KFC franchise requirements include a minimum investment of $1 million, substantial liquid assets, and a 20-year commitment. Franchisees must also commit to multi-branding and spend a percentage of gross sales on advertising. The process takes about a year.
The company that owns Kentucky Fried Chicken (KFC), Yum! Brands Inc., establishes the requirements that a potential investor must meet to open a KFC franchise. While KFC franchises can be quite profitable for their owners, starting a franchise can be challenging due to the time, effort and significant investment required. Requirements include a large initial investment of at least $1 million United States Dollars (USD); investors must also have substantial liquid assets and be able to pay a franchise fee. Restaurant locations must also be approved by the parent company and franchise owners must commit to a 20-year deal.
KFC’s parent organization, Yum! Brands, Inc., is a restaurant network that includes the Taco Bell, Pizza Hut, and Long John Silver brands. With over 80% of all KFC locations owned and operated by individual franchise owners, Yum! Marchi encourages franchise opportunities. To qualify for a KFC franchise, however, prospective owners must meet the company’s stringent requirements.
Starting a KFC franchise doesn’t come cheap. An initial investment of approximately $1 million or more is required to cover construction and equipment costs. Many people use third-party lenders to finance these startup costs, such as Yum! Brands, Inc. does not offer any type of financing for its franchise program.
Prospective franchisees must have a net worth of approximately $1 million United States Dollars (USD), along with substantial liquid assets in the multi-million dollar range. Franchise owners must also pay a monthly franchise fee and service charge, which is a percentage of the restaurant’s gross sales, once it is open to the public. In addition, an annual renewal fee is required to be paid each year and a 20-year contract period is required.
Due to the numerous restaurants owned by Yum! Brands, Inc., the company strongly emphasizes multi-branding. Franchisees must commit to building or operating three more restaurants over a three-year period. In some cases, two of these restaurants may be combined into one unit, such as a Taco Bell/KFC restaurant. Additionally, a minimal percentage of the franchise’s gross sales must be spent on advertising.
Once a candidate’s assets have been verified, they must meet with a Yum! Brands representative to discuss the location of the restaurant. Often, the restaurant will already be built and the franchise owner will simply negotiate a purchase deal for the location. If a store is not available for purchase, the owner and company representative must select a construction site for the new KFC franchise.
In order to minimize the sales impact for existing locations, the new franchise must be at least 1.5 miles, or at least 30,000 people, away from any other KFC. Construction cannot begin until the site has been approved by the company. Once a location is cleared for development, the applicant has eight months to complete construction and one year to open.
Like most franchises, KFC franchisees receive all products, training and branding from its parent company. Each franchise owner, however, is responsible for all construction and hiring costs. From start to finish, the entire KFC franchise qualification process takes about a year.
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