Want To Open A Franchise? Try A KFC Franchise!
From real estate to stock investing, there are many ways to increase your income. However, just like any other investment, a large (or small) amount of initial capital. Therefore, this brings up the question; is purchasing a franchise a good investment? Well, in order to find out the answer to that question, we have to look at a few factors.
First, how do you go about acquiring a franchise? Second, what are the fees? This is an important one because the amount of money YOU take home at the end of the day depends on how much money you’re spending, saving, and bringing in. Lastly, and probably the part that most people are here to find out, how much money you can make. Of course, for that section alone, there are many factors that play into how much you can make. However, in this article, we will also take a look at what kind of requirements you need. For example, any schooling that may be required to purchase a franchise. This will help you get a better understanding of how you can come to own a franchise. Therefore, let’s take a look at how you can own and operate a KFC Franchise.
How To Acquire A KFC Franchise
To acquire a KFC franchise, you do not need to go through too many obstacles. However, there are criteria that must be met. First, you need to have money, and by this, I mean liquid capital. This is something that is common with many franchise opportunities. This is due to the various upfront fees that you’ll have to pay. For example, one rather large fee you’ll have to pay is the franchise fee. We will get more into that later. However, the franchise fee for every company is different. However, it seems to always be there.
It is important to note that KFC, much like McDonald’s, does not give a franchise to just anyone who has liquid capital. KFC looks for people who they believe will be able to run a successful business. Therefore, if you have a history in hospitality as a general manager, or even owned a franchise in the past, you’ll have a better leg to stand on. However, this does not mean that you’ll be completely out of the running, there is still a high chance that you’ll be able to acquire one of these franchises.
For the sake of this example, let’s say that you have the capital and are more or less qualified. Your first step in acquiring a KFC franchise is to simply apply. This can be done by filling out the form online. After this, you will most likely be contacted by someone from the head office who will walk you through the next steps.
Now, many people are probably wondering whether or not you need a degree to own a franchise. To put it simply, this does not appear to be the case. However, it can definitely help you be a better candidate. Furthermore, the knowledge you get from a degree in an industry such as business can definitely help.
Even if you’ve worked in fast food your whole life, opening up a franchise is a completely different ballpark. Therefore, more often than not, you will have to go through a training program. This training program can vary in its duration.
Above is a picture from a PDF provided by KFC. In this PDF, KFC outlines three main points. First is the training. Second is restaurant models and last is the fees. However, for now, we’ll discuss the training. As you can see, the length of your training will depend on your experience, with the lowest time frame being 4 weeks. The training is full-time and covers a plethora of programs. These programs range from restaurant orientation to “The Colonel’s Way”.
Next is the restaurant model. You’ll have the choice between three different types.
The three models have varying sizes. Therefore, it’s reasonable to assume that certain models will dive more traffic, earn more money but have a larger initial and ongoing investment. Therefore, you’ll have the choice between a restaurant that stands alone, if within a plaza or embedded within gas stations/malls. Each of these has its own benefits and disadvantages.
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What Are The Fees?
In terms of the fees, there are a few. First, you have the franchise fee. This is a one-time lumpsum fee. Next, you have royalties, marketing, and startup costs. The startup costs are what will be the most expensive. This is due to the fact that you have to purchase items such as kitchen equipment. Depending on the size of your establishment, this can be a rather large amount.
Above are the costs and percentages for the fees that were previously talked about. The franchise fee will cost you a heft $53,000 USD. Since this isn’t in Canadian, you’ll have to do the conversion. At the current conversion rate, this will cost you just under $70,000 CAD. Next are the royalties and marketing. Although it’s not specified, this is most likely a percentage taken off your gross monthly sales. Therefore, this fee will be most likely taken out every month. Lastly are the start-up costs which can range from $700,000 to $950,000. Of course, you’ll have your other ongoing fees such as payroll and supplies. As a result, KFC states that you need to have $350,000 – $950,000 liquid capital.
How Much Money Can You Make?
Now, onto how much money you can make. Unfortunately, it seems that KFC does not reveal the average profits from their franchises. Therefore, it makes it quite difficult to gauge how much money a franchise owner will take home at the end of the day. However, we won’t let you leave empty-handed.
Above is a picture of the average sales per franchise in thousand US dollars. Therefore, we can conclude that in 2019, the average KFC franchise accumulated $1,196,000 in sales that year alone. This puts KFC in the upper echelons of top earners when it comes to fast food. However, like with any business, the more sales/traffic you get, the more fees you’ll incur.
As for how much money you can take home, the answer depends. It depends on the number of sales you have vs how much you’re spending. Of course, if you’re barely getting by month to month, you’ll be earning less money. As a franchise owner, you are technically getting paid last. Therefore, you will be paying yourself out of whatever is left.
This is why you set incentives. Rewards for low drive-thru timers and saving money on labor. This allows you to save more money and bring through an increased amount of sales. For example, say your franchise has low labor costs, low drive-thru times, and an increased amount of sales, resulting in a large number of profits. From this amount, you can afford to pay out bonuses to your managers and take home a larger salary.
Of course, within the first few years, it’ll take a while to earn back your investment. However, franchises are essentially a gold mine once you’re profiting. If I had to guess how much money a franchise owner earns, I would say within the ballpark of $100,000 – $300,000 per year.
Shameed is just a man on a mission to help those around him gain financial success. Obsessed with writing about all things finance, this GTA native is constantly learning and sharing his experiences with others.
