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The Franchise Chatter Blog’s List of 24 Things Every Prospective Franchisee Needs to Know Before Investing in a KFC Franchise (2011)
KFC Brand Advantage
1. KFC is the world’s most popular chicken franchise. It specializes in fried chicken, grilled chicken, crispy strips, wings, chicken sandwiches and a variety of home-style sides.
2. KFC is based in Louisville, KY and has been in operation since 1952.
3. KFC’s parent company, Yum! Brands, is the world’s largest restaurant company, with more than 37,000 locations in more than 120 countries and territories.
4. KFC operates 5,200 restaurants in the Unites States and more than 15,000 restaurants in 109 countries and territories around the world.
5. Everyday, KFC serves more than 4 million customers in the US and 12 million customers worldwide.
6. At the end of 2008, KFC was the leader in the U.S. chicken quick serve restaurant (QSR) segment among companies featuring chicken on the bone as their primary product offering. KFC had a 42 percent market share – more than three times the market share of its closest competitor.
7. More than 80 percent of U.S. KFC restaurants are owned and operated by franchisees.
KFC Business Model
8. KFC is looking for franchisees that will commit to building three units over their first three to five years in the system, and a vision to be an operator of at least five to ten restaurants over time.
9. KFC strongly believes that building or buying multiple restaurants enables the franchisee to achieve scale in operations. Multiple unit owners can leverage their expertise, offer growth opportunities for their best employees, qualify for quantity discounts based on their size, and increase overall organizational stability by broadening the base of their operations and by spreading their overhead costs among multiple restaurants.
10. KFC currently has more than 350 multi-unit franchisees — more than 150 of these operate more than five restaurants.
11. KFC may sell existing company owned units to existing or new franchisees.
KFC Franchise Cost and Net Worth Requirements
12. The initial franchise fee for a KFC restaurant is $45,000 and the monthly royalty fee is 5% of gross sales.
13. KFC also requires franchisees to contribute 5% of gross sales for advertising (This covers national and local advertising initiatives).
14, The minimum net worth requirement to open a KFC restaurant in the United States is $1.5 million, of which $750,000 must be in liquid assets.
KFC Franchise Support and Training
15. Fourteen weeks before a restaurant’s opening, three key holders will begin a comprehensive 8-10 week training program. Key holders of a restaurant could include the franchisee, an Above Store Leader, Restaurant General Manager or Assistant Manager.
16. The training program includes centralized orientation training in Louisville, KY, online training using the KFC Learning Zone and in-store skill practice at existing restaurants near the franchisee’s home base.
17. There is a fee for this training and the franchisee is responsible for all costs incurred, including travel and lodging of the key holders. The entire cost of the training runs from $3,000 to $10,000.
18. KFC provides recommendations on how to conduct a Grand Opening and reimburses up to $5,000 of documented expenses.
19. Franchisees are invited to attend the annual convention held the first quarter of each year, and regional meetings (on topics like operations and team training) held in the Spring and Fall. There are also regular Town Hall calls and Franchisee Summits to brief franchisees on critical issues when they arise.
20. In addition, KFC’s parent company, Yum! Brands, has established a Yum! University, offering a wide variety of optional continuing education courses.
KFC Real Estate Selection and Build-Out
21. Every KFC franchise has a protected territory of 1.5 miles or 30,000 people, whichever is smaller. Stores are only approved if the sales impact on existing KFC restaurants is below established standards.
22. Generally, once a site has been approved, the franchisee has eight months to begin construction and one year to open for business.
23. The franchisee is responsible for the construction of the restaurant through general contractors with standard building plans provided by the KFC Development Team. The franchisee may choose to avail of KFC Development Services for a fee.
24. In 2011, Entrepreneur Magazine ranked KFC #16 in their Franchise 500 and #14 in their list of America’s Top Global Franchises.