwiches, and employees seem to be pretty happy (as opposed to the average fast food employee) what exactly is the problem? Are you really that upset at the simple terminology used regarding “Franchise Opportunity”? My guess is you simply despise CFA for other reasons. Which is fine, but hardly professional to let that seep through your opinions so blatantly. I mean seriously dude…agenda much?
Jeremy,
There’s a difference between less equity and no equity.
And, unless I’m mistaken, franchisees? don’t get Jack when they exit the business.
The terminology being used is incorrect. These folks are operators, not owner-operators…franchisees, and they shouldn’t be called franchisees. That would be reason #2 to despise them.
Reason #1 is pretty darn strong by itself, though.
JL
To each his own. I guess if you are really stuck on the “phrasing”, but surely you see a difference with this…can we call it an Opportunity”? I’m sure many of the current CFA “operators” do not have the capital to open a McDonalds or Wendys. So I see this is a great window for well qualified people to take an active role in a great business model that seems to be pretty successful. For those people, given the choice between NOT making a move at all…or choosing the CFA route and making a pretty good living, why not?
I clearly see your point, and it is valid for anyone looking to get into a CFA, but it’s hardly a secret. If it works, it works, in my opinion. If most “operators” are happy then while it may be duck of a tiger of a different stripe, that doesn’t necessarily make it it a bad idea for someone looking at franchise opportunities.
As for reason number one? As a libertarian minded guy, I personally choose not to use politics to steer where I do business. The free market world (what’s left of it) would shrink pretty fast if I did. Assuming I read your mind on this issue.
actually YOUR terminology is incorrect. Franchise doesn’t equal equitable ownership. Franchise merely equalis priviledge. Surprised the “King of Franchise” doesn’t even know the definition!
Franchise:an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities.
look it up. dictionary dot com.
There are actually many definitions for the word franchise. Yes you have defined one if them. I would look into it a bit mor though
Thank you!!! Exactly!
Wow! Now these are bad people for making money. Or are they “bad” because they disagree with your ludicrous, prejudiced opinion.
Oh and another thing, reading further down I noticed that you said that Chick-fil-A Operators would get sued if they were called owners…what? By whom? Where did you get this? How do you write a book on franchises with this little knowledge of how business works? It’s is rather clear that you have an agenda here.
Jason,
Please re-read what i wrote.
I said that chickfilA corporate would get sued.
The operators are not “owners.” They’re operators. Owners can sell their businesses.
Operators can’t.
JL
Average chickfila operator is the highest paid franchisee in the industry. Over 25,000 applicants last year and only 70 selected. Sounds like you were one of those not selected.
Jason,
If I would have “Applied” to become a franchisee? of Chik Fil A, I would have been turned down.
Want to know why?
Because I would never agree to “participate” in prayer meetings and prayer groups.
And, I would never agree to “attend church” on Sundays when my…their store was closed.
Other than that, I’d bet they would have me!
JL
Untrue… I know two Operators and one is Jewish and I just got off the phone with the other. He said that what you said is far from the truth. Apparently there are several LGBT Operators, etc. dude it is cool that you enjoy blogging but you are wildly inaccurate. Plus, it’s irresponsible amature journalism to constantly misspell the franchise you are reviewing. Chick-fil-A
Jason,
I don’t believe you.
JL
I call bs. Mr. Cathy has admitted that the people he hires must have Christian values, and he looks to hire married men or women. While they don’t necessarily need to be Christian, I don’t know many practicing Jews who would participate in Christian prayer meetings and prayer groups.
Me either, Zahara.
Which is my point.
These people need to stop trying to ram their religion and their religious views down my throat. If I want to learn about their values, i’ll ask them.
JL
This franchise deserves a misspelling.
Truly.
JL
The Franchise King is a joke.
last time i checked, families not attending church together on Sundays were falling apart. families need quality time at the table, in church, and after work. as a operator of a cfa it would allow this quality time with the family. i spent 36 years in middle management with two fortune 500 companies working 84 hours a week at a fourth of the salary and no time to see the kids grow. now they are gone, still working. anyone who had to work at a discount retailer knows you never get ahead. so give the small guy a break, my daughter works for cfa while in college and is pursuing this avenue. she loves her time off, the bosses, peers, and her customers. never heard this from anyone at any other fast food joint.
