In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a KFC franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a KFC franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned KFC outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2024 FDD

Section IV – News updates on the KFC franchise opportunity

Section V – Presentation and analysis of KFC’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2024 FDD, including information on the:

• 2023 average and median net sales, cost of product, and labor cost for the 36 single-brand company-owned KFC outlets open for at least one year as of KFCLLC’s fiscal year ended December 25, 2023

• 2023 average and median net sales for the 2,905 single-brand franchised KFC outlets open for at least one year as of KFCLLC’s fiscal year ended December 25, 2023

• 2023 average and median net sales for the 2,941 single-brand KFC outlets (company-owned and franchised) open for at least one year as of KFCLLC’s fiscal year ended December 25, 2023

• average, median, high, and low weekly net sales for the 85 new KFC outlets, which have been open for periods ranging from 13 to 104 weeks as of KFCLLC’s fiscal year ended December 25, 2023

Section VI – Key ratios, comparables, computations, and analyses for the KFC franchise opportunity (exclusive content for Platinum subscribers)

Section I – KFC Franchise Costs

• Background Check Fee:  $575 to $2,500 per person
• Deposit Fee:  $20,000
• Option Fee:  $25,000
• Training Expenses:  $5,000 to $8,000
• Permits, Licenses, and Security Deposits:  $50,000 to $100,000
• Real Property:  $300,000 to $1,000,000
• Building and Site Costs:  $1,000,000 to $1,900,000
• Equipment, Signage, Decor, POS, and MERIT:  $375,000 to $606,000
• Start-Up Inventory:  $10,000
• Grand Opening Expense:  $5,000
• Insurance:  $7,250 to $10,050
• Miscellaneous Costs:  $5,000 to $10,000
• Additional Funds:  $50,000 to $75,000
• Total Estimated KFC Franchise Costs:  $1,852,825 to $3,771,550

Section II – KFC’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Initial Franchise Fee:  $45,000. You must pay the initial franchise fee in two parts: (i) the Deposit Fee; and (ii) the Option Fee.
• Royalty:  4% to 5% of Gross Revenue or a minimum of $1,440, whichever is greater, per month (minimum fee subject to adjustment based upon the Consumer Price Index)
• National Co-Op:  4.5% of Gross Revenue

Section III – Number of Franchised and Company-Owned KFC Outlets

Franchised

2021

• Outlets at the Start of the Year:  3,860
• Outlets at the End of the Year:  3,872
• Net Change:  +12

2022

• Outlets at the Start of the Year:  3,872
• Outlets at the End of the Year:  3,842
• Net Change:  -30

2023

• Outlets at the Start of the Year:  3,842
• Outlets at the End of the Year:  3,715
• Net Change:  -127

Company-Owned

2021

• Outlets at the Start of the Year:  47
• Outlets at the End of the Year:  47
• Net Change:  0

2022

• Outlets at the Start of the Year:  47
• Outlets at the End of the Year:  46
• Net Change:  -1

2023

• Outlets at the Start of the Year:  46
• Outlets at the End of the Year:  46
• Net Change:  0

Section IV – News Updates on the KFC Franchise

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the KFC Franchise (Item 19, 2024 FDD)

• Of the 2,941 domestic, single-brand Outlets open for the entirety of KFCLLC’s fiscal year ended December 25, 2023 (“FYE 2023”), 36 were owned and operated by KFCC and 2,905 were owned or operated by KFCLLC franchisees.

• This financial performance representation reflects the averages for a sub-set of all single-brand Outlets in the United States as of FYE 2023. The sub-set consists of Company-Owned Outlets and all single-brand Outlets which were owned or operated by KFCLLC’s franchisees.

• All KFC Outlets included for FYE 2023 were open a minimum of one year as of FYE 2023.

• The financial performance representation does not include 821 Outlets that were open as of FYE 2023 either because they were not open a minimum of one year as of FYE 2023 or they are Non-Traditional, multi-brand, seasonal, or other types of KFC locations, not single-brand KFC locations.

• Characteristics of the included locations may differ materially from the characteristics of the Outlet(s) that you may develop or acquire depending on your experience; competition in your trade area; the physical condition of the included locations as compared to the Outlet(s); employment and labor conditions in your trade area; and the length of time that the included locations have operated as compared to the Outlet(s).

• “Net Sales” is the total annual cash or other payments received after discounts and promotions for the sale or use of any products, goods, or services that were sold from the Outlets included within the group, and “Average Net Sales” is the mathematical average of the “Net Sales” for the group.

• “Average Cost of Product” is the mathematical average of the total annual delivered cost of food, beverages, paper, and promotional items to the Outlets included within the group (“Cost of Product”), which is then expressed as a percentage of Average Net Sales. This does not include any financial results from Outlets that were owned and operated by franchisees of KFCLLC.

• The median Cost of Product during FYE 2023 was $476,812.

• Of the 36 Company-Owned Outlets included in this Item 19 for FYE 2023, 19 or 52.8% attained a Cost of Product lower than the stated average result.

• “Average Cost of Labor” is the mathematical average of the total annual hourly labor costs; the salaries and related costs of management; payroll taxes; health insurance; vacation; sick pay; bonuses; and workers’ compensation insurance for all employees at the Company-Owned Outlets included within the group (“Cost of Labor”), which is then expressed as a percentage of Average Net Sales. This does not include any financial results from Outlets that were owned and operated by franchisees of KFCLLC.

• The median Cost of Labor during FYE 2023 was $464,619.

