KFC
Date of Incorporation: 1971
Franchising Since: 1952
Headquarters: Kentucky
Country: U.S.
Description: KFC Corporation’s parent is YUM! Brands, Inc, a.k.a. Tricon Global Restaurants, Inc. On May 7, 2002 Tricon acquired Yorkshire Global restaurants, Inc, and changed its name to YUM! on May, 17, 2002. The KFC outlet offers 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 that was established for a primary purpose other then selling food foe reasonably immediate consumption.
Franchise Offer: The licensee will operate a KFC outlet which prepares and sells chicken, snackables and other approved menu items using the certain trademarks and trade secrets owned by KFC Corporation. The outlets are characterized by a unique system which includes special recipes and menu items, distinctive design, décor and furnishings, specifications and procedures for operations procedures for quality control; training and assistance; and advertising and promotional programs.
Financial Assistance: The franchisor does not offer any direct or indirect financing, nor do they guarantee any note, lease or obligation.
YUM! Capital LLC is a special purpose limited liability company organized under Delaware law, the sole member of which is YUM! Capital Funding Corp., a Delaware non-stock corporation; YUM! Capital issues commercial paper secured by loans (or participations in loans) purchased from YUM! Capital Funding Corp and made by YUM! Capital Funding Corp to franchisees in YU!M's restaurant brands;
The general terms of YUM! Funding's financing program is summarized as follows:
• Purpose: To finance the construction of new (multi-brand or single brand) restaurants, conversion of single-brand into multibrand and single-brand remodels without conversion.
• Amount: Lot less than $65,000, but not greater than $5,000,000.
• Term: The program will provide for terms of up to 15 years and amortizations up to 15 years.
Training and Assistance: The franchisee or their manager and at least one other key operator must attend and complete to KFC Corporation’s satisfaction the training program offered by KFC corporation. At KFC’s discretion, other employees must attend and complete the training program to KFC’s satisfaction. The franchisor, their managers and other employees must also attend such additional courses, programs and seminars as KFC may require. The training program will last approximately four days, with sessions lasting 8 to 10 hours a day. KFC will also offer assistance in the areas of customer service, general outlet management, quality control, new product preparation and equipment maintenance.
Territory: The franchisor does not have any protected radius or exclusive area for the sale of KFC’s products. The franchisor may face competition from other franchisees, from restaurants that the franchisee own, or from other channels of distribution or competitive brands that the franchisor or their affiliates control.
Term of Agreement and Renewal: The term of the franchisee agreement is 5 years upon payment of initial fee and up to a maximum 20 years upon payment of a fee of $1,000 per year after the first 5 years.
Obligations and Restrictions: The franchisor is responsible for the full performance of the licensing agreement. One or more of your shareholders (if a corporation), each partner (if a partnership) or each member (if a limited liability company) may also be requires to individually guarantee the performance of the obligations under the licence agreement. If the franchisee is an individual, their spouse may also be required to sign such a guaranty. KFC does not have the right to approve the manager of the franchisee’s KFC outlet or impose any limitations as to whom they may hire. The franchisee must sell all required products as KFC periodically designated.
Total Number of Units: The total number of franchised units for year ended 2006: 1023
Financial Statements: The total revenue for Yum! Brands, Inc and Subsidiaries for year ended 2007: $10,416,000,000.
Investment Tables:
Initial Investment:
| Expenditure | Low | High |
|---|---|---|
| Initial Franchise Fee | $25,000 | $25,000 |
| Development Services Fee | Varies | Varies |
| Real Property | $500,000 | $850,000 |
| Construction and Leasehold Improvements | $325,000 | $500,000 |
| Equipment/Signage | $250,000 | $300,000 |
| Opening Advertising | $5,000 | $5,000 |
| Opening Inventory | $10,000 | $10,000 |
| Utility Deposits and Business Licenses | $7,000 | $7,000 |
| Initial Training | $2,300 | $2,300 |
| Miscellaneous Opening Costs | $5,000 | $15,000 |
| Additional Funds (3 months) | $13,000 | $18,000 |
| Total | $1,142,300 | $1,732,300 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| Royalty | The greater of 4% of gross revenues, or a minimum of $600 per month (minimum fee subject to adjustment based upon the Consumer Price Index) |
| Local Advertising | 3% of gross revenues |
| National Cooperative Advertising | 2% of gross revenues |
| Renewal | $4,850 (subject to adjustment based upon the Consumer Price Index) |
| Transfer | $4,850, or $2,425 if the transferee is an existing KFC franchisee |
| Audit | Entire cost of audit, including expenses of auditing personnel |
| Administrative | $500 fee for KFC's administrative service in processing changes to corporate structure |
| Additional Services | As determined by KFC |
| Costs, expenses and attorneys' fees | Will vary |
| Indemnification | Will vary |
| Late royalty payments | 1-1/2% per month |
The above information has been taken from the UFOC/FDD of KFC.
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