How Much Does a KFC Franchise Cost?
Many investors and entrepreneurs are interested in investing in a profitable business, and many look at starting a KFC franchise. KFC is one of the largest and most well-known restaurant brands. It is a global franchise with worldwide branding and recognition. As a result, there is great interest in the business and investing community to owing a KFC franchise.
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.
Benefits to Owing a KFC
There are a number of benefits to becoming a part of the KFC Company. The first benefit is the ability to leverage the worldwide brand of KFC. When you open a franchise in a good location, attracting foot traffic is vital to the success of your business. Being able to leverage a large brand like KFC gives your franchise an excellent opportunity to get off to a faster start. With as much success as they have had, there are also a lot of lessons learned regarding what works best and what is most effective. Having the ability to leverage this experience and knowledge has tremendous value.
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.
How Much Can You Expect to Make with a KFC Franchise?
The amount of profit that a KFC franchise owner makes depends on a wide variety of factors. One of the biggest factors is location. In addition to placing the franchise in a good location with a lot of foot or drive by traffic, the local demographics are important as well. Somedon’t do well because they are placed in an area where the culture and taste of the residents don’t line up with what the franchise has to offer.
Another huge factor that determines the profitability of the business is the ability of the franchise owner to hire and retain good employees. You can own a great franchise like KFC. However, if the employees that you hire do a poor job at customer service and running the restaurant, word will spread fast in your local area. Once a bad reputation has been established, it will be difficult to rectify this. A bad reputation can result in lower sales and can even be the main reason why a franchise fails.
So how much can you expect to make as a KFC? Most entrepreneurs that start a KFC franchise have a goal of making between $80,000 and $100,000 per year after expenses and fees. Profit can be higher or lower based on the factors discussed above and on the current market conditions.
The parent company and its KFCspend 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 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!
Are you ready to learn more about starting your own KFC franchise?