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Looking to start a KFC franchise in India? Firstly, you need to understand the process of being a part of this large fast-food chain. Secondly, gaining information on the process and actual KFC cost involved for a KFC Franchise outlet in India is necessary. Read on since this article can provide you with more than just these answers.
What is the story behind the KFC brand?
- KFC (Kentucky Fried Chicken) is a global fast-food chain with an interesting story behind it.
- The founder, Colonel Harland Sanders, was unafraid of his many failures during the Great Depression period.
- He exhausted all his money and started the KFC roadside venture at Corbin when he was 65 years and with his 105 USD social security check.
- He used his mother’s recipe to dish out the best proprietary KFC chicken recipe. Sanders remains a great example of entrepreneurship.
- Second in sales to the McDonald's fast-food chain, KFC, the genuinely American fast-food franchised restaurant, has grown across 140 countries with over 40,000 outlets since its first franchised restaurant in 1952.
- The first outlet of KFC or Kentucky Fried Chicken opened in the USA's Utah. Today the Yum! Brands that own Pizza Hut, Taco Bell and others are the parent company of the KFC subsidiary.
- The KFC franchise cost in India is greater than the cost of opening a McDonald's franchise outlet, perhaps because they have a better reputation.
- They also have more outlets and a success story they can boast about.
- KFC also licenses its franchise operations through dedicated master franchise operators and a domain developer in India, making it one of the most sought after franchise options that are hard to obtain in India.
The KFC franchise operation low-down:
- The KFC franchise in India operation depends on the location, investment, area available, market scope at the location etc., which are factors considered by the Master Franchisee (MF).
- The MF decides on the terms of association, the revenue-sharing and financial models and then starts clearing the franchisee agreement.
- Associates are either awarded a franchise model or an equity model based on their investment capacity and return expected to benefit both contracting parties.
- The Indian Master Franchisors for the Yum! Brands are Burman Hospitality, RJ Corp of Devyani International and Sapphire Foods. Close to 90% of the outlets in India work on the franchisee model.
- In India, Yum! Brands work through three franchise partners- Sapphire Foods, RJ Corp-owned Devyani International, and Burman Hospitality.
- Devyani International and Sapphire Foods also handle the Pizza Hut and KFC branded outlets, of which over 800 outlets exist in India alone! It is a challenge to acquire the KFC Franchise permits.
The KFC Cost in India:
- The estimated startup costs can range from a staggering 1.2 m to 2.5 m USD with a franchise fee of 45,000 USD. There is also a gross 5% royalty on monthly receipts paid as a fee to KFC. Some estimates suggest that the total profits accruing per store per annum are in the range of 5.8 to 7.5 thousand USD.
- The average KFC franchise cost in India is thus in the range of Rs 1 to 2 Cr investment, with commercial space of 1 to 1.5 thousand sq. ft. as per the agreement dictates, plus the 4-5% commission to KFC paid as royalty amounts on the actual gross sales receipts. This, in turn, means a Rs 20 lakh preliminary investment and about 1000 square ft prime commercial space in a potential business area to set up the store after signing the marketing agreement.
The franchise agreement permits the use of the name Kentucky Fried Chicken, KFC trademark, brand name, service marks, logo, commercial symbols etc., to be used by the franchisee in its authorised operation and area of operation. The KFC franchise can operate the take-away and dine-in food services as per the directions and on behalf of KFC or Yum! Brands. Yum! is a 478 placed Fortune 500 listing food restaurants company that rakes over 90 Cr profit in 2021. The franchisee also has to adhere to the norms in the agreement regarding the proprietary KFC business formats, layouts, methods, cooking procedures, design and procurement standards/ specifications of the franchisor. The agreement is also liable for a review once in 2 to 3 years of the outlet running successfully.
Why opt for a KFC Franchise outlet?
The KFC franchise outlet is a sought-after choice because:
- Elite restaurants run on brand names, and KFC is the subsidiary of the largest franchised fast-food global chain of restaurants of Yum! Brands that also owns Pizza Hut and Taco Bell outlets.
- The fried chicken chain has a proprietary and authentic KFC recipe with a marvellous story behind it.
- KFC has the necessary expertise to build a successful and robust franchise-based outlet across the globe, with over 400 outlets in 100 Indian cities.
- Just like the large investment, entrepreneurs in this line of business can make humongous amounts on sales and profits.
The Advantages of the KFC Franchise:
- It is estimated that your profits in the business could touch the investments and KFC franchise cost thrice through revenues earned in a short span of a year.
- With such excellent profits, it is a small wonder that the KFC franchisee outlet is such a great food business idea in India. Depending on the franchisee or equity model, the profitability may vary.
- However, the KFC model ensures early start-up times and quick gains or return on investment (ROI).
