Best Franchises With Low Startup Cost – Chick-fil-A receives more than 40,000 applicants each year. With a Chick-fil-A franchise fee of only $10,000; To begin with it seems like a big investment. But there are strict Chick-fil-A franchise requirements and a lengthy approval process that brings in less than one percent. The franchise fee is not the only cost. So, how much does it cost to open a Chick-fil-A franchise, and does it matter in the long run? Here are some reasons why franchising is hot, and why it’s a better option.
Chick-fil-A is named as having the “best chicken sandwich” by food blogs every year. Where does the company stand in terms of investment value and what is the need for a Chick-fil-A franchise? This is where things get confusing.
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The starting fee for a Chick-fil-A franchise is only US $10,000. This is very low, as the average company is over $40,000, for franchises such as Taco Bell and McDonald’s. But when you compare Taco Bell or McDonalds to Chick-fil-A, you’re not comparing apples to apples. Chick-fil-A franchise fees are low because the company wants to retain ownership of the franchise, and make all marketing decisions (we’ll get into this below). The initial investment must be in an average business, and from $265 to $2.2 million.
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Chick-fil-A restaurants average $5.3 million in annual sales. This is surprising, since Popeye’s closest competitor is $1.5 million for each franchise location, and the leader of the quick service industry (QSR) McDonald’s averages $2.7 million. That said, sales and business profits are two very different things, and profits in the QSR sector are small – usually 5 to 10 percent for the most active. Franchise Business Review’s latest research on food franchises found that the average franchisee in the food and beverage sector takes home an average of $120,000 in annual revenue – and our food prices average 15 to 20 percent more than that. Although Chick-fil-A does not release user revenue figures, Franchise Business Review estimates that the average restaurant user earns a respectable $150,000.
If you want a self-directed business, where you have little involvement in back-end operations, Chick-fil-A is for you. The franchisor takes care of most of the dirty work: choosing a location, buying real estate, building a budget, and buying equipment. The franchisor also manages accounting, service and customer relations, maintenance, and sales.
No matter how small it is, it is every business person’s dream. The retention rate of Chick-fil-A franchisees has remained at 96 percent for more than 50 years. their employees. Lynnae Schneller, who has a location in Tacoma, Washington, said that Chick-fil-A “brings its family and community together in a new way.”
There are many reasons why a franchise might not be the right time for you: you don’t agree with their style and approach, you don’t like the product, and the list goes on. However, the information below can be a valuable deterrent for Chick-fil-A customers. Don’t let that discourage you, though, as there are many other options on the market today (as we’ll discuss later in the article!).
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While this is true for some franchises, many offer the option of having multiple locations. Chick-fil-A is not, and only allows one portion per vendor. The value can be less, because you are limited to a certain area.
The company wants their franchisees to be hands-on, committed to their Chick-fil-A franchise. In other words, if you are a serial entrepreneur: this is not the right franchise for you. They did not give a clear reason for this, but one can conclude that the company does not like the creation of conglomerates, and it is better than most.
Much has been written about the culture of the Chick-fil-A franchise. Closing their restaurants on Sundays has just started. The group has a long history of traditional, religious traditions. Some people find this interesting and one of the great things about Chick-fil-A as a company. While others want to be part of an open culture. A company’s culture and values are important to look at when considering an investment.
It’s no secret that finding a Chick-fil-A franchise is difficult; The head of the Environmental Protection Agency, Scott Pruitt, could not buy his wife Marilyn. According to an article from The Washington Post, Chick-fil-A only accepts 100 to 115 out of 40 applicants each year. This means that only 0.25 percent of applicants are selected (your kids better get into Harvard!). In addition, they will not establish their franchises:
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Chick-fil-A has one of the lowest required wages in the QSR sector, but as their employee, you are not alone in the business. In general, the land, buildings, and equipment are owned by Chick-fil-A companies, which they lease to their employees. It’s like renting versus renting. When your franchise agreement with Chick-fil-A expires, you have nothing – which for most businesses is a deal breaker.
“Chick-fil-A is a different animal,” said Franchise Business Review founder and CEO Eric Stites. “Yes, it’s easy to get into, but it’s not impossible, unless you’re a business owner, a Chick-fil-A company. For most people, the decision to go into business is to build long-term wealth through equity… a big one that you can sell and give to your family. That’s not the case with Chick-fil-A franchise opportunity.”
If you find that Chick-fil-A is not the right franchise opportunity for you, here are some great options, which can be found on our Top Food Franchises list.
Named by Franchise Business Review as the top food chain for the past eight years, Checkers and Rally’s franchisees have been satisfied, and the support has been unparalleled. The franchise fee is $30,000 and the initial investment is $593K-$820K. Their franchise proof document (FDD) shows a 62.2 percent return on investment on average annual sales of $128,000, and veterans don’t have to pay a fee.
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This fast food chain has become an American favorite, both for their food and their franchising opportunities. The fee to open a Wendy’s franchise is $40,000 per unit (they call it the “Technical Assistance Fee”), with the possibility of having more than one unit. The initial investment is expected to be from $2 million to $3.6 million, and the annual sales are expected to be $1,600,525 according to the figures of the franchise report 2018. In addition to acquiring property, it is not yet enough. suitable places: airports, entertainment centers, and hospitals.
Donatos Pizza is a force to be reckoned with, generating over $1 million in average sales each year, with their flagship restaurants grossing over $2 million annually. They have over 160 paid locations nationwide, and they’re still growing! The initial investment for a Donatos franchise is approximately $375 to $699, and the franchise fee is in the middle of the business, at $30,000.
East Coast Wings and Grill is not a quick service setup. However, the investment is a bargain compared to others in the industry. The starting price for an East Coast Wings and Grill franchise is between $698,500 and $15,332,000, which is very low compared to similar restaurants (Buffalo Wild Wings, for example, has a very low price of $18,000 ). The franchise fee is $40,000, and average net (per unit) sales in 2017 were $1,573,714 with a 15% net operating margin.
The food and beverage franchise sector offers a variety of options for potential franchisees, many of which are affordable and manageable. Chick-fil-A is a highly sought-after place, and while it may be a good choice for some, it’s not for everyone. We hope you have made your choice easy, and if you want to learn more about the food and drink sector, please check out our list of Top Food Destinations.
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