The Filipino KFC franchise offers: Original Recipe and Hot and Crispy Chicken, Fully Loaded Meals, Bucket Meals, the Famous Bowl, Fun Shots, the Zinger sandwich, brownies, crispy fries, coleslaw, mashed potatoes, Salad d’Lite (consisting of various types of salad), and the brand new KFC Twister.
There are many costs for people who plan on becoming new franchisees for KFC. The initial franchise fee is $45,000. The development service fee varies depending on the country. The real property fee is typically within the range of $400,00 to $1,000,000. Then, construction and leasehold improvements will usually cost around $575,000 to $915,000. The cost for the equipment and signage normally comes to an amount between $216,000 and $366,000. The amount needed for opening advertising is around $5,000, and the cost for opening inventory is usually $10,000. Then, the cost to obtain utility deposits and business licenses will come to around $7,000. Initial training costs anything from $3,900 to $15,000. Additionally, some miscellaneous opening costs will total at around $5,000-$15,000. Additional funds for 3 months will be between $13,000-$18,000, which brings the grand total to anything from $1,379,000 to $2,391,000. On top of that, the franchise must also give 4% of whatever it makes to the main KFC Corporation as a royalty fee.
It’s difficult to start a franchise alone. That’s why KFC also provides training to its’ franchisees. They offer 8-16 weeks of product training, which introduces franchisees to the people they need to know, and exactly what they need to know. They will also help provide assistance in getting the franchise up and running.
There are many benefits to franchising, both for the franchisor and franchisee. For the franchisor, selling license to franchisees is a good source of income for the franchisor, as well as providing products to the franchisees. Also, expansion of a franchise is much easier and much faster than if the franchisor had to finance every location by him or herself, not to mention that it’s much less of a hassle, since the franchisee will be running the business for the franchisor.
It is also advantageous for a franchisee. Firstly, the chances of the business being a failure are very low, because the product and restaurant will already be well known. The franchisor will pay for advertising, as well as provide training for the staff and management. All the supplies can be obtained from a central source, which means that there is no hassle in obtaining supplies quickly and efficiently. The franchisee will have fewer difficult decisions to make, because many major decisions are made by the franchisor. Also, banks are more willing to lend to franchisees due to the low risk involved in owning a franchise.
However, there are also many disadvantages to owning a franchise. If a franchisee poorly manages one outlet, it could give the entire franchise a bad reputation. Also, franchisors only receive part of the profit, and all the rest of it goes to the franchisee.
The franchisee also doesn’t have a lot of independence as compared with someone who owns a non-franchising business. Also, the franchisee may not be able to make decisions that suit the local area because the franchisor doesn’t allow them, and the license fee needs to be paid to the franchisor, as well as part of what the franchise earns.
Bibliography:
IGCSE Business Studies [third edition] Book