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It costs $10k to ‘own’ a Chick-fil-A franchise

thehustle.co

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Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#21

Post by sparkie »

Nextgrid wrote: post #2

I always found franchise initial startup costs to be predatory, as they get paid either way regardless of whether the franchisee actually succeeds. In my opinion they should be abolished and franchisors should only rely on royalties, so that they have an incentive to help the franchisee succeed if they want to make money.

They have a brand image to uphold. If anybody were to be able to open up a franchise and run it badly (ie, have rats running around), this would have a serious negative image on the whole brand and would sway people away from eating at the same branded joints again, even though other joints are run by different people.

As such, it is necessary to vet the potential franchisee to ensure they're going to support and improve your brand image rather than damage it. Requiring a "deposit" as such is part of this, as the franchisee will need to at least recover the amount invested by providing good service.

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#22

Post by i_am_proteus »

Nextgrid wrote: post #2

I always found franchise initial startup costs to be predatory, as they get paid either way regardless of whether the franchisee actually succeeds. In my opinion they should be abolished and franchisors should only rely on royalties, so that they have an incentive to help the franchisee succeed if they want to make money.

And yet people choose to buy franchises rather than start their own independent shops. Proliferation of franchises indicates that this is mutually beneficial.

Also, bear in mind that the franchise's corporate brand reputationsuffers when a franchise fails, so there's inherently some risk sharing.

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#23

Post by micmil »

Nextgrid wrote: post #2

I always found franchise initial startup costs to be predatory, as they get paid either way regardless of whether the franchisee actually succeeds. In my opinion they should be abolished and franchisors should only rely on royalties, so that they have an incentive to help the franchisee succeed if they want to make money.

There's nothing "predatory" about assuring that your business partner actually has enough capital to operate a business. The startup costs may be significantly lower for a freestanding restaurant but you also have to shoulder the burden of marketing and establishing a customer base. A national chain doesn't just sit on its ass and collect money from franchisees. The costs of marketing and R&D are enormous but in the franchise model these things are offloaded from the individual restaurant to the parent company.

The parent company has no interest in that location ever closing. They're not house flippers or day traders. They rely on stable long-term income, not random tiny spikes a few times a year. Franchise fees are barely even a blip on the radar of a company like McDonald's.

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#24

Post by pbhjpbhj »

prostheticvamp wrote: post #14
flatiron wrote: post #12

Earlier quoted context omitted.

They said $150-$250k a year for the owner so you would get paid better too.

150-250k a year for a 60hr a week job as the “owner”.

Do they accept job-shares for the position of owner. That's a pretty sweet deal for a $75k-$125k @ 30hr/week job?

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#25

Post by jrs235 »

Forge36 wrote: post #8
Nextgrid wrote: post #2

I always found franchise initial startup costs to be predatory, as they get paid either way regardless of whether the franchisee actually succeeds. In my opinion they should be abolished and franchisors should only rely on royalties, so that they have an incentive to help the franchisee succeed if they want to make money.

I recall subway had "low" startup costs and it resulted in too many locations. What incentivizes the new location to do due-diligence in picking a good location? If this is placed into the chain owner: What's the difference between a franchise vs single owner?

Chick-fil-A corporate determines all new locations. Corporate cares about the success of their locations because they own the lot, own the building, own the equipment, own just about everything and lease it back to the operator. If an operator violates the franchise agreement they get evicted and or lose their equipment and can no longer operate. It's how Chick-fil-a is able to maintain quality and control. Ever wonder why a Chick-fil-a location doesn't buck corporate and open on Sundays? Because they'd lose everything they need to run their business.

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#26

Post by lr »

tehlike wrote: post #19
baron816 wrote: post #9

> With a 0.13% acceptance rate, it’s harder to become a Chick-fil-A franchisee than it is to...get a job at Google (0.23%) I think I'd rather just get a job at Google.

You can potentially scale the chickfila to 2-3, though, and you can imagine you can get other franchises eventually.

From the article:

In most cases, they aren’t permitted to “own” multiple locations. They aren’t permitted to run any other business.

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#27

Post by [deleted] »

tehlike wrote: post #19
baron816 wrote: post #9

> With a 0.13% acceptance rate, it’s harder to become a Chick-fil-A franchisee than it is to...get a job at Google (0.23%) I think I'd rather just get a job at Google.

You can potentially scale the chickfila to 2-3, though, and you can imagine you can get other franchises eventually.

[deleted]

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#28

Post by giancarlostoro »

rjvir wrote: post #16
giancarlostoro wrote: post #7

Earlier quoted context omitted.

If you dont want to pay you join a different franchise or start your own restaurant. I fail to see the issue. Nobodys putting a gun to your head to open up a CFA restaurant.

It's possible to be predatory without holding people at gunpoint.

Again, nobody is telling you to join them if you dont want to though. You can make a competing restaurant yourself.

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#29

Post by csdreamer7 »

From the article. Already knew, but this summarizes the food business so beautifully.

“As a fast-food franchise owner, you’re often fighting a war for pennies,” says Rose. “Food is the most competitive industry known to man: It has the highest investment level of any industry, the highest failure rate, and the lowest margins.”

Re: It costs $10k to ‘own’ a Chick-fil-A franchise

#30

Post by allovernow »

i_am_proteus wrote: post #22
Nextgrid wrote: post #2

I always found franchise initial startup costs to be predatory, as they get paid either way regardless of whether the franchisee actually succeeds. In my opinion they should be abolished and franchisors should only rely on royalties, so that they have an incentive to help the franchisee succeed if they want to make money.

And yet people choose to buy franchises rather than start their own independent shops. Proliferation of franchises indicates that this is mutually beneficial. Also, bear in mind that the franchise's corporate brand reputationsuffers when a franchise fails, so there's inherently some risk sharing.

Not commenting on franchising, but I'd point out that, for example, loan sharks are "mutually beneficial" and exist across societies, but they can still be quite predatory.
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