Why It Only Costs $10K To ‘Own’ A Chick-fil-A Franchise

Why It Only Costs $10K To ‘Own’ A Chick-fil-A Franchise

It’s harder to become a Chick-fil-A franchisee than it is to get into Stanford University. “When I got the opportunity to become an operator, I cried,” said Quincy Springs IV of Atlanta. Photo: Chick-fil-A

When Quincy L.A. Springs IV of Atlanta applied to become a Chick-fil-A franchisee, he had to write 12 essays, go through 10 rounds of interviews, and provide a copy of his high-school transcript.

Less than a quarter of 1 percent of applicants get selected by Chick-fil-A to become operators. Springs was one of the lucky few. He opened the Vine City Chick-fil-A in 2017.

A decorated military officer, Springs’ LinkedIn page gives insight into why he was chosen.

Springs served as a logistics officer and combat advisor for the U.S. Army in Afghanistan. He has an international service record and says he’s passionate about empowering youth and growing jobs in underrepresented Atlanta communities. Springs worked as general manager of an Atlanta Walmart that did $40 million in annual sales. He earned a degree in philosophy from Washington and Lee University, graduating cum laude.

“When I got the opportunity to become an operator, I cried,” Lee told Business Insider.

Quincy L. A. Springs, IV, the owner-operator of a Chick-Fil-A store in the Greater Atlanta Area. Photo: Westside Future Fund.

It’s harder to become a Chick-fil-A franchisee than it is to get into Stanford University.

That’s because rather than choose wealthy investors with a high net worth and liquid assets like most other franchises do, the Chick-fil-A corporation selects franchisees based on other criteria.

It looks for candidates who are involved in their local communities, who are willing to be “highly involved” in day-to-day operations, and it doesn’t hurt if they adhere to “Christian values”, although that’s unspoken, The Hustle reported.

The Hustle spoke with more than a dozen franchise owners and analyzed data from franchise disclosure documents filed by 22 of the largest domestic chains.

The average chain it looked at requires a franchise applicant to have a minimum net worth of $1 million (half of which is liquid). Wendy’s is higher than average, requiring you to have $5 million in the bank. To open a Subway, you need $80,000, Dunkin’ Donuts, $250,000 and McDonald’s, $500,00.

The lucky ones who win the golden Chick-fil-A ticket and become franchisees only have to come up with $10,000.

There is a catch though. Chick-fil-A charges the highest royalties of all restaurant chains polled by The Hustle. 

Generally, fast food franchisees pay a royalty fee of 4-to-8 percent of the store’s monthly sales. Chick-fil-A charges by far the highest royalty fee of 15 percent plus 50 percent of net profits.

Unlike other franchise models, Chick-fil-A — not the franchisee — covers nearly the entire cost of opening each new restaurant. Costs run from $343,000 to $2 millon. The Chick-fil-A franchisee only pays the $10,000 franchise fee.

So it’s not surprising that 60,000 people apply to be Chick-fil-A operators every year and less than 80 are selected.

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Just 0.13 percent of Chick-fil-A applicants are accepted as operators each year. It’s harder to get a job at Google (0.23 percent), become a special agent for the Secret Service (1 percent), or get accepted to Stanford University (4.8 percent).

Chick-fil-A franchisees don’t own the restaurant or equipment. Everything belongs to the corporate office. They don’t have an equity stake in the business, can’t have multiple locations, can’t run any other business and aren’t truly franchisees in the traditional sense.

Here’s the sweet part. Chick-fil-A’s average revenue is the highest of any U.S. fast-food chain at $4.2 million per store. That’s more than McDonald’s ($2.8 million) and KFC (1.2 million). How impressive is that considering Chick-fil-A restaurants are closed on Sunday?