Chick Fil A (Franchise Program) Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$444,243 - $2,338,786
Franchise Fee
$10,000
Total US Locations
2,964
Business Summary
Chick-fil-A operates a quick-service restaurant business specializing in a boneless breast of chicken sandwich. Chick-fil-A Restaurants offer a limited menu including various chicken sandwiches, nuggets, salads, sides, beverages like lemonade, and breakfast items. Franchisees operate these restaurants, which can be free-standing, located in mall units, drive-thru only units, or in non-traditional captive venue locations such as airports, universities, or office buildings. Chick-fil-A provides the premises and equipment for these restaurants, and franchisees are responsible for the day-to-day management and operation.
Corporate History
Chick-fil-A, Inc. was founded on March 23, 1964, as a Georgia corporation. The company's origins trace back to its founder, S. Truett Cathy, who opened his first restaurant, the Dwarf Grill, in Hapeville, Georgia, in April 1946. The first Chick-fil-A Restaurant in a shopping mall opened in November 1967, which was also the first to be operated by a franchisee. Chick-fil-A began formally offering franchise opportunities to prospective restaurant Operators in February 1987. The first free-standing Chick-fil-A Restaurant opened in April 1986. Over time, Chick-fil-A expanded its business model to include licensed units in non-traditional locations starting in May 1992. The company also has several affiliates, including Chick-fil-A Supply, LLC (a food distributor), Bay Center Foods, LLC (a lemon juice producer), and international franchising entities like Chick-fil-A Canada ULC and Chick-fil-A (PR) LLC.
Financial Overview
Investment Range
$444,243 - $2,338,786
Franchise Fee (Low)
$10,000
Franchise Fee (High)
$10,000
Royalty %
15%
Working Capital
$1,256,147
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
The independent auditors have issued an unqualified opinion, indicating that Chick-fil-A's consolidated financial statements present fairly its financial position and results of operations. Chick-fil-A is a large and growing company, reporting total system-wide sales of approximately $21.5 billion in 2023. The company maintains strong net earnings, exceeding $1 billion in 2023, and possesses significant assets, including over $12 billion in net property and equipment, along with healthy cash and cash equivalents. Chick-fil-A manages substantial notes payable and lease liabilities, which are typical for a company of its scale with extensive real estate holdings. In 2023, Chick-fil-A conducted a non-cash exchange of common stock for preferred stock and also purchased and retired a considerable number of treasury shares. No going concern qualifications were noted by the auditors.
Financing Details
Chick-fil-A provides financing options to its Operators primarily through direct leasing and subleasing arrangements. Franchisees lease or sublease traditional restaurant premises and equipment directly from Chick-fil-A. Monthly equipment rental fees range from $750 to $5,000, depending on the type of restaurant location. For non-traditional captive venue units, Chick-fil-A sublicenses occupancy rights and subleases equipment, with specific usage fees for food trucks. A $5,000 portion of the initial $10,000 franchise fee is also retained by Chick-fil-A as a working capital deposit, acting as indirect financing. Additionally, Chick-fil-A indirectly supports franchisees by financing their retention of Base Profit and Extra Profit if their business's Aggregate Operating Profit is insufficient to cover these draws in a given month. Franchisee obligations are personally guaranteed, and Chick-fil-A holds a security interest in any business equipment owned by the franchisee. Chick-fil-A generally does not offer other direct or indirect financing arrangements or guarantee franchisee obligations to third parties, though its lenders may have a security interest in its franchise and lease agreements.
Performance Metrics
Total US Locations
2,964
Franchised Units
2,494
Corporate Units
58
Franchising Since
1987
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
6
Litigation Summary
Chick-fil-A has recently been involved in several class-action lawsuits. In March 2023, a complaint was filed by Chick-fil-A brand restaurant customers alleging that Chick-fil-A failed to properly secure and safeguard personally identifiable information of Chick-fil-A One program users, leading to a cybersecurity attack. This case was settled on an individual basis for $210,000 in November 2023 and subsequently dismissed. Separately, Chick-fil-A was a defendant in five putative class actions filed between May 2021 and September 2022. These lawsuits alleged that Chick-fil-A misrepresented delivery costs by charging a delivery fee while also having higher menu prices for delivery orders compared to in-store prices. These five cases were consolidated for settlement purposes and received final court approval in February 2024. The settlement involves Chick-fil-A contributing $4,400,000 to a fund, which will be used to cover class counsel fees, service awards for lead plaintiffs, and payments to class members who submitted valid claims for cash or gift cards, with any remaining funds distributed to charities. No franchisees were named as defendants in these delivery cost lawsuits.
Bankruptcy History
Chick-fil-A itself has no bankruptcy history to report. However, Item 4 discloses that Pier 1 Imports, Inc. filed for Chapter 11 bankruptcy in February 2020. Cheryl Bachelder, who is a member of Chick-fil-A's Board of Directors, served as Interim Chief Executive Officer of Pier 1 Imports from December 2018 through November 2019. Pier 1 Imports closed its stores and liquidated its assets, with the bankruptcy matter still pending as of the FDD issuance date. Chick-fil-A clarifies that Pier 1 Imports is not the franchisor nor an affiliate of Chick-fil-A.
