Can You Really Start A Franchise For Only $5000?

by Scott Bradley on November 18, 2010


Last night I had an interesting experience, because I did something I never thought I would ever do. Here is what happened. (Don’t miss the learning points at the end of this post, to help you learn and implement specific things that will help you get better results in your business).

After talking with a friend on Monday night of this week, he was telling me how he dropped his application in for a specific franchise I just became privy to within the past six months.

I have only eaten there once, and really enjoyed the experience, but I never would even consider starting a franchise because of the huge up front costs associated with starting one. Normal franchises range anywhere in price from 200,000-800,000 depending on which one you choose to invest in.

As my friend shared with me that he wanted to have his own Chick-Fil-A, the first words that came out of my mouth were, “John, don’t franchises like that require a huge investment?”

Surprisingly he said, “Nope, you run and operate your very own Chick-Fil-A for the small investment of $5000.”

After letting this sink in, I thought to myself that this seemed too good to be true, so I went to the website to learn more about the opportunity to own your very own Chick-Fil-A. I came across the page where they have information about where they are having franchise information meetings, and luckily they were having one close by.

Looking at the page, I thought to myself, “What do I have to lose? I may learn something if I go into the meeting with an open mind.”

So there I was last night driving to the Irvine Marriott thinking to myself, “Am I really doing this?” At that point it was too late to turn around, so I continued to pursue getting my “self parking” ticket and strolling on inside to the meeting room where the event was taking place.

As I walked into the hotel, there was a table with a red Chick-Fil-A tablecloth with miniature stuffed cows that said “Eat Mor Chicken.” I got there early because I hate being late to meetings and appointments. As I was waiting for the corporate suits to come out the door to start checking people in, the reality that I was there to learn about a business I would never even consider investing in, started to come very clear to me.

While I am not a fan of investing in a franchise business, the thought of only spending $5000 of capital, and having your very own business to run and operate, while pulling down six figures was somewhat promising…but my brain still couldn’t fathom how this company was making that possible without any “Gotcha’s or hidden clauses in their contract.”

After the corporate suits came out to check everyone in, I found my seat in the audience and noticed that there were about 50-70 people in the room to learn about the Chick-Fil-A opportunity. I was absolutely shocked by the amount of people and quality of the people in the room.

I was surprised to see that this wasn’t your typical, “Network Marketing Meeting” crowd who could barely rub two nickels together in some situations, but rather people who came from upper-middle class backgrounds, with some individuals coming in suits.

As I surveyed the room more, I also noticed how the bodily makeup of the majority of the guests wasn’t unhealthy at all. I mean there were some rather “large” individuals, but for the most part, the majority of the audience seemed to be healthy upper middle class individuals looking for an opportunity that could get them out of the rat race and into achieving their dreams.

After taking this entire experience in, the presentation started with a man getting up at the front of the room. He had a overhead projector in front of him, and a white screen behind him. He did the typical welcome speech, and started off with a movie that went over the 2009 statistics of how amazing the company did last year. Statistics about gross sales, profits, and detailed stats about the Chick-Fil-A bowl were compiled into this 5 minute video.

As the video finished, the presenter came back up to the stage to thank everyone for being at the meeting, and then he started a mini-trivia session giving away small little promotional items for correct answers. After the presenter finished, he introduced the main presenter for the night who he referred to as a “Chick-Fil-A operator business consultant.”

With the first couple words out of his mouth, you could immediately tell he was from the south, and was extremely passionate about the Chick-Fil-A company and opportunity.

He started off his presentation with the story of the owner and how the company came to be what it was today. Here are some interesting facts I picked up from this part of the presentation.

-The flagship product is the Chick-Fil-A sandwich

-The company was started by two individuals, where one, a pilot, passed away in the early days of a company due to a small plane crash.

-The founder of the company has a true passion for helping people and serving his community

-The company has experienced a 43 year consecutive increase in sales, only opening up around 69-70 stores per year.