Reggie,
Thanks for commenting.
The reason you never heard this from any other fast food franchise chain is that they don’t promote religion.
I think that its great that your daughter is working while going to school.
And, you’re right; family units are not as strong for the most part as they used to be. it starts at the top; Mom and Dad need to step up more and be leaders in their families.
JL
Wait so if my family and I don’t attend church on Sundays were going to fall apart? You do realize there are endless ways for families to spend time together and connect? We like to spend time in nature for instance. Don’t be so judgmental.
I totally agree. I don’t need or want an employer TELLING me how they think how should spend my personal time.
JL
I think your nasty, my-way-is-the-only-way attitude would keep you out.
I am looking for a fair solution to a liabilities clause in an FDD that I am reviewing and the franchisor is open to my concerns. The franchisee is liable for all liabilities if they close their doors. This business does almost 75% of sales in gift certificates and royalties are paid and redemption of a G.C. is not the retail value for the franchisor . So, any suggestions that will protect the franchisor from being burned on redeemable gift certificates on a closed franchise and give more protection to the franchisee in the event of failure? Thank you for your insights.
Great question, Brenda.
But, I’m not a franchise lawyer.
Go here- http://www.franchisebizdirectory.com/category/franchise-attorneys/
Contact one them and mention me.
Joel Libava
I think you are being very clearly partial to a personal agenda and not following a sound logical thought process. A franchise is, by definition, a license allowing one to market goods from a company. That is precisely what a CFA franchisee/operator is allowed with their opportunity. The model is different from most common franchises, but that in no way negates the fact that it is a franchise.
The CFA franchise opportunity is truly an opportunity, as opposed to most franchises being more of an investment. The model is designed that way to specifically move the focus from only operators with high net values and instead on to operators with high moral value and loyalty, just as you pointed out. That is why wage worker turnover in CFA is half the industry average, and operator turnover is less than one in twenty. It is clearly a consistently strong business because it is viewed as a true opportunity, and not just a bought business like most franchises.
Thanks for commenting, Vince.
Although it is considered a franchise, it’s not. There is no equity. At all. Of course operator turnover is low; it’s not like they can sell their businesses and walk away.
They would have nothing if they did that.
JL
I would again point to the idea that a franchise isn’t defined by the accrual of equity, but is defined by havin the license to market a company’s product. Beyond that, your idea of equity is skewed. Because the CFA owner/operator has virtually no investment/debt to begin operation. At that point, all profit is equal to equity, because there is no debt incurred to overcome. Also, your argument about calling them owners or operators is 100% unfounded. Walk into any CFA, you will see that they are clearly listed as “Owner/Operator.” You really call yourself the Franchise King?
Hi again, Vince,
My definition of a franchise does include an opportunity to build equity.
And, being listed as “owner-operator” is cosmetic. The owner doesn’t own crap. CFA does. They own it ALL.
That’s why it’s not a franchise in the franchise sense.
Make sense?
JL
The article seems to have neglected to mention some of the following key aspects of getting a Chick-fil-a franchise.
1. Mr. Libava objects to the use of the word ‘franchise’ by Chick-fil-a; but what word would be better? He says it’s only a job, but outside of ownership, it seems to work much more like a franchise arrangement than a job. Most ‘jobs’ don’t include keeping 30 to 40 percent of the profits of the restaurant. Just because the arrangement is unusual doesn’t mean that it is disingenuous or unfair. I would also note that Chick-fil-a couldn’t be more open about just exactly what they are, and are not, offering. The first page of information on their ‘franchise’ opportunities states clearly that if you are looking for equity ownership, the ability to build on a site of your choice, the desire to open a chain of outlets or a passive business investment that you probably should look elsewhere. They never use the word owner (unlike the article above), never imply you are building equity. Before a person is even allowed to express interest in becoming a franchise operator for Chick-fil-a they force them through a set of questions and answers that clearly outline the offer. And outside of the ownership aspects, Chick-fil-a seems to allow the operators about the same degree of autonomy and freedom to operate the outlet as any other franchise restaurant brand (which is to say you have some freedom, but not nearly as much as if you had a non-franchise restaurant.)
