KFC Franchise Requirements

Written by john demerceau
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KFC Franchise Requirements
Fried chicken is but one of the fast-food items sold by KFC franchises. (Media Bank/Photos.com/Getty Images)

KFC, or Kentucky Fried Chicken, is a restaurant franchise system that dates back to 1952. Its familiar logo, the likeness of its founder, Colonel Harlan Sanders, is widely recognised and its present owner, YUM Restaurants, continues to offer franchises. A minimum net worth and liquid assets requirement has been set by YUM to ensure that franchisees can cover basic opening and initial operating expenses. Once approved, training is necessary before a new franchisee can begin operations.

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Application Process

To be considered for a KFC franchise, candidates must fill in and submit a full application. This includes signing and agreeing to the terms of the Franchise Disclosure Document. This document includes the requirements, as well as the possible risks and rewards of opening a franchise. An operations plan is submitted and interviews are conducted to determine whether the franchisee is to be accepted once the financial details have been verified, and then a site selection and approval process is necessary before training and opening take place.

Financial Requirements

A franchisee must have a minimum net worth of £975,000 and £487,500 in liquid assets to be considered for a KFC or combined KFC and Taco Bell franchise. However, KFC prefers franchisees who can commit to building and opening three new restaurants within three to five years of their initial franchise purchase. Therefore, unless the initial restaurant can generate enough capital for subsequent KFC locations, the franchisee should have additional assets or clear access to additional investment capital.

Breakdown of Initial Costs

Typically, £514,150 to £832,650 is required for construction, including fit-out, signage, decor and permits, as well as building renovation or new construction. The franchise fee itself is £29,250 and the development fee is up to £22,750. Real estate costs range from £260,000 to £650,000, and £32,500 to £48,750 is needed for reserves. When opening costs, training costs and initial inventory are added, the total funds necessary for a new franchise are £851,435 to £1,606,150. A candidate who meets the assets and net worth requirement can usually obtain sufficient financing to cover all costs.

Training Requirements

Once the franchisee and the site are approved, three key personnel are required to undergo a training program prepared and administered by KFC. Usual participants include the principal franchisee, a manager of the franchise holding company and the manager or assistant manager of the planned restaurant. This training is paid for by the franchisee, and it is held at KFC headquarters in Louisville, Kentucky. Parts of the training may also take place in established KFC locations known as "certified training stores."

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