After sharing the story about how Chick-Fil-A came to be, he then started to share some information about how Chick-Fil-A has grown as a company. He highlighted where the greatest opportunities were, and where they were choosing to place their focus in the next 2-3 years. Because they were looking to expand within the Los Angeles and Orange County area, it wasn’t any surprise why they were having the meeting yesterday night.

He then went to speak about what they were exactly looking for in the people who they chose as operators of a Chick-Fil-A. As he mentioned this part of his presentation, he was quick to make clear that they get over 20,000 applicants per year who want to own their own Chick-Fil-A, and also made clear that they only select about 69-70 per year…which is absolutely staggering when you think about how small of a percentage they take, and how selective they are.

Without any surprise here is who he said they are looking for…

People who…

-Identify themselves as entrepreneurial even if they have never built or run a business in the past.

-Have leadership skills and who have illustrated that they have successfully led people in the past.

-Want to be a part of the community, and who actively take part in community gatherings and activities.

-Don’t necessarily have a high net worth, or a nice nest egg to fall back on (Basically, you don’t need to have access to millions of dollars to be accepted as an operator).

Here were a couple interesting things that were also mentioned that caught my attention…

-You must be able to show that you have been a good steward with your finances, which means that if you have had a bankruptcy in the past there is no way you will be considered.

-They want you to always have a rapport with your customers where your customers say “I am going to John’s Chick-Fil-A…instead of just saying, “I am going to Chick-Fil-A.”

-Only one store per operator

-Chick-Fil-A contributes all the upfront costs to build and supply the store with the appropriate technology and materials for the operator to come in and run the business. This costs them around $3,000,000 or more to get a store ready for an operator.

-Restaurants are only open Monday-Saturday…On Sunday the store is closed.

After going through all of those specific details, he then went into detail about how all the finances work, and what you need to know if you really were serious about this opportunity.

Here are the details…

-The only investment risk you have to pay is $5000 (Remember, Chick-Fil-A fronts all of the cash to get the store up and running, and owns everything in the store and all of the real estate.)

-You must pay Chick-Fil-A 15% of gross sales

-You must pay Chick-Fil-A 50% of net profits

-No matter what, you as an operator are assured $30,000 annually in pay

-You cannot run the business as an LLC, S or C corp…you must run it as a Sole Prop

-Operators do NOT build equity in the biz, and the contractor agreement is not transferable

After going through the basic financial picture he then shared how Chick-Fil-A supports the operators within the Chick-Fil-A operator network. He briefly mentioned that they manage payroll, and various other functions to help operators of their Chick-Fil-A be as successful as possible.

And then he made the audience feel a little uncomfortable…

By putting up a slide that read…

“To glorify God by being a faithful steward of all that is entrusted to us. To have a positive influence on all of those who come in contact with Chick-Fil-A.”

One thing that he made clear about this slide was that in having your own Chick-Fil-A store is something that is very special, and that if you aren’t someone who sees having a store as a way to truly serve your customers and community, this probably isn’t an opportunity for you. (Which I totally agreed with and resonated, I was just a little uncomfortable that they were bringing God into the picture…not that I have any problem with it, it was just a little uncomfortable).

After that somewhat uncomfortable slide for the audience, he then put on a video that was highlighting and reiterating the slide that was just put up on the screen prior to turning on the video.

Simply, the video was meant to truly communicate how genuine the company is, illustrate the type of people that it attracts, how the company makes a difference in the communities that it resides in, and finally how the company has a heart and is a true ambassador for Christ. There were also some points of the movie that communicated the vision the owner has, and how he implemented that over the years.

After the video was over, it was then question time. Here are some things I picked up from that segment before the presentation came to a close.

-There is less than a 3% turnover rate per year with operators nationwide.

-The national average for sales per restaurant roughly comes to around $3,000,000 per year per restaurant.