• Of the 36 Company-Owned Outlets included in this Item 19 for FYE 2023, 19 or 52.8% attained a Cost of Labor lower than the stated average result.

• The operations of Company-Owned Outlets are similar to those of the franchised Outlets offered by the Disclosure Document, except that Company-Owned Outlets do not have certain expenses that franchised Outlets have, such as payment of royalties. Company-Owned Outlets also benefit from economies of scale that are not available to outlets that are owned singly or in small groups by a franchisee.

Part 1 – 2023 Average Performance of Single-Brand KFC Locations Open During the Entirety of FYE 2023

Company-Owned

• Count:  36
• Average Net Sales:  $1,453,255
• Median Net Sales:  $1,421,282
• Average Cost of Product:  $489,879
• Average Cost of Product as % of Net Sales:  33.7%
• Average Labor Cost:  $483,296
• Average Cost of Labor as % of Net Sales:  33.3%

Franchisee-Owned

• Count:  2,905
• Average Net Sales:  $1,384,944
• Median Net Sales:  $1,321,309

All Single-Brand Outlets

• Count:  2,941
• Average Net Sales:  $1,385,780
• Median Net Sales:  $1,323,469

Part 2 – Average Weekly Net Sales for New Outlets

• As of FYE 2023, there were 85 Outlets that were built as a new Outlet (whether as a new restaurant, or as a torn down and reconstructed Outlet) (the “New Outlets”) during the fiscal years ended December 26, 2022, and December 25, 2023.

• KFC discloses information below relating to Average Weekly Net Sales for 78 New Outlets, which have been open for periods ranging from 13 to 104 weeks as of FYE 2023. KFC excluded 7 New Outlets, 6 of which opened in 2023 and have operated for less than 13 weeks due to an insufficient period of operations, and 1 Re-Opened Outlet (defined below) for which KFC did not have prior sales information for the 52 weeks preceding its closure.

• Of the 78 New Outlets (i) 52 were freestanding restaurants built from the ground-up (“Ground Ups”); (ii) 9 were freestanding restaurants converted from a different restaurant brand (“Conversions”); (iii) 1 was a permanently closed freestanding restaurant that was later remodeled and re-opened (“Re-Opened Outlets”); (iv) 5 were freestanding restaurants relocated to a different freestanding location (“Relocated Outlets”); and (v) 11 were non-freestanding restaurants that were newly built in-line or on an end cap of a strip mall, which may or may not have drive thru (“Inline/Endcap Outlets”).

• KFC calculated the Average Weekly Net Sales by dividing the sum of Outlet Average Weekly Net Sales for the New Outlets by the number of New Outlets in each category identified below. The “Outlet Average Weekly Net Sales” for each New Outlet is the total sales for such New Outlet since opening, divided by the number of weeks such New Outlet has been open as of FYE 2023.

All New Outlets

• Average Weekly Net Sales:  $30,793
• Median Weekly Net Sales:  $30,829
• Lowest Weekly Net Sales:  $16,415
• Highest Weekly Net Sales:  $56,591
• Percentage That Met or Exceeded the Average Weekly Net Sales:  50%
• Average Annualized Sales:  $1,601,218
• Percentage Increase (or Decrease) Over Single Brand Outlets:  16%
• Average Increase in Net Sales:  N/A

Ground Ups

• Average Weekly Net Sales:  $31,532
• Median Weekly Net Sales:  $31,242
• Lowest Weekly Net Sales:  $19,867
• Highest Weekly Net Sales:  $50,304
• Percentage That Met or Exceeded the Average Weekly Net Sales:  44%
• Average Annualized Sales:  $1,639,683
• Percentage Increase (or Decrease) Over Single Brand Outlets:  18%
• Average Increase in Net Sales:  N/A

Conversions

• Average Weekly Net Sales:  $29,561
• Median Weekly Net Sales:  $27,261
• Lowest Weekly Net Sales:  $16,415
• Highest Weekly Net Sales:  $49,239
• Percentage That Met or Exceeded the Average Weekly Net Sales:  44%
• Average Annualized Sales:  $1,537,181
• Percentage Increase (or Decrease) Over Single Brand Outlets:  11%
• Average Increase in Net Sales:  N/A

Re-Opened Outlets

• Average Weekly Net Sales:  $24,417
• Median Weekly Net Sales:  $24,417
• Lowest Weekly Net Sales:  $24,417
• Highest Weekly Net Sales:  $24,417
• Percentage That Met or Exceeded the Average Weekly Net Sales:  N/A
• Average Annualized Sales:  $1,269,699
• Percentage Increase (or Decrease) Over Single Brand Outlets:  -8%
• Average Increase in Net Sales:  33%

Relocated Outlets

• Average Weekly Net Sales:  $33,426
• Median Weekly Net Sales:  $35,441
• Lowest Weekly Net Sales:  $25,344
• Highest Weekly Net Sales:  $40,910
• Percentage That Met or Exceeded the Average Weekly Net Sales:  60%
• Average Annualized Sales:  $1,738,172
• Percentage Increase (or Decrease) Over Single Brand Outlets:  25%
• Average Increase in Net Sales:  34%

Inline/Endcap Outlets

• Average Weekly Net Sales:  $27,686
• Median Weekly Net Sales:  $23,295
• Lowest Weekly Net Sales:  $18,701
• Highest Weekly Net Sales:  $56,591
• Percentage That Met or Exceeded the Average Weekly Net Sales:  36%
• Average Annualized Sales:  $1,439,661
• Percentage Increase (or Decrease) Over Single Brand Outlets:  4%
• Average Increase in Net Sales:  N/A

Section VI – KFC Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️