2. Mr. Libava seems to have a issue with Chick-fil-a’s culture, but every organization has a culture. If for some strange reason you feel compelled to work on Sunday, then this organization isn’t for you. But don’t imagine that other organizations won’t have rules and expect you to conform with them. Don’t think you can open a Hooter’s restaurant and have the waitresses dress modestly. Don’t think you can open a Starbuck’s and refuse to sell caffeinated coffee. Chick-fil-a is hardly unique in trying to establish a corporate culture. Any franchise opportunity is going to have rules. As a franchise operator for Chick-fil-a, I suspect that you could probably express any opinion you like about Gay rights, abortion, drug legalization or any other controversial subject. However, no restaurant chain is going to allow the franchisee to connect their brand to controversial issues. Dan Cafey spoke as a private individual, and all he said was that he thought marriage is between a man and a woman. There is no mandate that all the Chick-fil-a operators have to agree with him and it’s absurd for Mr Libava to imply that this is the case.
3. The most glaring omission in this review of the Chick-fil-a opportunity wasn’t that there is a guaranteed minimum of $30,000 a year. It’s that your likelihood of getting one is so low. Chick-fil-a get’s ten’s of thousands of would be operators applying every year for a franchise. They typically build under a hundred new locations each year and turnover for operators is very low, so your chances of getting one to operate is quite slim.
Steve…thanks for your thoughts.
1. You wrote that, “Chick-fil-a they force them through a set of questions and answers that clearly outline the offer.”
They sure do. How many questions are asked about their religious beliefs?
2. You wrote that, “They never use the word owner.”
True that. (Or, “Truet that. LOL). It’s a good thing that Chik doesn’t use the word owner. They would get sued! The franchisees don’t own shit. Nothing. Nada.
3. Culture. Really?
4. As for your paragraph stating that, “As a franchise operator for Chick-fil-a, I suspect that you could probably express any opinion you like about Gay rights, abortion, drug legalization or any other controversial subject. However, no restaurant chain is going to allow the franchisee to connect their brand to controversial issues. Dan Cafey spoke as a private individual, and all he said was that he thought marriage is between a man and a woman. There is no mandate that all the Chick-fil-a operators have to agree with him and it’s absurd for Mr Libava to imply that this is the case.”
Really? Their entire “Brand” is anti-gay marriage. It’s anti-non-Christian “franchisees.” It’s anti- We live in the year 2013. He didn’t speak as a private individual. That’s why this post is the most-visited one on this franchise blog.
5. Turnover. Of course the turnover is low. Chik freaking own you after you sign on as a “franchisee.” Heck, you’re not allowed to own ANY other type of business while you are involved with them. You’re not allowed to have a Plan B.
How “Christian.”
The agenda in your piece is quite clear. You don’t agree with the politics or beliefs of “corporate” and it seems to have skewed your tips and advice. You are unprofessional and a biggot.
I will have to search for better/non-biased tips and advice elsewhere. I’m certain I will be missed.
My agenda? It’s my opinion. A franchisor that mixes religion with business is playing with fire. JL
They would only be playing with fire with someone who disagrees with their faith. It’s a free country… or at least it used to be. If someone doesn’t want to be an operator at Chick-fil-a, they can go somewhere else. The liberal mind-set espouses tolerance… except when it comes to them tolerating anyone who lives in the Christian faith. If you don’t like Chck-fil-A, go to KFC. It’s their company, their culture, their product, and their business. Mind your own.
For me, David, it’s not so much as I disagree with their faith-it’s that I don’t want it shoved down my throat along with their Chikin.
That’s why I will never set foot in a CFA food franchise ever again.
Their world view isn’t mine.
Notice that I’m not sharing what mine is.
JL
You must be used to talking to idiots. You didn’t share your world view? Anyone with half a brain knows what your views are just from the crap you’ve written in this piece. And, you’re probably a little upset that they’re so successful with their business model and you weren’t consulted. I realize these comments were from several months ago but I couldn’t help myself. I imagine you’re more of a self-titled king then an industry recognized one. Very biased against Christians.
Hi Dwight,
Chik Fil A would have never consulted me. I’m Jewish.