-They have operators that are as young as 21 and as old as 70+

-As an operator you must not do anything else other than own and operate a Chick-Fil-A business

-Each operator controls all of the local marketing programs normally spending 2-3% of their gross revenue to increase local sales

-The employees work for you, but the payroll process is managed by Chick-Fil-A

-There are 3rd party vendors that Chick-Fil-A partners with to provide insurance and other legal resources if there was anything that ever happened in your restaurant.

-The application process to get started spans anywhere from 9-12 months

Here is how the application process looks and flows…

1) Go to their website and fill out the franchise interest form

2) Get a 17 page application to fill out if you pass step 1

3) Get a 45 min to 1 hour phone interview with someone at the corporate office if you pass step 2

4) Get a series of in-field interviews (2 rounds) if you pass step 3

5) Fly to the corporate headquarters in Atlanta for 3-6 interviews if you pass step 4

6) Another round of in-field interviews if you pass step 5

7) Fly to corporate headquarters again for a final round of interviews if you pass step 6

If you are lucky enough to pass step seven, then your training period in the field and at the corporate office runs anywhere from 6-8 weeks, and then you are ready to start, own and operate your very own Chick-Fil-A restaurant.

Now I know that was a lot of information, but here is why I went to the presentation, and what I really learned from the experience that I would like to share with you.

Why I Went To The Chick-Fil-A Franchise Opportunity Meeting

I went to this presentation because I was curious and wanted to see how the very front end of their marketing funnel process looked, felt, and how they dealt with the very first stage of the process in turning people off the street into a Chick-Fil-A Operator. I also wanted to see how they financially structured their business, to only allow each owner and operator only have to pay $5000 to start their very own Chick-Fil-A. Finally, I wanted to see what they presented, and see if I can take anything away from how they positioned their information to inspire people to take action. (As a marketing funnel builder and copywriter I am always paying attention to specific things like this.)

Here is What I Learned From The Chick-Fil-A Franchise Opportunity Meeting

1) Building a company culture is extremely important. Without a culture that believes and lives by a set of core values, your company is one that will not stand the test of time.

2) Structuring a business that has a core value of authentically serving its customers is absolutely important.

3) Finding a way you and your business can make a positive difference in the community, builds closer bonds with your customers and definitely increases sales.

4) When presenting in front of a live audience, answer questions truthfully, honestly and with the most amount of transparency as possible. If you hold information back, you will make the entire room doubt everything else you are saying. (This didn’t happen last night, in fact the presenter did a great job).

5) Make sure you have a step by step marketing funnel process that sorts out your prospects, and only brings you the specific types of people you want to do business with. (If you notice from that application process above…it hasn’t steered them wrong yet). (I specialize in helping entrepreneurs build this specific step by step process around their products and services to help them increase sales and their bottom line).

6) Always make sure you are doing something you are passionate about, and make sure that what you are selling is something that is valuable to the market you are serving. Without a market, you can have all the passion in the world, but good luck trying to convince a market that isn’t there to buy a product they don’t want. You won’t be in business for very long…the facts are the facts.

In closing, I just want to say I was extremely impressed with how the meeting was run, and if I was interested in selling fried chicken products in a franchise business system, I would be on this opportunity like white on rice. Because I don’t want to help perpetuate the obesity epidemic in this country, and because I have been on a 6 month life transformation journey transforming my body into a lean strong body starting at 255 lbs and 30% body fat with the goal of getting to 190 lbs and 10% body fat, I am going to have to pass. Now, it is not to say that this experience last night wasn’t a valuable for me, because I will definitely be implementing specific things I picked up for my own business going forward. In the end, this was worth my time, and I hope after reading this post you got a good amount of value and ideas as well!

{ 23 comments… read them below or add one }

Angela Schaefers November 18, 2010 at 10:55 AM

Scott- very good overview of the presentation at Chick-Fil-A! I have read many articles and talked to a couple of franchise owners and they have all resonated the same feeling of the company being straight forward and committed to their core values.

I think a big message here is that we each have to determine our core values, mission & purpose before we enter any endeavor and then stick to it!

Thank you again for sharing timely and relevant content!

