Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of KFC Express Franchise Costs (2014 FDD)

by Franchise Chatter on July 18, 2014

in Chicken Franchises, Franchise Costs

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KFC Express Photo by Karen

Detailed Estimates of KFC Express Franchise Costs Based on Item 7 (Estimated Initial Investment) of KFC Express’s 2014 Franchise Disclosure Document

  • The KFC Express unit will offer a limited menu from a kiosk; some other type of unit that can be easily transported or assembled; or a segregated food-service area at a location in a facility (e.g. mini travel plaza, airport, university, athletic stadium, amusement park, etc.) that was established for a primary purpose other than selling food for reasonably immediate consumption.
  • KFC Express units may also be opened in areas such as small rural towns that would be unable to support a traditional KFC location. Units opened in these areas may offer a more diverse menu.

1.  Initial License Fee:  $10,000 to $25,000

  • You will be required to pay KFC an initial license fee of $10,000 for a five-year license term; and if the term of the License Agreement is longer than five years, the initial license fee will be increased by an additional $1,000 for each additional year in the term of the License Agreement, up to a maximum of twenty years, for which the initial license fee is $25,000.

2.  Design Services Fee:  $2,000 to $6,500

  • KFC’s A&E Department offers, for a fee, a Design Services Program to assist you in the design of KFC Express units. The fee, which is payable in advance at the time the service is requested, will vary depending on the number of concepts involved.
  • All licensed locations must utilize A&E-approved Design Services.
  • The “Design Services Fee” for a custom facade ranges from $2,000 for one brand to $5,500 for more than one brand, plus an additional cost, in either case, of $500 for design services relating to a dining area. For this fee, you will receive a Schematic Design Drawing Set that includes an equipment plan, an equipment schedule, and interior elevations. Additional renderings, site plan, and exterior elevations, if needed, are also available for purchase.
  • The Design Services Fees are not refundable.

3.  Real Property:  $50,000 to $75,000

  • Average sites for approved licensed units vary depending upon available space within a mini travel plaza, airport, university, stadium, or other facility, as well as other factors, and should have good visibility and be easily accessible to customers.
  • KFC Express estimates college/university locations require a minimum of 440 to 900 square feet; and airport and mall locations require a minimum of 795 square feet (does not include dining area space). Please note that these space requirements do not include walk-in cooler/freezer or dish wash space.
  • Both the location and the proposed unit are subject to KFC’s acceptance before you obtain permits or local approvals or start construction.
  • Since licensed units are intended to function within a larger facility (such as an airport, stadium, convention center, retail center, employee cafeteria, school, hotel, or resort owned and/or operated by the licensee), in many instances payment for space within these facilities will be based upon a negotiated percentage of sales, rather than on a set amount. In other instances (primarily involving contract feeders in employee cafeterias), there will be no real estate cost, as the licensee is being paid a fee to provide a service.
  • Lease costs may be beyond KFC’s estimated range in some localities. Security deposits may be required.

4.  Construction and Leasehold Improvements:  $10,000 to $200,000

  • You may need to install, among other things, wiring, flooring, plumbing, and lighting systems which meet KFC’s specifications. The costs will vary depending on the condition of the site and local costs.

5.  Equipment/Signage:  $25,000 to $190,000

  • You must install, among other things, restaurant equipment (including cookers, refrigerators, display/holding cabinets, warmers, ovens), furniture, decor items, counters, cash registers, point-of-sale computer systems, smallwares, as well as indoor and outdoor signage.

6.  Opening Advertising:  $5,000

  • Before opening the KFC unit, your initial advertising may include print media and in-store promotional items, such as point-of-sale displays and merchandising materials.

7.  Opening Inventory:  $5,000

  • KFC estimates that the amount given will be sufficient to cover initial supplies of food and beverage products, as well as packaging and other general supplies, such as cleaning and office materials. Initial inventory will vary depending upon expected grand opening volumes.

8.  Utility Deposits and Business Licenses:  $7,500

  • You may be required to obtain permits from various local regulatory agencies which may charge a fee for the permits. You also may need to provide a deposit for utilities. The amount will vary depending upon the practices of the utility companies.

9.  Miscellaneous Opening Costs:  $5,000 to $15,000

  • The estimated costs consist of such items as training, uniforms, insurance, and professional fees (for example, attorneys and accountants).
  • The training costs vary depending on the number of employees and methods of training, including training programs required by KFC. You will be responsible for all costs including course materials, food, transportation, and lodging for persons attending training sessions.

10.  Additional Funds (3 months):  $8,000 to $13,000

  • You will need capital to support on-going expenses, such as payroll; utilities; licensing fees; advertising; supplies; food and beverage products; and packaging, to the extent that these costs are not covered by sales revenue. This is only an estimate, however, and there is no assurance that additional working capital will not be necessary during this start-up phase or after.

11.  Total Estimated Expenditures:  $127,500 to $542,000

  • KFC relied upon its experience in the industry in compiling these estimates; however, KFC’s licensing program for KFC Express is still relatively new.
  • KFC may offer to assist in securing financing for the site acquisition, construction, and/or equipment in a limited number of instances.

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