How Chick-fil-A's structure drives service culture

Chick-fil-A is a unicorn in the franchise world.

Fast food franchises tend to struggle with service quality and customer experience is inconsistent.

Not at Chick-fil-A.

It has a remarkable service culture, despite having over 1,800 franchise operators. It's the top-ranked fast food chain on the American Customer Satisfaction Index .

How does Chick-fil-A succeed where others struggle? I went behind-the-scenes at Chick-fil-A to find out.

One thing I discovered is Chick-fil-A has a very unique franchise agreement . This agreement has a huge impact on its service culture.

I'm going to walk you through three unusual features. You can apply these lessons to your team, even if you don't work in a franchised business.

Operators, not independent owners

Chick-fil-A calls franchisees "operators."

Operators don't own their restaurant. They have earned the opportunity to rent the restaurant from Chick-fil-A and run it.

Unlike other fast food franchises, a Chick-fil-A operator can't sell their restaurant to a third party.

This positions operators as partners with Chick-fil-A. They're expected to run their restaurant to Chick-fil-A's exacting standards and receive extensive support to do it.

That's very different than a typical fast food franchise. Franchisees at other chains are investors who own their business.

Service largely depends on the skill and will of individual franchise owners. Those franchise owners often have different operating philosophies than the franchisor.

Service Culture Lesson: Avoid a company of lone wolves. Align your entire organization around high, consistent operating standards.

Tight span of control

Operators are allowed to run a single Chick-fil-A location with very few exceptions.

An operator has to demonstrate outstanding performance before earning the right to open a second location. Top-performing operators can run a maximum of three.

The Chick-fil-A franchise agreement calls for people who run their daily restaurant operations. They're hands-on leaders who maintain Chick-fil-A's high standards.

The franchise fee reflects this. It's just $10,000, and there are no additional net worth requirements.

Chick-fil-A operators are expected to be dedicated to the business. They're not allowed to actively participate in other companies.

Other fast food franchisees encourage owners to operate multiple locations. These are investors who often leave day-to-day management to hired managers.

Upfront fees and required investment reflects this. For instance, the McDonald's franchise fee is $45,000, and franchisees need a total of $700,000 in cash to get started.

Service Culture Lesson: Ensure each leader has an appropriate span of control. They should be able to spend more time with people than administration.

Share the profits

Profit sharing is another unusual part of the Chick-fil-A franchise agreement.

Operators split net profits 50/50 with Chick-fil-A. This is in addition to paying 15% of revenue as a royalty.

In return, Chick-fil-A builds and equips the restaurant. (The operator leases the building and equipment.) Extensive training and support is provided.

The message is, "We're in this together."

Contrast this with other fast food companies. Franchise owners typically pay a smaller royalty on revenue without profit sharing.

But there are trade-offs.

The franchisees have to make significant up-front investment and receive less support. Franchisors often charge significant fees.

For example, McDonald's makes more money from franchises by renting real estate than it does on royalties. This makes a well-run, profitable location ancillary rather than primary.

Service Culture Lesson: Invest in your people. Compensate your team generously based on the success of the organization.

Conclusion

Structure has a huge impact on service culture. You can apply lessons from Chick-fil-A to your own business:

• Choose consistent operating standards that everyone follows.
• Make sure leaders spend more time with people than administration.
• Compensate people generously based on the organization's overall success.

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