5 Things You Need to Know Before Investing in a Chick-fil-A Franchise
Chick-fil-A is one of the most successful and influential fast food chains in America. Chick-fil-A units are the most-frequented fast food restaurant in 38 out of 50 states, according to a study by Business Insider and Foursquare. Plus, QSR Magazine released a report that the average Chick-fil-A makes about $4.4 million in sales per year -- $1.7 million more than the next best restaurant, Whataburger.
So, if you're looking for an awesome investment opportunity, then Chick-fil-A sounds like a home run. But is it? Here are five things you need to know before buying one of the chicken franchises.
Chick-fil-A isn't an investment.
Chick-fil-A is very clear on this front: If you're thinking of getting a Chick-fil-A restaurant solely because it's a good investment, or because it could help you transition to something else down the road, then the company isn't interested in letting you run one of its restaurants. Instead, according to its website, "The Chick-fil-A franchise opportunity requires that the individual be free of any other active business ventures and operate the restaurant on a full-time, hands-on basis."
This philosophy might help Chick-fil-A reach its potential at each location, but it also means that you won't be able to work on any other sort of projects. It's not a passive income stream, it's not a part of your portfolio -- Chick-fil-A insists on being your sole focus.
Chick-fil-A is expanding in 28 states.
Right now, Chick-fil-A has focused its growth opportunities to 28 states:
Arizona, California (especially L.A. County, Orange County, San Diego County and San Francisco Bay) Colorado, Connecticut, Florida (especially South East Florida), Georgia, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York (especially Long Island and New York City), North Dakota, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Washington and Wisconsin
This is a wide-ranging list, so unless you live in Alaska or Hawaii, it's likely that there could be opportunities near you. You can learn more about potential locations either by applying or by attending an operator event.
Chick-fil-A is incredibly picky when choosing operators.
It simply isn't easy to get a Chick-fil-A franchise. According to AOL, the company only accepts about 75 to 80 new franchises each year, despite the fact it receives around 20,000 applications on an annual basis. That means about 0.4 percent of applicants get approved. By contrast, Harvard Business School accepted 11 percent of its applicants for the Class of 2019.
In other words, Harvard Business School accepts 27.5 times more of its applicants each year than Chick-fil-A. With that in mind, consider your own history before applying. Do you have a strong background in business? Will your references give you powerful recommendations? What will make you stand out from everyone else?
Chick-fil-A wants more control than other fast food restaurants.
So, if you have the intention of buying a franchise you can later sell, Chick-fil-A isn't for you.
Chick-fil-A pays every startup cost.
If you've started to wonder why anyone would consider purchasing a Chick-fil-A franchise, given all of the considerable hurdles, then this is a powerful reason. Because Chick-fil-A wants to maintain ownership of the franchise, the company chooses the location, buys the real estate, constructs the restaurant and purchases the equipment.
All you have to pay is a $10,000 franchise fee.
Chick-fil-A's impossibly low price tag helps make it accessible, even despite its irregular business model and low acceptance rates, and it's part of what makes it so successful.