KFC Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$1,053,000

-

$3,772,000

OPERATING PROFIT

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Emily

Updated

February 15, 2024

Is

KFC

a franchise?

Yes,
KFC
is a franchise and
currently
accepts
franchise
applications

KFC, also known by its full name Kentucky Fried Chicken, is a global fast-food chain that specializes in fried chicken. The company's origins trace back to 1930 when Colonel Harland Sanders began selling fried chicken from his roadside restaurant in North Corbin, Kentucky. Sanders' unique blend of 11 herbs and spices became the cornerstone of KFC's menu and remains a closely guarded secret to this day. The first official franchise opened its doors on September 24, 1952, in Salt Lake City, Utah, marking the beginning of KFC's franchising journey.

Colonel Sanders, born in 1890, was not only the founder but also became a significant cultural icon, symbolized by his distinctive white suit and goatee. His image continues to be a central part of KFC's branding. The company saw rapid growth and, overwhelmed by the expansion, Sanders sold KFC in 1964 to a group of investors led by John Y. Brown Jr. and Jack C. Massey. This sale laid the groundwork for the company's future development and standardization.

KFC's headquarters are located in Louisville, Kentucky, with a global management office in Dallas, Texas. As a subsidiary of Yum! Brands, KFC has grown to become the world's second-largest restaurant chain by sales, with thousands of locations across over 150 countries. The brand has successfully diversified the fast-food market by challenging the dominance of hamburgers and introducing various chicken products, including its famous bucket meals.

The company has undergone various ownership changes over the years, each contributing to KFC's global presence and menu expansion. Despite these changes, KFC remains true to its roots, continuing to serve Colonel Sanders' original fried chicken recipe to millions of customers worldwide.

How many

KFC

franchises

are there?

In 2022, there were
4093
outlets in the United States, of which
3872
are franchises, and
221
are corporate-owned.

What are the

KFC

franchise

fees?

Initial franchise fee

$45,000

Royalty fee

5.0%

Advertising fee

4.5%

Initial Franchise Fee ($45,000)

The initial franchise fee for a standard Franchise Agreement with KFC is $45,000. This fee is payable in two parts: a Deposit Fee of $20,000 upon signing the Deposit Agreement, and an Option Fee of $25,000 upon signing the Option Agreement.

Royalty Fee (4% to 5% of Gross Revenue or a minimum of $1,350, whichever is greater, per month)

Franchisees are required to pay a monthly royalty fee of 4% to 5% of the prior month's Gross Revenue for each Restaurant franchised under the agreement, or a minimum of $1,350, whichever is greater.

Advertising (Not to exceed 5% of Gross Revenue)

The Franchise Agreement states that KFC will not require franchisees to pay more than 5% of Gross Revenue for advertising purposes.

Rent (Varies)

The rent is variable and is agreed upon in the lease agreement if the property is leased from KFC.

Training Fees ($500 per person per week for Additional/Refresh Training)

Franchisees are required to pay $500 per person per week for Additional/Refresh Training as incurred.

Transfer Fee ($4,500 for the first Outlet and $2,250 for each additional Outlet in the same transaction)

Upon the sale of a franchise or other transfer, a transfer fee is applicable. This fee is $4,500 for the first Outlet and $2,250 for each additional Outlet in the same transaction.

How much does

it cost

to start a

KFC

franchise?

It costs between
$1,053,000
and
$3,772,000
to start a
KFC
franchise.

The total estimated initial investment for a newly constructed KFC outlet ranges from $1,852,825 to $3,771,550. Below is a detailed breakdown of these costs, offering a clear view of the financial landscape you're stepping into.

Type of Expenditure Amount
Background Check Fee $575 - $2,500 per person
Deposit Fee $20,000
Option Fee $25,000
Training Expenses $5,000 - $8,000
Permits, Licenses & Security Deposits $50,000 - $100,000
Real Property $300,000 - $1,000,000
Building & Site Costs $200,000 - $1,900,000
Equipment, Signage, Décor, POS & MERIT $375,000 - $606,000
Start-up Inventory $10,000
Grand Opening Expense $5,000
Insurance $7,250 - $10,050
Miscellaneous Costs $5,000 - $10,000
Additional Funds $50,000 - $75,000
Total (new Outlets) $1,852,825 - $3,771,550
Total (remodel or reopen) $1,052,825 - $2,521,550

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Does

KFC

provide

training

to its

franchisees?

Yes,
KFC
provides training to its franchisees.

The training program for KFC franchisees is quite extensive and is structured to ensure that franchisees and their key operators are well-prepared to run a KFC outlet. Here's a breakdown of the training program as per the Franchise Disclosure Document (FDD) for KFC:

  1. Initial Training Program:
    • New Franchisee Immersion Program: Understanding the history of KFC, reviewing the organizational structure of KFC, and meeting KFCLLC partners.
    • Above Restaurant Leader Training: This includes restaurant orientation, customer service team member training, packing, food safety, restaurant operations compliance check, leading food quality, cook and projections, leading guest experience and restaurant finances, and MERIT basics.
    • Key Operator Restaurant Training: This involves working with a Franchise Business Coach on an onboarding plan, a restaurant visit and overview of the training plan, and key operator training for the next 5 weeks which includes service mastery, chicken mastery, preparing sides, freezer to fryer products, compliance hazard communications, current promotional eLearning, food handler training (per state requirements), and more.
  2. Learning Management System (LMS):

    KFCLLC provides a web-based Learning Management System designed to deliver core training processes and track completed training for restaurant employees.

  3. On-Site Training:

    Franchisees or their designees are required to attend OSM System on-site training classes at KFCLLC’s RSC in Louisville, KY, and thereafter OSM and Learning Management System training classes via the LMS application.

    The cost to attend such classes is included in the monthly services fee (other than travel expenses), and the content will be made available at no additional charge.

Does

KFC

provides

territory

protection?

Franchisees are granted the right to operate a KFC Restaurant within a defined area referred to as the "Protected Area." Within this Protected Area, they are obligated to develop and operate the Franchised Restaurants.

However, while there are some territorial rights associated with the Protected Area, these rights do not guarantee exclusivity. Specifically, franchisees may face competition from other franchisees, from Company-Owned Outlets, or from other channels of distribution or competitive brands that KFCLLC controls.

Within the Protected Territory, KFCLLC will not use, or permit others to use in selling food products, any of the Marks that franchisees have the right to use under the Franchise Agreement.

Can a

KFC

franchise

be run as

a passive

investment?

KFC mandates that either the franchisee or a fully-trained and qualified unit manager must devote full time to the management and operation of the Outlet.

If the franchisee is a corporation, entity, partnership, or has more than one owner, a 'Control Person' must be designated. This individual has the authority to and actively directs the business affairs of the corporation or entity with respect to the Outlet.

The franchisee is responsible for hiring all managers and employees for the Outlet, and these individuals must complete the training programs that KFCLLC may require. The manager is not required to have an equity interest in the business.

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