Chick-Fil-A is an extremely successful and consistent franchise system.
The privately held chain did over $2.5 billion in systemwide sales in 2009 from over 1,300 franchised stores in the U.S.
The founder of Chick-Fil-A, the late Truett Cathy, developed the Chick-Fil-A brand with his brother in 1946 with a simple, yet powerful goal of starting something innovative and for everyone. The brand was initially started as The Dwarf House in a South Atlanta community, which fortunately for all those who have benefited from the growth of Chick-Fil-A, the brand was transitioned to a name more generally appealing and socially acceptable. What has remained constant in the Chick Fil-A model is the devotion to Christian foundations and beliefs in everything the business does. The company has made headlines for closing on Sundays in every location without exception to honor god and Mr. Cathy has cause ripples in the press by coming out against gay marriage rights. What is somewhat astounding in today’s less conservative environment is that the unwavering focus on Chrstianity from a business perspective seems to pay off. The turnover among Chick-fil-A franchise operators is an extremely low, incredibly at less than 5% a year. The staff and people who wear the Chick-Fil-A uniform to work also have staggering turnover rates at less than half of the fast food industry averages showing the commitment and dedication people have who are part of this organization. Chick-fil-A has and continues to have a long term approach to every relationship they develop, the organization focuses on hiring and bringing in franchisees who are looking for lifetime commitments to the company.
To further the company’s mission of glorifying God, many of the Chick-fil-A franchisees have come from the foster homes run by a nonprofit organization Chick-fil-A funds, the WinShape Foundation. The upfront franchise fee for a Chick-fil-A is only $5,000, again embodying this long-term, lifetime approach, nothing about the franchise offering is profitable for the company unless a relationship is truly Win-Win. Most franchise systems require net worth’s in excess of $500k and upfront franchise fees of $35k or more where Chick-Fil-A seems to put considerably more weight on the value of the person than their bank account. The franchise structure of the Chick-fil-A system from a business model is unique also. Chick-fil-A pays for the land, the construction and the equipment, they then rent everything to the franchisee for 15% of the restaurant’s sales plus 50% of the pretax profit remaining. Operators are discouraged from running more than a few restaurants will typically take home about $100,000 a year on average from a single outlet.
The entire Chick Fil-A System is extremely particular in who he selects as franchise operators, in most cases, applicants never even receive a response to their initial inquiry. This is one franchise brand which truly looks at franchising as a process of awarding opportunity vs. selling units. There is a preference for married workers and those who have attended Christian-based relationship-building retreats, during the franchise sales process, Chick-fil-A will even interview family members of prospective operators. They would like to learn more about candidates and their relationships at home. “If a man can’t manage his own life, he can’t manage a business,” says Cathy.
How is this legal and why does it work so well for Chick-fil-A? The structure is based on core beliefs and principles which are consistent throughout the franchise system. Whether it is legal is open for debate, but the bottom line is that in franchising, the rules are different than in employment law. There is much more freedom in who is selected and why as opposed to hiring an employee where religion and marital status are to be left off the table. Ultimately it seems that we all have something to learn from Chick Fil-A’s success in becoming one of the world’s largest, most profitable fast food franchises, sometimes returning to traditional values and basic foundations may be the best route to bottom line profits.
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