McDonald’s franchises may blanket the globe, but no American fast-food joint is seeing more revenue growth than Chick-fil-A. The firm is famous for its religiosity – its stores are closed on Sundays — but the real secret to its success might lie in the firm’s unique franchising agreements. According to the Atlanta Journal-Constitution:
“The company bankrolls the entire cost of its new restaurants and picks the locations. The only cost its so-called ‘operator’ franchisees shoulder up front is $5,000, but they can’t later sell the business or pass it on to their heirs. Chick-fil-A retains ownership of the restaurant, and takes a much bigger cut of each store’s revenues and profits than at most franchises. It gets 15 percent of sales, collects rent on the property, and splits the remaining profit with the operator.”
This arrangement is capital-intensive, eating into profit margin, but has served the waffle fry-purveyor well, as its breakneck revenue growth will attest.
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