Agreement Terms
Renewal Term
1 years
Renewal Conditions
Chick-fil-A franchisees do not have specific requirements to renew their agreements. However, Chick-fil-A can choose not to renew the agreement with 30 days' prior written notice if the franchisee is in material default, has an unresolved dispute regarding revenues or payments, attempted an unauthorized transfer, or failed to devote full time and best efforts to their Chick-fil-A Restaurants. Chick-fil-A also reserves the right to change the terms and conditions of the franchise agreement upon renewal, providing written notice to the franchisee 45 days prior to the end of the existing term. The franchisee then has 15 days from the date of that notice to decide whether to renew under the new terms or not renew. Failure to provide a timely response is considered an election by the franchisee to terminate the agreement at the end of the existing term.
Training & Support Program
Franchisor Assistance
Before a Chick-fil-A restaurant opens, Chick-fil-A assists with negotiating and executing the premises lease, acquiring and installing most of the necessary equipment, and providing initial training. During the operation of the restaurant, Chick-fil-A establishes and manages a program for collecting and accounting for sales receipts, facilitating payments for rent, equipment rental, insurance premiums, and other fees. It also provides monthly financial reports and allows franchisees to examine relevant financial records. Chick-fil-A administers any collected advertising fees for promotional activities and national, regional, and local advertising campaigns. Furthermore, Chick-fil-A provides a point-of-sale (POS) hardware and software system, a management PC, and technical support for these systems. Chick-fil-A plans to offer various seminars and conferences on topics such as sales techniques, operational compliance, and marketing programs, and may require franchisee participation in these. Additionally, Chick-fil-A may offer or allow the adoption of various programs to help franchisees with product promotion, recruitment, and retention of staff, with the specifics determined on a case-by-case basis.
Initial Training Hours
200
Training Location
Classroom and/or Simulated Restaurant spaces in Atlanta, Georgia; Company Operated Restaurants (locations vary); WinShape Retreat Mt. Berry, GA
Ongoing Support
Chick-fil-A provides ongoing support to its franchisees through various services. It establishes and administers a program for collecting and accounting for sales receipts, facilitating payments for rent, equipment rental, insurance premiums, and other fees, and furnishes monthly fee calculation reports. Technical support is provided for the hardware and software systems used in the restaurants. Chick-fil-A may also offer optional advertising support and services to franchisees at local, store, market, or regional levels through its in-house advertising agency. The franchisor plans to offer various seminars and conferences on sales techniques, operational compliance, performance standards, and marketing programs, and may require franchisee participation in these. Additionally, Chick-fil-A may offer or permit the adoption of programs for promoting products, recruiting and retaining personnel, or for other purposes, with the details concerning purpose, timing, implementation, and cost-sharing determined on a case-by-case basis.
Franchise Requirements
Ideal Candidate Profile
Chick-fil-A seeks individuals, rather than corporations or partnerships, who are committed to making a substantial, personal investment of time in directly operating, directing, and supervising their restaurant business. Ideal candidates are expected to devote their full time and personal best efforts to achieve the highest possible sales and profits, while diligently promoting the reputation and goodwill of their Chick-fil-A Restaurant. They must keep free from conflicting enterprises that would interfere with this commitment. Key selection criteria include strong work experience and aptitude, a solid financial background and creditworthiness, and good moral character. Franchisees must also be able to establish legal residency in the restaurant's locality, avoid conflicting business interests, and successfully complete the required initial training program.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
full-time
Territory Type
non-exclusive
Territory Size Requirements
Chick-fil-A franchisees do not receive an exclusive or protected territory, either explicitly stated or implied. The Franchise Agreement does not grant any exclusive area or rights to exclude, disapprove, control, or impose conditions on the location, development, or operation of current or future Chick-fil-A Restaurants. Chick-fil-A reserves 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 a franchisee's Chick-fil-A business location. This includes using other channels of distribution like the Internet or direct marketing. Chick-fil-A also operates other brands that may be competitive.
Staffing Notes
Chick-fil-A franchisees are solely responsible for all aspects of employee management for their restaurant, including hiring, determining compensation and benefits, establishing schedules and duties, training, managing, supervising, promoting, disciplining, and terminating staff. Franchisees are also responsible for timely paying all wages, benefits, and employee-related liabilities, as well as determining staffing levels, tasks, and workplace health and safety rules. Chick-fil-A emphasizes that it is not the employer, co-employer, or joint employer of the franchisee's staff. Franchisees are required to train their personnel using Chick-fil-A's proprietary operations and training manuals and materials. For food truck operations, franchisees must provide employees from their main restaurant to staff the food truck and ensure they are trained in safe operation, driving, and food preparation procedures for the truck.