Chick-fil-A
Date Incorporation: 1964
Franchising Since: 1967
Headquarters: Atlanta, Georgia
Business Description: A Chick-fil-A restaurant is a limited menu, quick-service restaurant specializing in a boneless breast of chicken sandwich known as a Chick-fil-A chicken sandwich. In addition to the Chick-fil-A chicken sandwich, menu items at a Chick-fil-A Restaurant include salads, Chick-fil-A nuggets, Cool Wrap items, Chick-fil-A Waffle Potato Fries and soft drinks, as well as hand-spun milkshakes, freshly squeezed lemonade and a variety of breakfast items, including their café blends coffee, Chick-n-Minis, breakfast burritos and chicken, egg & cheese bagel.
Franchise Offer: Chick-fil-A's principal business is the development of a chain of retail quick-service restaurants operated by franchisees that are referred to as Operators. Chick-fil-A restaurants are established in free-standing locations as well as in non-free-standing locations, including mall and in-line units, non-traditional locations and locations which are drive through only. Chick-fil-A also offers a Licensing program focusing on the development of new licensed Locations on College Campuses, in Airports, Healthcare Facilities and Corporate Services venues. Chick-fil-A locations are required to be closed on Sundays and Christmas Day.
Financial Assistance: Chick-fil-A leases and subleases restaurant premises to its Operators. The terms for these leases and subleases vary depending on the location of the Chick-fil-A restaurant. Chick-fil-A provides extended payment terms for certain pre-opening expenditures and also rents equipment to its operators at a fixed monthly equipment rental fee for each Chick-fil-A restaurant. In the formula for allocating the revenues of each operator's Chick-fil-A restaurant business, Chick-fil-A indirectly finances the retention of the base profit draw and extra profit draw if the franchised Chick-fil-A restaurant business does not produce enough aggregate operating profit to cover these draw items. Chick-fil-A will administer and account for the sales receipts of the franchised Chick-fil-A restaurant business, provide bookkeeping and accounting services to complement the administering and disposition of the sales receipts of the franchised Chick-fil-A restaurant business, maintain certain financial records and furnish a report to the franchisee each month containing specified financial information concerning the previous month's performance of the franchised Chick-fil-A restaurant business.
Training and Assistance: Chick-fil-A Operators must successfully complete an extensive, multi-week training program prior to commencing operation of a franchised Chick-fil-A Restaurant business. Licensees are required to send their Food Service Director and one Manager with direct oversight of the Licensed Chick-fil-A Restaurant to Atlanta for a 1 1/2 day Orientation Class as well as having a minimum of two dedicated team leaders train in a Chick-fil-A Restaurant for six days of training.
Territory: The Operator will be granted the right to operate a Chick-fil-A restaurant at a specific location designated by Chick-fil-A. Chick-fil-A's real estate and development office selects the site for the restaurant, buys the land and builds the restaurant, and then leases it for a fee each month to the franchisee. The rights granted to the Operator under the operator agreement are limited to their Chick-fil-A restaurant business location only. Chick-fil-A has the right to establish other operator-run, licensee-run or company-owned or operated restaurants both within and outside the geographic and customer trading pattern areas surrounding the franchised Chick-fil-A restaurant business location.
Term of Agreement and Renewal: The agreement terminates on December 31 of the year that the Agreement is signed or when the lease expires, if earlier. The agreement is automatically extended for one-year periods unless written notice is given by either party.
Obligations and Restrictions: The Operator must run the restaurant as a sole proprietor; the restaurant cannot be run as a corporation. Chick-fil-A requires that the individual be free of any other active business ventures and operate the Restaurant on a full-time, hands-on basis. The agreement requires the Operator to devote their full time and personal best efforts to operate the franchised Chick-fil-A restaurant business. Chick-fil-A requires the Operator to offer and sell only the Chick-fil-A brand products and other items that Chick-fil-A has approved. The Operator must offer all products that Chick-fil-A designates.
Total Number of Units: Over 1,500 locations
Investment Tables:
Initial Investment:
| Expenditures | Low | High |
|---|---|---|
| Initial Fee | $5,000 | $5,000 |
| Opening inventory | $23,000 | $52,100 |
| First month's rental of equipment | $750 | $750 |
| First month's lease/sublease of premises | $2,000 | $33,500 |
| First month's insurance expense | $140 | $3,600 |
| Additional funds | $249,835 | $719,700 |
| Total | $280,725 | $814,650 |
Ongoing fees and costs:
| Name of Fee | Amount |
|---|---|
| Operating service charges | 15% of gross sales & 50% of net profit per month |
| Advertising | None |
| Accounting | $60 per month |
| Rent | $2,000 - $33,500 |
| Insurance | $140 - $3,600 |
| Monthly equipment rental | $750 |
| Hardware and software support; high speed Internet access | $500 - $4,000 |
| Credit card fees and related processing fees | Varies |
| Highway signage | Varies |
The above information has been compiled from the FDD of Chick-fil-A along with online sources.
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