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Scott Bradley November 20, 2010 at 9:53 AM

Hi Angela,

Thank you for your comment! I appreciate it!

You are 100% right on about core values!

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Donna L. Johnson November 18, 2010 at 11:08 AM

Scott –

This is amazing! I’m still trying to pick my mouth up off the floor. I think having a business model like this weeds out all of the people who would misrepresent the Chic-Fil-A brand. While I don’t each much fast food, they’re on the top of my list of places to go simply because of the superior service you receive and the values the company adheres to.

Thank you so much for sharing your experience with us.

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Scott Bradley November 20, 2010 at 9:54 AM

Exactly! The sorting process they go through definitely shows their commitment to finding the right people to become operators of the restaurant.

You are welcome for sharing! Thanks for the comment!

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Joshua Bevan November 19, 2010 at 10:50 PM

Great article! Thank you.
My experience with Chick-fil-a and their corporate culture was very similar. The whole company is full of genuine, passionate people.
I had the privilege of meeting and interviewing the president Dan Cathy.
http://www.joshuabevan.com/give/chick-fil-a-first-100/
I’d love to hear your feedback

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Scott Bradley November 20, 2010 at 9:55 AM

Josh,

You are welcome. Great interview! Thanks for your comment!

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ecantu December 10, 2010 at 10:24 PM

Wow great posting! I have dreamed of owning a Chick-Fil-A for years now and like you I thought it was simply out of reach. If your posting is sincere, next year I’ll will be looking into locating and attending my first meeting..Thx.EC

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David Nagel January 2, 2011 at 1:07 PM

Excellent. Thank you for posting. I missed this meeting but definitely understand what was covered. I am thankful for this post.

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Luis Villarreal May 23, 2011 at 9:39 AM

Scott, Excellent summary,

I’m a Compensation Manager from 7-Eleven México, and I have a question, How is the employees’s payroll process?

Thanks, regards

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Scott Bradley May 23, 2011 at 11:20 AM

Luis – I am not 100% sure about this. I would contact the company to get your question answered. Thanks for your comment!

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Luis Villarreal May 23, 2011 at 4:17 PM

Thanks Scott for your rapid answer!

Regards. LV

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PJPemberton June 24, 2011 at 10:12 AM

Hi Scott, Thanks for the information. I’ve been looking on Chick-fil-a’s website for franchise information but can’t find anything. I only find information on 3rd party francise sites. How can I contact them about starting the application process? Thanks.

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M K Darvish July 21, 2011 at 6:00 AM

Dear Scott
your article on chic-fil-Awas interesting but i wonder if an organization has the same attitude and would like to franchise chic-fil A will it be possible, secondly, do they franchise internationally, and do i have to be christian to franchise chic-filA??? pls do let me know. i thank you for your information. thanks

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alex pando September 16, 2011 at 10:49 PM

I would like to know how to get on the chic-fil-a franchise bid list for future builds in florida I,m a general contractor my email is michelangeloconstruction@yahoo.com

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Scott Bradley September 19, 2011 at 7:58 AM

Hi Alex – Thank you for your comment. I would recommend that you go to the corporate website and begin the process of submitting your application. Here is the link to get you started! http://www.chick-fil-a.com/Company/Careers-Franchise-Application

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Billy November 27, 2011 at 3:05 PM

Do you have any idea what the normal work week would be like for a franchisee?

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Geri July 10, 2012 at 7:44 AM

Hi Scott,

Thanks for the article! I think it remains true, whether you believe in God or not, Godly principles when applied produces fruit in your life. Without a shadow of a doubt. However, the key, as this article fails to mention, is: “What is it that would keep a business like this afloat for SO long?” It’s one thing to get/start a business, but it’s totally different keeping/maintaining a SUCCESSFUL business for SO long! We’re talking longevitity here. It’s not about applying some textbook formulas learned in college or some school – no, no! It’s about a person! Principles are great, but I believe what Truett Cathy tapped into is not a “what” at all, but a “who”. It’s the GOD FACTOR (or simply, the advantage one has who has totally surrendered their lives to Jesus Christ)! Make no mistake about it. And if we want to succeed in/at anything, we must make it our business to give everything to God, because He owns it anyway.