JL
To the folks who may read this, suggest you go to Fran net for franchise advise and alignment. I don’t think Joel is objective enough for that type of a position.
Yes…for sure, Targa. A frannet broker who will receive a $20,000 commission for matching someone to a franchise that They represent is truly objective…in every sense of the word. JL
Thank you for your comment. Franchoice, and The Franchise Brokers Association are even better choices if you’re going to use a broker. JL
Joel,
Sounds like you have some personnel issues your working on, or at least I hope you are. You sound like a frustrated, something, just not sure what. chick f la is a business like any other business. They have a selection process for their owner operators that is second to none. Where else can you pay 5,000 for a business, or if you want to say to buy a job, which by the way pays 185,000 a 220,000 per year. Thats a pretty good paying job!
Yes this is true i saw how the financials work.
Seems you could do something more constructive with your time rather than bash an American success story.
Targa. Pointing out franchisors that seem to be engaging in religious discrimination when choosing franchisees is a pretty constructive use if my time. Thanks for reading my post. JL
Yes, those filled with righteous (pun-intended) indignation at the acts of discriminatory Christians, always think their best work is done by dragging them in the street and flogging them. My problem with this whole thread is that I don’t see any CFA operators on here complaining… even anonymously. The only one complaining is you.
I lost my business in the economic downtown and was wiped out financially. If they offered me the chance to get back in a high-income role for a $5000 investment, I would do it in a minute!!
I’m a free-market guy. If their making people angry by discriminating or being unfair, the market will decide their fate. But, the only person angry is you.
Joel,
Why does this make you so mad? It’s not like they charge 50,000 and then don’t let you keep anything. They only charge 5,000 for the fee for a company that has a record of great success. Is it so wrong that they want to do things different. Plus if it was me I wouldn’t want to spend all that money on the building, supplies ect. Besides if it makes you that upset you don’t have to buy the chick fil A franchise.
Hi John,
Thanks for popping by.
If they charged $50k and didn’t let you keep anything it REALLY wouldn’t be a franchise business.
No one has to “buy” it.
And, no one except corporate “owns” it.
JL
You seem to have an “entitlement” mindset. Someone without a lot of money, makes no upfront investment, takes no risk of significant loss in the venture, get’s a leadership role in a great culture, and, based upon your estimations in another post, earns $200,000 per year (some of these guys have up to 3 units!), and you’re complaining because they don’t have an asset to sell in the end!?! Are you kidding me?
I’ll pay $15,000 for the 3 of those, have zero liability, no significant accounting, HR, or marketing concerns (since corporate handles most of those), earn my $600,000 per year until I’m too old to walk, and laugh all the way to my final rest.
I’ve had my own business and had to stare down a $70,000 payroll, each month, month in and month out, sometimes paying my employees when I was buying groceries and paying my light bill with a visa card. CFA operators don’t worry about that stuff. They name their schedule, focus on strategic development of their staff and sales strategy, have freedom to allocate their time as they decide, and make an outstanding income along the way. Yeah, you’re right, that’s a terrible deal.
It seems to me that your someone who makes his living off folks buying or marketing franchise opportunities. Could it simply be that this model is a threat to your livelihood?
David,
Really? CFA operators are making $200k a year (I stated the $200k yearly income estimated based on what others have said.) and get to set their own hours.
Right.
Like CFA corporate doesn’t Own You if you’re an operator.
In a perfect world, if someone with the right religious beliefs (according to the Cathy family) gets picked in the CFA franchise operator lottery, invests their $5,000, signs their operators agreement, and really can make $200k a year, it sure sounds like a great deal.
And, where did you get your information about it being a great culture there?
JL
I attended a chick-fil-a franchise presentation. I would say it’s not a typical franchise, but it’s definetly a business opportunity. I’m ok with them calling it a franchise. Your success depends on the success of the business. In that sense, it is definetly a business opportunity. You don’t build equity, but you make a very good income with basically no investment. All of the risk is on corporate – if they don’t pick a good location, they take the hit from a financial perspective. I think this is a great opportunity (if you qualify) for a firt time entrepreneur, or someone starting their career to begin their business ownership. The operator who presented at the meeting I went to was probably in his mid-40s and went there from a nice corporate job.
Thanks for stopping by.