- Since the prices of all KFC items are already standardised and well-accepted in India, there is no ambiguity in the pricing models.
- KFC also offers a complete training, setting up the store as per its directions and design, and a huge brand name to be associated with.
KFC Franchise documentation:
If you get an okay for a KFC Franchise agreement, a Franchise Disclosure Document (FDD) with KFC has to be signed before the license award. This agreement has all the financial dealings, conditions, terms, franchise leases agreements, construction details, and more to be signed with the master Franchisee of KFC. You will be required to submit all property documents; identification means like Permanent Account Number (PAN), Aadhar card, residential address, financial strength proof via bank records, etc. The FDD agreement is duly filled in and signed.
The Training process:
- The KFC franchisee needs to attend the introductory training program conducted by KFC LLC regarding "How to operate a KFC Outlet". This training is to be completed per the KFC terms and conditions and is overviewed by the Master Franchisor.
- The franchisee will then be designated as Chief Operator in the following training program, provided to all KFC businesses on a franchise model and deals with the ‘Key Operator Restaurant Training Program’.
- All franchisee staff members have to complete the designated service levels training program under the franchisor's management and supervision till they certify they are good to go.
- The training program schedule or need-based training at the designated/selected venues is decided by KFC LLC. It may be at regional, national, or divisional level KFC LLC offices selected by the mutual consent of both franchisee and franchisor.
- The training programs will also contain a computer-based online educational curriculum for the Learning Zone programs, on-the-job training (OJT), accounting and record entries, etc., at various KFC classrooms and units. The franchisee who has completed the program on Key Operator KFC Restaurant Training will be required to lead and guide their staff members at the franchised outlet and KFC unit.
- The franchisee may also attend all continuation training programs, refresher training, supplementary need-based programs, etc. with their staff in full attendance and under the franchisor or KFC’s guidance as and when required by KFC.
Tips to start up a business venture:
Have a disciplined plan of action:
When choosing the KFC Franchise opportunity as your idea of a Micro, Small, and Medium Enterprise (MSME) venture that you desire, it is imperative to remember that the path of an entrepreneur is never smooth. There are large stakes involved, and hence you will need discipline, a detailed project report, market research and a down-to-the-minute action plan before you commit yourself.
This means that you need to study the market for:
- The location and business advantages of your eatery outlet.
- Local audience KFC food preferences
- Plan out the rentals, cost of infrastructure involved, workforce required, the KFC Franchise expenses etc.
- The plan of action, your financial statements, food business experiences, and sources to fund the investment required need to be looked into and arranged meticulously.
- Draw up the actual returns on investments and stick to your assessment of profitability and break-even period.
- Draw up financial budgets for every significant step of the way and be prepared for financial emergencies.
- Goods and Services Tax (GST) compliance is an area that is fraught with ups and downs, so be prepared for the latest technology and accounting software.
- Ensure all licensing, food and restaurant requirements, electricity, water connections, outlet licenses etc., are all in place and planned for before you start.
- Check out your nearest competitor details and strategy.
- Plan your work timings, staff recruitment, workforce replacements, training schedules, etc., well in advance.
About the location:
Business and profit are all about how well you choose your location. The KFC outlet requires an area of 1000 to 1500 ft in a prime business area close to transportation stations and an upbeat area, of course! The rentals at such places can be over the top. A successful venture is dependent on the ambience provided, available space for dining, the peak hours and rush crowd anticipation, and a lot more. Focus on the location specifics and ensure you are close to your desired market segment of KFC loyal customers.
Study the financial, accounting and legal norms:
These factors are crucial to your KFC outlet and can depend on your location, city, state etc. Draw up your budget for every significant operation phase and try to stay clear of over-spending and unexpected financial stress. Meet up with your lawyer, Chartered Accountant, Bankers and Managers, seeking their advice and cooperation in your venture. Choose a good technical person to help you with data storage on the cloud, cyber security, accounting and financial software etc. Hence, you always stay clear of frauds and unwarranted financial losses, non-compliance issues etc.
The government and banks may have special schemes for medium scale small enterprises like the KFC opportunity.
- Do you need a project report?
- Should you register the enterprise?
- How will you get the food, electricity and water connection licenses?
- What infrastructure and hygiene levels need to be maintained?
These are just some of the starting questions that you need to answer before you take a step towards starting a KFC Franchise.
KFC has an 11% share in the Indian market estimated at Rs 1,500 Cr and has stepped up the pace for franchisee operations in India. If you have the money and yearn for great profits, then the KFC franchise is a great opportunity in the food businesses MSME sector. To contact KFC for a franchise opportunity, go to the KFC website and the ‘contact us’ option. Download the application form and submit it online. Be prepared for GST compliance measures. Did you know that the Khatabook app can be used from small business ventures to the MSME units for all GST compliance and accounting software needs? Try it out today!