How Much Does a KFC Franchise Cost?

The Mysterious Call of the Colonel
Say the magic words, “a secret blend of eleven herbs and spices,” and any fast food aficionado worth his or her salt will immediately recognize the famous marketing pitch of KFC.  Known for many years as Kentucky Fried Chicken, Colonel Harland Sanders started the company way back in 1939, having opened his first restaurant in a gas station in Corbin, Kentucky.  After awarding his first franchise in 1952 to an enterprising individual in Salt Lake City – the royalty Sanders charged his initial franchisee was five cents per meal – he subsequently became the world’s largest seller of ready-to-eat chicken.  The company eventually became part of Yum! Brands and changed its name to KFC to reflect a more varied menu.  The parent company also owns such iconic restaurant brands as A&W, Long John Silvers, Pizza Hut, and Taco Bell.

KFC Franchise Review
There are more than 14,000 KFC franchises in more than 80 countries, and they claim to serve something like twelve million customers every day.  Counting just the chicken dinners alone, more than two billion are sold annually.  In 2009, KFC was ranked 14th on the Franchise 500 list for all franchise operations, 13th on the America’s Top Global Franchises list, and number one in its category four out of the past five years.  One of the most popular programs in recent years has involved their multi-branding process, where a KFC franchise is paired with one or two other fast food brands under the same roof.  The company has more than 4,000 of these locations around the world.  Pairing KFC with Taco Bell, for example, gives the franchisee access to two separate national marketing campaigns, two broad-based menus, and consequently a much larger clientele.

KFC Franchise Information & Costs
The corporation charges each of its new owners an upfront franchise fee of $25,000.  One’s total initial investment will range from $1.1 million to $1.7 million, with much of that variation based upon the difference in real estate values from one part of the country to another.  At the low end, the total costs break down something like this – real property ($500,000), construction ($325,000), equipment and signage ($250,000), opening advertising ($5,000), opening inventory ($10,000), utility deposits and business license ($7,000), initial training ($2,300), miscellaneous opening costs ($5,000), and a three month cushion to cover operational expenses ($13,000). There are also ongoing fees assessed to each franchisee, most of which are calculated as a percentage of monthly gross sales revenue.  For example, the standard royalty fee is four percent, with an additional three percent for local advertising, plus two percent for national ad campaigns.  Each franchise agreement is good for 20 years, after which it can be renewed for a modest four-figure fee.  In the event a franchisee elects to sell his or her business, the corporation will charge a $4,850 transfer fee, although that fee is cut in half if the buyer owns one or more KFC franchises.

Plenty of Corporate Support
The parent company and its KFC franchises spend more than $600 million annually on consumer advertising, with national ad campaigns launching year-round.  Many markets also enjoy ad co-ops, which allows for mass market pricing on media ad buys in print as well as on radio and television.  KFC has something they call their Franchise Business Coach program, which provides ongoing training and support to every KFC franchise owner, as well as a unified food service buying program to keep costs low and ensure that the quality of every meal does not vary from one store to another.  Since beginning this program ten years ago, Yum! Brands estimates that it has saved its franchisees a collective half a billion dollars by providing them with system wide inventory and supply discounts.  You can buy a lot of fried chicken with that kind of money!

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2 Responses to “How Much Does a KFC Franchise Cost?”

  1. Gcobani Thobela Says:

    I would like to know more about KFC franchises.

  2. Mr Thabane Says:

    I need to know what steps that I have to take to start a KFC franchise. How much must I have to start?

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