I guess that for the right person, who agrees to attend Sunday worship (it’s strongly suggested that the franchisees do that by corporate, you know) it would be okay.
But, it’s not a franchise…at least not in the way that the franchise business model was set-up in the first place.
JL
You know, liberals claim that our nation’s constitution is not “set in stone.” They argue instead that it’s a living, breathing document that evolves over time. According to them, as the times change, so do the document’s interpretations. This is where “bench legislation” comes from. Judges don’t rule on the law of the land, they set legal precedence based upon what they personally think is most just at any given moment.
You seem to be someone who would sympathize with this type of thinking. Yes? No?
If yes, why then can the definition of something as insignificant as the word “franchise” not evolve? Times change. Someone builds a better mousetrap. It used to be that people in our country celebrated innovation and better, more efficient ways to do things.
I suppose the word is not allowed to evolve (at least on this blog) because you would have to put down your axe on this issue and find something else to grind on … and what fun would that be?
Thank you for your article!!! Everyone needs to know this corporation is holding the “gold cow” hostage. As a close friend of mine lost his chic fil a he had built for 20 years– over a unfounded lie. Many others have had their chic fil as taken away from them. I heard one guy had his business taken because he refused to honor an expired coupon! STAY FAR AWAY from this not christian company –they are evil.
Thanks a lot for that update.
JL
Wow, you accept this comment as fact without questioning it? Another post on here pointed out that CFA had a Jewish operator and you questioned him immediately, “I don’t believe you.”
But, this knuckle throws out an unsubstantiated claim and gets, “Thanks for the update?”
You’re not fair minded. You’re biased. Anyone reading this blog should take note.
He probably placed the comment there himself to soothe his ego.
Who cares? If a franchisee wants to get in bed with them, its a free country.
It sure is.
And, I’ll bet that it’s a feather bed.
JL
I have to say I agree with your article completely. The Chick fil A franchise model is in no way a franchise at all. The reality of the situation is that Dan Cathy is a businessman and a smart one at that. He has figured out how to attract talented people and lock them into a “management” position by giving them an ownership title. After doing extensive research into their franchise agreements I discovered the following. First off they will only allow the “owner” to operate as a sole proprietor, they will not allow you to do business as an LLC. So now you will be exposing all of your personal assets including your home, personal bank account, vehicles and juniors college fund. So let’s say you own a successful location and do 3 million a year. A very well run business will end up with a net profit of about 20% or 600,000 So first we will subtract 15% of the gross sales for the franchise fee of 450,000 which leaves us with 150,000 then divide that in half for the rest of thier cut, which leaves the “owners” share at 75,000 not a bad living. Oh wait I forgot about old uncle Sam, as a sole proprietor the IRS does not differentiate between you and your business so guess what you are left with a huge tax liability. There is a reason they only guarantee 30,000 per year because they know you won’t be making much more than that. Oh and I forgot, expect to be putting in about 80 hours a week at a minimum to do even this well.
Thanks for your comment and the info!
I had no idea that there was a $30k “Guarantee.”JL
I didn’t get your math from revenue of 3 million. 20% or $600,000 is net profit. Subtract 15% franchise fee or $90,000. So then isn’t it $510,000 remaining and split 50% with Chik fil a leaves the “franchise” owner with $255,000 before taxes. Considering an investment of $5000 to potentially make $250k is a very good opportunity.
I have not vetted Beau’s math skills.
Yet.
JL
Yes, there’s a $30k guarantee until the restaurant starts working. However, this contributors whole post is wrong. Since you can’t sell it, you don’t “own” it. There is no liability as Chick-fil-A corporate owns everything and indemnifies their operators.
My first job was at a Chick-Fil-A. The manager there was wonderful to me. It was a great experience and one where I was proud of the company I worked for. There methods may not be traditional, but I’ll always hold a special love for Chick-Fil-A. They build great people up through an entry level position and help them to blossom into professionals. The skills I learned there still help me today. This doesn’t relate much to the topic, but being a benefactor of the Chick-Fil-A system, I feel they do a lot of good for the people involved with their system.
Thanks for popping by with that, Sabrina.
I’ll bet that their training is top-notch. They do seem to run tight ships.
