Ever wonder what it would be like to run one of the most popular chicken restaurants in the world? Kentucky Fried Chicken is a worldwide fast-food chain that focuses on Southern fried chicken. The company has more than 23,000 locations with loyal customers all over the world.
How much does it cost to open a KFC franchise? Expect to invest $1 – $2 million dollars including franchise fee of $45,000 to open a KFC franchise location.
To open a KFC franchise you need a liquid capital (i.e. cash or savings) of $360,000 and a net worth of $1,000,000 which is the value of your total assets, subtracted by any debt. These are only base numbers and can vary greatly depending on a number of factors like location. Here’s everything you need to know to before signing the dotted line to own a KFC franchise location organized by category.
- Financial Requirements and Fees
- Average Sales / Revenue per Year
- Franchise Facts
- Average Profit
- Things to Consider
- Advantages of KFC franchise
- Challenges of KFC franchise
Financial Requirements and Fees
Here is a base overview of what the essential finance requirements are for a KFC franchise.
|Fees/ Expenses||Amount Needed|
|Total Investment||$1,000,000 – $2,000,000|
Here is a more detailed breakdown of costs and fees required to open a KFC:
|Fee||Low-End Costs||High-End Costs|
|Marketing Start-Up Fee||$5,000||$5,000|
|Grand Opening Inventory||$5,000||$10,000|
It’s important to understand the startup costs you’ll need to open a store location, including the on-going expenses. Recurring costs like royalty fees may be daunting at first glance, yet many franchisees have reaped the rewards of profiting operating this global food brand. There are additional on-going fees that are not accounted for in these numbers that depending on the location or type of KFC restaurant you want to open.
|Type of Fee||Amount|
|Continuing Franchise Fee (royalty)||4% – 5%|
|Continuing Advertising Fee||5%|
|Training Expenses||$7,000 to $10,000|
|Permits, Licenses, and Security Deposits||$50,000 to $100,000|
|Real Property||$400,000 – $1,100,000|
|Equipment, Signage, and Décor, POS & MERIT||$329,000 – $476,000|
|Application & Background Check Fee (per person)||$300 – $500|
|Support Services and Software Maintenance for KFCLLC’s MERIT System||$173.15 per unit/per month|
Average Sales / Revenue per Year
The average KFC unit drives $600,000 to $1 million in sales per year. These estimates will fluctuate based on your store location and whether or not the store is freestanding, drive-thru, in a gas station, or densely populated location.
While some areas may bring in more foot traffic and customers, it’s also important to note that rent / lease payments may be higher. You’ll also need to factor in hiring more staff (and wages) to help run the high volume KFC businesses.
KFC Franchise Facts
|Incorporated Name:||KFC, LLC|
|Industry:||Quick Food Services|
How Much Profit Does the KFC Franchise Make Per Year?
As an individual unit, KFC makes about $942,000 – $1,000,000 per year. Although Yum! Brands keeps their franchise owner’s salaries private, it can be estimated that owners take home roughly $120,000 a year, based on average food franchise owner salaries.
This amount is typical for a fast-food restaurant of this scale but may range depending on many factors.
Things to Consider Before Opening a KFC Franchise
Type of Franchise
Before opening your KFC franchise, you’ll need to choose between non-traditional and traditional locations. Non-traditional KFC outlets are smaller and offer a limited menu. These are usually found in high foot-traffic locations like amusement parks, military bases, colleges, and athletic stadiums.
The advantage of a non-traditional KFC is you can save operating and inventory costs from having a smaller menu and in some situations overhead due to less staff and lower lease payments.
Traditional KFC outlets are usually found in freestanding locations. It may be more difficult to gain foot traffic at these locations, yet their full menu provides more options for customers, therefore increasing the likelihood of larger sales and higher overall volume.
KFC Corporation began in Louisville, Kentucky. After becoming a franchise in 1952, KFC branched out to more than 80 countries and territories in the world. Today, 23,000+ KFC outlets serve up to 12 million customers each day, making the concept the most popular chicken restaurant chain in the world.
You’ll find KFC locations in amusement parks, military bases, and universities in addition to freestanding locations. Despite being popular in the United States, most of the franchise’s locations are based abroad. If you live outside of the US, a KFC outlet may be an intriguing option for you, given the popularity amongst international customers looking for a hearty American meal. KFC also caters to the taste and culture for the specific area, so menu items in other countries may be slightly different.
Opening a franchise is no small feat and the financial undertaking may be daunting. KFC mandates franchise owners own at least $1 million in net worth in addition to $360,000 in liquid assets. Since the franchise fee is relatively low and the concept is proven internationally, it can be a smart investment if you have the means.
Advantages of Kentucky Fried Chicken
Opening and running a KFC outlet may be a challenging endeavor, yet it does not come without its advantages. The Yum! Minority Assistance Program finances new minority franchises purchasing an existing Outlet. If financial assistance is granted, Yum! will loan 25% of up to $12,000,000 of the franchised business loan as well as up to $3,000,000 per loan or franchisee.