Psalm 37: 3- 5
3 Trust in the Lord, and do good; so shalt thou dwell in the land, and verily thou shalt be fed.
4 Delight thyself also in the Lord: and he shall give thee the desires of thine heart.
5 Commit thy way unto the Lord; trust also in him; and he shall bring it to pass.

Proverbs 3: 5-10
5 Trust in the Lord with all thine heart; and lean not unto thine own understanding.
6 In all thy ways acknowledge him, and he shall direct thy paths.
7 Be not wise in thine own eyes: fear the Lord, and depart from evil.
8 It shall be health to thy navel, and marrow to thy bones.
9 Honour the Lord with thy substance, and with the firstfruits of all thine increase:
10 So shall thy barns be filled with plenty, and thy presses shall burst out with new wine.

Proverbs 16:7
When a man’s ways please the Lord, he maketh even his enemies to be at peace with him.

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Bill July 17, 2012 at 12:40 PM

Hi Mr. Scott,
It is a wonderful article. One thing I wonder is that if an Chick Fil A operator passed away from some reasons, is there anyway that franchise restaurant pass it down to his wife or children? or is there any benefits or percentage from the gross income passes on to his wife or children? If none of that happens, Chick Fil A Corp will take it back and give nothing to the operator’s family, then I think that the operator just runs the business for them. when an operator deposit 5,000 up front to make himself commitment that work for them for life in that store, of-course, they will pay better as considering commission by 65/35% .

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Maria Medvedeva July 31, 2012 at 2:10 AM

Hi Scott,

Thank you for sharing your meeting. Indeed it was an excellent description for a new start entrepreneur. They mentioned the average sale per store, but I was wondering what is the profit margin expected per store? Is it profitable to run such franchise? How long would it take to break even if you did invest a considerable amount into real estate lease, etc…

Thanks a lot.
Maria

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Kevin August 10, 2012 at 10:48 AM

I recently was denied an opportunity with Chik-fil-a after going through the phone interview. Scott is dead on, the management staff seems very genuine and professional. My experience was this; no matter how much you feel God may be calling you to this or anything else-if people do not show favor on you, and you are not appropriately equipped for the position-the right door will not open. If an operator for Chik-fil-a is your ambition, spend time working on your social skills and business strategies. One of the challenges for me was after going through several years of closed doors, my confidence level was really low. It was difficult to express my skills and what I was capable of in that hour interview. A couple answers were not as articulated as I’d hoped for. So, pray for good opportunites, surround yourself with quality people, prepare appropriately and do the best you can to humbly, but confidently display your talent. Best of Luck!

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John Q. FiletA August 13, 2012 at 2:17 PM

So why are the top on the list for franchises that fail. 15% rev and 50% of all profits? This sounds like they just hire good managers and are avoiding the employment taxes in every state.

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JK September 22, 2012 at 3:24 PM

Scott, thank you for the article. So, I am the corporate type that had switched corporate careers a few times (CPA by training, switched and loved the sales/sales mangement side). With that, please endulge my CPA side for a moment as I sincerely consider leaving the corporate world at this juncture (20+ years) of my life.
How much or what do you think the average Franchisee operator actually makes a year after he pays all of the bills. You mentioned that the average store grosses $3 mill/year and the company takes 15% gross and 50% net (no one will be allowed to make less than $30K/year). So, that means roughly $2.55 mill gross (85% of 3 mill). What do you think is a safe % number to use to estimate costs/expenses (Payroll, rent, COGS, etc.), or another way to put it what’s the “net” that you think the Franchise operator is spliting with Chick-Fil-A corporate?

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Scott Bradley September 27, 2012 at 11:06 AM

Great questions JK. I honestly don’t know the answer. I know for a fact a good rule to live by is to try to make a nice 30% net profit margin after all expenses have been paid.

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