To say KFC is popular is an understatement. More than 12 million customers are served at KFC’s 15,000+ restaurants around the world each day. The brand operates in 109 countries and territories globally, and more than 5,200 locations in the U.S. alone. It’s safe to say, KFC has some brand recognition. So what is the ACTUAL KFC franchise cost? We’ll break it down for you.
To get started, you’ll need to enter into a franchise agreement with KFC for either a “traditional” location or a “non-traditional” location. Costs vary depending on the type of franchise agreement you enter into. A “traditional” KFC is your everyday standalone restaurant (think the kind you might pass on a highway). KFC estimates it will cost you between about $1.4 and $2.7 million, all-in, for the first few months to operate a “traditional” KFC.
KFC’s “non-traditional” outlets offer limited menus and primarily operate at locations captive in nature. These include military bases, transportation terminals, colleges, malls, and the like. KFC estimates it will cost you between $241,100 and $996,000, all-in, for the first few months to operate a “non-traditional” KFC.
So here’s what you’re actually paying for to open either a “traditional” or “non-traditional” KFC.
Actual Initial Costs
“Traditional” KFC
Type of Expenditure
Low
High
Application & Background Check Fee (per person)
$300
$500
Deposit Fee
$20,000
$20,000
Option Fee
$25,000
$25,000
Training Expenses
$7,000
$10,000
Permits, Licenses, and Security Deposits
$50,000
$100,000
Real Property
$400,000
$1,100,000
Building & Site Costs
$534,000
$930,000
Equipment, Signage, and Décor, POS & MERIT
$329,000
$476,000
Start-up Inventory
$10,000
$10,000
Grand Opening Expense
$5,000
$5,000
Insurance
$7,250
$10,050
Miscellaneous Costs
$5,000
$10,000
Additional Funds
$50,000
$75,000
ESTIMATED TOTAL
$1,442,550
$2,771,550
“Non-Traditional” KFC
Type of Expenditure
Low
High
Initial License Fee
$10,000
$15,000
Background Check Fee
$350
$500
Real Property
$50,000
$75,000
Construction and Leasehold Improvements
$50,000
$75,000
Equipment/Signage
$90,000
$200,000
Opening Advertising
$5,000
$5,000
Opening Inventory
$5,000
$5,000
Utility Deposits and Business Licenses
$7,500
$7,500
Training
$3,000
$5,000
Insurance
$7,250
$10,000
Miscellaneous Costs
$5,000
$10,000
Additional Funds
$8,000
$13,000
ESTIMATED TOTAL
$241,100
$996,000
The Other Fees
In addition to the startup costs, you’ll be responsible to pay KFC other fees from time to time. Again, these differ based on the type of KFC–“traditional” or “non-traditional”–you operate.
Here’s what else you’ll be paying:
“Traditional” Fees
Type of Fee
Amount
Royalty
4% to 5% of gross revenueor a minimum of $1,260, whichever is greater, per month (minimum fee subject to adjustment based upon the Consumer Price Index).
National Co-op (advertising)
4.5% of gross revenue.
Renewal, if applicable
$8,400 (subject to adjustment based upon the Consumer Price Index).
Transfer to an Existing KFC LLC Franchisee
$4,200 for the first outlet and $2,100 for each additional outlet in the same transaction.
Transfer to a New KFC LLC Franchisee
$8,400 for the first outlet and $4,200 for each additional outlet in the same transaction.
Audit
Entire cost of audit, including expenses of auditing personnel.
Additional Refresh/Training
$3,000
Costs, Expenses and Attorneys’ Fees
Will vary.
Indemnification
Will vary.
Late Royalty Payments
1.5% per month.
Restaurant Operations Compliance Check – comprised of two categories: (1) Food Safety Compliance Check and (2) Brand Standards Compliance Check Re-evaluation
Up to $237 to $296.50 per re-evaluation.
Support Services and Software Maintenance for KFCLLC’s MERIT System
$181.51 per unit/per month.
One System Fund Fee
$180 per outlet/per month (plus applicable tax and shipping) (reoccurring payments).
“Non-traditional” Fees
Type of Fee
Amount
Licensing Fee
9.5% of Gross Revenues for each partial or full month of the term of the License Agreement.
Audit
Entire cost of audit, including expenses of auditing personnel.
Costs, expenses and attorneys’ fees
Will vary
Indemnification
Will vary
Transfer to a New KFC LLC Franchisee
$8,400 for the first outlet and $4,200 for each additional outlet in the same transaction.
Interest on Late Payments
18% per year or the highest rate allowed by law, whichever is less.
Additional Refresh/Training
$1,050 per trainee.
Administrative
$500 administrative services fee for each transaction in which KFCLLC processes changes to your corporate structure, or when processing other approved modifications.
Restaurant Operations Compliance Check(“ROCC”) –comprised of two categories: (1) Food Safety ComplianceCheck (“FSCC”) and(2) Brand Standards Compliance Check(“BSCC”) re- evaluation
$237 to $296.50 per evaluation.
Support Services and Software Maintenancefor KFCLLC’sMERIT System
$181.51 per unit/per month.
Transfer to a new KFCLLC licensee
Up to $237 to $296.50 per re-evaluation.
Support Services and Software Maintenance for KFCLLC’s MERIT System
$3,000 for the first Outlet and $1,500 for each additional Outlet in the same transaction.
Transfer to an existing KFCLLC licensee
$2,000 for the first Outlet and $1,000 for each additional Outlet in the same transaction.
The Key Provisions
There’s a few other franchise agreement requirements you should be aware if you’re considering buying a KFC franchise. Again, these differ depending on whether you purchase a “traditional” or “non-traditional” location. Here they are
“Traditional” Key Provisions
What’s my territory?: Franchisees do not receive an exclusive territory. Franchisees do, however, receive a protected territory if they remain in compliance with the franchise agreement. The protected territory is the smaller of (i) a radius of 1.5 miles of the outlet, or (ii) an area around the outlet where 30,000 people reside, or, in the case of a metropolitan area containing more than 100,000 people, within which 30,000 people reside or work (the Protected Territory).
How long is the term and can I renew?: The initial franchise term is 20 years. If franchisees meet certain requirements they may renew. Franchisees may be asked to sign a contract with different terms and conditions than the original contract.
Is there Financial Assistance?: YUM! Brands, KFC’s parent company, offers an optional lending assistance program for qualified minorities. The YUM Minority Assistance Program covers financing for new minority franchisees. Qualifying purchases include purchasing an existing outlet, purchasing an existing company-owned outlet, or developing a new outlet. The financing is generous. YUM guarantees 25% of the principal of the franchised business loan, up to a maximum of $3,000,000 per loan.
“Non-Traditional” Key Provisions
What’s my territory?: Franchisees do not receive an exclusive territory. KFC expressly reserves the right to operate/sell or allow others to operate/sell KFC locations near “non-traditional” locations.
How long is the term and can I renew?: The initial franchise term is 5 years ($10,000 license fee) or 10 years ($15,000 license fee).
Is there Financial Assistance?: YUM offers the same Minority Lending Program for “non-traditional” outlets.
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