JL
Finally, a compliment. Yes, they do. Compare the service at CFA (especially the drive-thru) with ANY other fast food franchise… especially the majors. Those kids get the best training in the industry.
When I used to go to their restaurant-when my kid was little, the employees were really good.
JL
I’ve spent much of the last three decades in franchising accumulating several rewards and this year’s National Association of Entrepreneurship’s NAE 250 award. I’ve done consulting work and training for thousands of businesses, brokers and/or franchisors and now also do franchise brokerage (I don’t represent Chick-Fil-A). Joel’s facts are correct…. there are some other opportunities that provide you real ownership (you never own a franchise – you have a license to use their brand, system, etc.)… but I don’t offer any for $5000. Joel is also correct that owning a Chick-Fil-A doesn’t have many of the advantages that other franchise concepts have… and to that degree, one can argue that they shouldn’t be considered a franchise… but is it a bad deal? Depends on what YOUR desires are.
For some this is a GREAT opportunity… VERY low investment, the opportunity to generate a six figure income, not work on Sundays (don’t underestimate this – this is often a KEY reason people who want to own a food franchise choose this concept), often work close to home, exceptionally high consumer satisfaction, repeat business, loyalty, and you have very good chance of success and stable long term income – sad to say, that’s not the case in the J-O-B environment – Those attibutes and others DO MAKE this a good opportunity for many (but not all)… maybe not the best, but FAR from the worst.
For the true entrepreneur, this may not be the best fit… but for the guy with a good work ethic, ability to manage an organization primarily consisting of young people, doesn’t want to make a large investment or risk their home, and simply likes the culture of the company… this is a viable option. There are a lot of displace executives that are losing over $10,000 a month that would be willing to invest a $5,000, $10,000 or more to get back a six figure income…. and RIGHT NOW… these Chick-Fil-A franchisees are VERY happy campers!!!!
Thanks..and your points are spot-on.
It’s about fit-but, it’s not really a franchise business opportunity that’s being offered, and that’s my problem with it.
The “family” has had lawyers look things over, obviously, and they must feel safe about their “opportunity” being registered as a franchise. I don’t-and their business model is not a franchise one.
I have a problem with misrepresentation, and I’ve written about it before-
https://thefranchiseking.com/business-opportunities-are-not-franchise-opportunities
JL
Joel,
Your problem is not with “mis representation” it’s about the fact that Dan spoke his mind about gays, by the way this is America and he can say whatever he likes. You need to get thicker skin. You even said it yourself ” if Dan would have kept his mouth shut” gee I bet Dan is shaking in his boots that you have exposed this massive fraud …….. Like I says LOL
your points are not terrible, but you miss a major component or two. first, becoming a chick-fil-a operator has very little chance of complete failure, since they are so successful. second, and more importantly…the profits of the operation are split 50/50. the operator does not need to handle any payroll or purchasing…that’s all handled corporately. i’m not sure where else virtually any teenager can go and be earning $200k+ per year by the time he’s thirty…with so little risk…and $0 in student loans to pay off. (FULL DISCLOSURE: i have am not now, nor have i ever been an employee or operator with chick-fil-a)
Hi Jay,
Thanks for stopping by.
You’re right! Very little chance of failure. But, after slaving away 65 hours a week for 10-15 years, what does a “franchisee” have to show for it, besides a good salary?
JL
As a business owner (non-franchise) I understand your point completely here. But, the opportunity to earn a nice living with minimal investment can be something that allows a business-savvy person to create equity in other things over the years. No, you cannot operate another business. But, are you allowed to own passive investments in other businesses? Limited Partnership shares, etc? I would assume so. At 200k a year with no debt you can sock quite a bit of money away into other things that provide interest, growth, and/or additional income.
Thanks for stopping by The Franchise King Blog.
I have no idea what the Chick fil A franchise agreement-contract states about, “passive business ownership.” And, I’d bet that it would be quite difficult to secure their contract to find out.
And, there’s no guarantee that one could make $200k a year as a “franchisee” of this Chicken Chain. None.
JL
So the message here is to fully investigate ANY franchise opportunity, and go into it with eyes wide open. Make sure it is the right opportunity for you (as it is for these franchisees).
Tru-That, Mike.
JL