Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Chick-fil-A Franchise Costs (2017 FDD)

by Franchise Chatter on January 12, 2014

in Chicken Franchises, Franchise Costs, Sandwich Franchise

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Chick-fil-A Sandwich Photo by roboppy

This post was updated on August 7, 2017 to reflect information from Chick-fil-A’s 2017 FDD (Item 7).

Detailed Estimates of Chick-fil-A Franchise Costs Based on Item 7 (Estimated Initial Investment) of Chick-fil-A’s 2017 Franchise Disclosure Document

Chick-fil-A Franchise

  • Chick-fil-A’s principal business is the development of a chain of retail quick-service restaurants specializing in a boneless breast of chicken sandwich. Most of these restaurants are operated by franchised operators who are independent contractors.
  • Chick-fil-A also operates various Chick-fil-A and other restaurants itself from time to time and may do so in the future through its affiliates and subsidiaries.
  • Chick-fil-A also licenses and continues to offer licenses to prospective Chick-fil-A licensees from time to time who have access to locations such as schools, workplaces, universities, airports, hospitals, and other similar locations to sell Chick-fil-A brand products at such locations. Chick-fil-A offers its licenses under a separate Disclosure Document.
  • 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 (“satellite units”) and locations which are drive-thru only.
  • Mall units are generally located in shopping malls and shopping centers.
  • In-line units are generally located in shopping centers, office buildings, and downtown areas.
  • Satellite units are generally located in office buildings, big box stores, and downtown areas, and may feature and serve only a limited number of menu items and may be (but are not necessarily) established in connection with an existing Chick-fil-A Restaurant.
  • Although Chick-fil-A and its franchised operators market Chick-fil-A brand products broadly, the franchisor finds that the typical Chick-fil-A customer is in the 18-44 age group.

Chick-fil-A Franchise Costs

Estimate of Initial Investment

  • The following describes the costs of initial investment for a free-standing unit, mall unit, satellite unit, and drive-thru only unit.

1.  Initial Fee:  $10,000

  • Once you have paid the $10,000 initial franchise fee, if you are offered the opportunity to operate an additional franchised Chick-fil-A Restaurant business, you will pay an additional franchise fee in the amount of $5,000 for each additional business.
  • Although the $10,000 initial franchise fee (or the $5,000 additional franchise fee, if applicable) is the only initial out-of-pocket investment you will be required to make to begin operation of the franchised Chick-fil-A Restaurant business (or additional business under your Franchise Agreement), the other expenditures will reduce the actual profits of your franchised Chick-fil-A Restaurant business and will affect the amount of your income.

Estimate of Additional Expenditures

  • These amounts are deducted from the Gross Receipts of your franchised Chick-fil-A Restaurant business as expenses.
  • Although calculated and due on a monthly basis, these fees and expenses are paid from Gross Receipts as expenses of your franchised Chick-fil-A Restaurant business to Chick-fil-A on either a monthly or pro rata/month to date daily basis.

1.  Opening Inventory:  $19,000 to $81,850

2.  First Month’s Rental of Equipment:  $750 to $2,000

3.  First Month’s Lease/Sublease of Premises:  $2,075 to $96,100

  • This amount depends on where your franchised Chick-fil-A Restaurant business will be located, the size of the premises, and other factors. The amount could be higher, for example, if your franchised Chick-fil-A Restaurant business will be located in a flagship-type, urban facility in a large metropolitan market.

4.  First Month’s Insurance Expense:  $200 to $7,610

5.  Additional Funds:  $284,200 to $1,527,700

  • This amount reflects the costs you can expect to pay in your first three months of operation and includes your expenses, as well as the cost of repairs, maintenance, and utilities, but does not include any draws, disbursements, or other distributions taken by you.
  • In formulating these figures, Chick-fil-A has relied on its own 50 years of experience in the Chick-fil-A Restaurant business and on profit and loss statements of Operator and Chick-fil-A operated Restaurants opened during the fiscal year ended December 31, 2016.
  • The exact amount required for additional funds will vary from operation to operation and cannot be estimated with certainty for your franchised Chick-fil-A Restaurant business.

6.  Total Estimate of Initial Investment:  $316,225 to $1,725,260

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