The only drawback is that Yum! Brands can withdraw the Yum! Minority Lending Assistance at any given moment and does not guarantee a loan even if the franchisee meets all of the loan requirements.
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In addition to financial assistance, Yum! Brands offers on-going business support as well as quality on-boarding and training. You will not be left alone to your own devices when working with Yum! Brands. If you are new to owning franchises and don’t have experience managing a quick-serve restaurant, Yum! brands will provide the necessary training for you and your team. Don’t forget that the fact that it is the most popular chicken restaurant chain in the world is a testament to its long-term financial success.
Also, since KFC is a part of Yum! Brands, which owns a number of other fast-food chains as well, you may have more opportunities to grow and open other franchises as well. Also since it already has a large following and consumer awareness, you won’t need to worry about your store being overlooked.
Finally as KFC has proven, this is a global opportunity. Consumers in countries from the United States, Canada, the Philippines, Australia, China, Thailand and the United Kingdom all have hundreds or thousands of locations in each market. This is a taste and flavor that’s enjoyed by almost every culture.
- Possible financial assistance from Yum! Brands.
- Quality training and on-boarding.
- Consistent business support.
- KFC’s world-renowned popularity proves and consumer awareness that high sales are very possible.
- Opting between a non-traditional and traditional franchise gives owners options based on their financial standing.
Challenges of Kentucky Fried Chicken
Despite their time-proven results of financial success, the KFC franchise does not come without its challenges. The franchise agreement requires a franchised outlet to have an experienced, qualified, full-time manager. This means that business owners will not be able to manage the outlet themselves unless they already have food business management experience.
In addition, there must be a “Control Person” who oversees business affairs. As you can imagine, this could possibly lead to an immense workload given to one person, rather than the sharing of authoritative duties between several people.
Franchisees are only allowed to cater for events if the franchise business owner meets the franchisor’s catering and special event requirements. This involves specific procedures regarding food delivery and signing an addendum. This can increase friction for a valuable sales channel, especially if you have existing relationships with other small businesses that regularly bring in catering.
A unique challenge KFC franchise owners may face is the implication that Yum! Brands may require them to open another franchise alongside KFC. Say, for example, Yum! Brands owns another franchise that they believe will draw in more customers to an already established KFC outlet. You, as the business owner, must be prepared to accept Yum! Brands’ requirement to open the additional franchise alongside an already successful KFC outlet. These concepts might include Pizza Hut, Taco Bell, The Habit Burger Grill, or WingStreet. As you can imagine, this will lead to more financial investment as well as additional workload.
In order to look more appealing to Yum! Brands, you may be asked to open more KFC franchises. This of course would increase the likelihood of financial assistance from Yum! Brands. If you’re able to prove yourself as a franchisee, more growth opportunities could come your way. This is a pro and a con depending on your personal goals and ambition level.
Another financial challenge is that KFC mandates franchise owners to have a net worth of $1 million and liquid assets of at least $360,000. On top of that, you must already have food business management and food service experience.
Related Reading: How Much Does It Really Cost to Open a Subway Franchise?
Yet another challenge of opening a KFC franchise is the long waiting period business owners must wait to hear from Yum! Brands. It may take up to a month for Yum! Brands to review your qualifications and may take even longer to schedule an interview. In fact, expect the entire approval and vetting process to take close to a year to complete. At any point during the approval and interview process you may be denied for not meeting Yum! Brand’s qualifications.
- Possible denial of financial assistance.
- Heavy workload designated to one “Control Person”.
- Possible requirement to open additional franchises.
- Must have a large net worth and a significant amount of liquid assets.
- Long approval waiting time.
Is the KFC Franchise Right for You?
Still want to get into business with Colonel Sanders and his finger licking good fried chicken recipes Whether or not it is the right opportunity for you comes down to the following:
Do you have a passion for restaurant operations? The food service industry and restaurant business is hands-on and requires experience and background knowledge on how to properly manage a fast-paced environment. This may be an appealing environment for multitaskers and people who enjoy leading large groups of employees.
Related Reading: How Much Does It Really Cost to Open a Chick-fil-A Franchise?
Are you committed to growth? Yum! Brands favors multi-unit ownership and requires you to be a team-builder. This may involve installing another franchise beside your already-established KFC or purchasing another freestanding KFC unit. Although owning multiple franchises has its challenges, the opportunity for financial growth is significant.
Do you enjoy eating at Kentucky Fried Chicken? In an ideal world, you’ll appreciate the food your serving and share the passion for this long-standing food concept.
Do you have the financial capital? You and your business partners are required to have at least $360,000 in liquid assets and $1,000,000 million in net worth. Owning a franchise is an expensive endeavor. Still the food brand has been proving itself a viable business opportunity for franchisees for nearly 8 decades.