The Great Depression was an unlikely time to open a new business, but Harland Sanders’ restaurant, auto court motel and gas station in Corbin, Kentucky, made money in the 1930s. Sanders franchised the food operations in 1952 under the name Kentucky Fried Chicken. KFC franchise ownership started with Sanders and shifted to R.J. Reynolds and Pepsico, Inc. in the 1980s. Tricon Global Restaurants, Inc., now known as YUM! Brands, Inc., bought operations and changed the popular name to KFC in 2002.
Qualifications for a modern KFC franchise require formal application and interviews for the opportunity to invest in serving Harland Sanders’ secret chicken recipe.
Preparing to Submit a KFC Application
Determine the amount you have to invest in a KFC franchise. This financial evaluation includes totaling your personal net worth and your available liquid assets. KFC requires franchisees to have $1.5 million net worth and $750,000 liquid assets to apply for a store. Collect your financial information and income tax records and meet with a business lender to prequalify for a franchise loan.
Next, determine the focus for your KFC franchise. Fast-food offerings with KFC include a stand-alone KFC or a combination store with KFC and Taco Bell operations at the same location.
Select the desirable geographic locations for your franchise restaurant and research the markets for fast food in these areas using business resources, including newspapers and magazines, available on the Internet. KFC wants its franchise owners to be hands-on in the daily operations of the restaurant, so it’s ideal to choose a location near your primary residence.
Review the Application and Paperwork
Request a copy of KFC’s corporate franchise information and the federally required disclosure document by using the request form on the corporate KFC website (https://www.kfc.com/about/franchising). Examine the details included in this paperwork. Some states also require separate disclosure statements. The Federal Trade Commission’s Franchise Rule requires presenting the mandatory disclosure at least 14 days before you sign the franchise agreement or pay fees and make deposits.
Complete the corporate application and wait for an invitation for an interview. During the waiting period, KFC corporate officers evaluate your financial assets and conduct background checks. You cannot have any criminal convictions or a history of either bankruptcy or litigation. Your credit score must also be at least 700.
Interview and Finalization Process
Next, you’ll participate in an extended interview with the corporation representatives and participate in a restaurant experience to evaluate your ability to take charge of a franchise operation. If you have prior restaurant or fast-food management experience, this requirement may be waived. This interview determines your franchise qualifications.
It’s wise to hire an attorney with franchise experience to evaluate the franchise agreement and the disclosure statements for potential problems. You’ll also need to officially select the site for your KFC franchise restaurant and negotiate the purchase of the franchise with the KFC Corporation. Write the corporate-required marketing plan for your restaurant and develop a business plan for your new store. KFC corporate representatives help guide in developing these plans.
Submit the site registration for your restaurant and pay KFC the required funds for the site evaluation. Corporate representatives assist with completing the registration request. All that’s left to do is apply for your franchise loan and build your restaurant.
Purchasing an Existing KFC Franchise
To purchase an existing KFC franchise, you’ll need to follow the same steps above in order to apply and interview with the KFC corporation regarding your interest in owning a franchise. Once approved, you’ll need to obtain a list of KFCs for sale instead of looking for a suitable place to build.
Before you make an official selection, evaluate the physical condition of the available KFC franchises. Hire licensed professionals to evaluate the equipment, building and parking lot, if the sale includes the structure and land. Also research the economic condition of the KFC franchises listed for sale. This requires evaluating the local fast-food market and labor conditions and may necessitate hiring an outside marketing specialist with experience in fast food operations.
Finally, negotiate the purchase of the KFC restaurant with the assistance of the corporate office to develop and sign the appropriate forms and documents. Meet with your loan broker to apply for the loan. Bring your prequalification paperwork, franchise purchase agreement and disclosure information to this meeting. To make everything official, sign the loan agreement.