$126

Business Description

KFC US, LLC, a Delaware limited liability company formed on March 31, 2016 (f/k/a KFC Franchisor, LLC), is the licensor, and will be referred to as "KFCLLC" throughout this Disclosure Document. KFCLLC conducts business under the trade names “KFC” and “Kentucky Fried Chicken.” The principal address of KFCLLC is 1900 Colonel Sanders Lane, Louisville, Kentucky 40213. The buyer and guarantor of a license will be referred to as "you" throughout this Disclosure Document, even if you are a corporation, partnership or other entity, and includes your owners.

Prior Experience

KFCLLC began offering licenses for Non-Traditional Outlets (as defined below) and Traditional Outlets (as defined below) in June 2016. From June 2016 to March 2019, KFCLLC sold licenses for NonTraditional Outlets under the logo “KFC Express.” KFCLLC also offers franchises for Kentucky Fried Chicken Outlets that offer a full menu of KFC products, operate from traditional locations and operate using the “KFC®” and “Kentucky Fried Chicken®” marks (each a “Traditional Outlet”). KFC LLC offers franchises for Traditional Outlets under a separate Franchise Disclosure Document. KFCLCC does not own or operate any Traditional Outlets or Non-Traditional Outlets. Together, Non-Traditional Outlets and Traditional Outlets are known as “Outlets.”

Business Offered

If you are approved as a KFC non-traditional licensee, KFCLLC will grant you the right to operate one KFC outlet (each a “Non-Traditional Outlet”) at a specific location approved by KFCLLC. Non-Traditional Outlets offer a limited menu and primarily operate at locations captive in nature, including such venues as military bases, transportation terminals, colleges and universities, venues within business and industry locations, malls, high foot traffic locations, amusement parks, athletic stadiums and similar sites. You will sign the Kentucky Fried Chicken Non-Traditional License Agreement, in the form attached as Exhibit B (the “Non-Traditional License Agreement”), for a license to operate a NonTraditional Outlet (the “Non-Traditional Outlet”). The Non-Traditional License Agreement grants you a license to use (i) certain KFC trademarks, trade names, service marks, logos and commercial symbols KFCLLC periodically authorizes, including the “KFC®” and “Kentucky Fried Chicken®” marks (together, the “Marks”); and (ii) the proprietary business formats, methods, procedures, designs, layouts, standards and specifications (together the “System”) KFCLCC authorizes, solely in connection with the operation of the Non-Traditional Outlet. The Non-Traditional Outlet will offer a menu of products primarily consisting of chicken items, including chicken strips and sandwiches, which are identified on Exhibit A of the Non-Traditional License Agreement (the “Approved Products”). KFCLLC may amend or remove any of the Approved Products upon prior written-notice to you. Before you build an Outlet or sign the Non-Traditional License Agreement, you must sign a “Non-Traditional Deposit Agreement” in the form attached as Exhibit C, under which you will apply for a site for the Non-Traditional Outlet. Once KFCLLC approves a proposed site under the Non-Traditional Deposit Agreement, then concurrently with signing the Non-Traditional License Agreement, you must sign a KFC Non-Traditional Option Agreement, in the form attached as Exhibit D (the “Non-Traditional Option Agreement”). The Non-Traditional Option Agreement provides you the option to develop the Non-Traditional Outlet at an approved site. KFCLLC does not sign the Non-Traditional License Agreement until you have fulfilled the requirements of the Non-Traditional Option Agreement.

Initial Fees

Initial License Fee KFCLLC charges an initial license fee of $10,000 for a 5-year term; and, if the term of the NonTraditional License Agreement is longer than 5 years, the initial license fee will be increased by an additional $1,000 for each additional year in the term of the Non-Traditional License Agreement, up to a maximum term of 20 years and $25,000. The initial license fee is in consideration of KFCLLC providing you the right to develop the Non-Traditional Outlet. You must pay the initial license fee in two parts: (i) the Deposit Fee; and (ii) the Option Fee. The payment terms and conditions of the Deposit Fee and Option Fee are both described below. Deposit Fee You will pay KFCLLC $5,000 upon signing the Non-Traditional Deposit Agreement (the “Deposit Fee”). If KFCLLC does not approve the proposed site and terminates the Non-Traditional Deposit Agreement, you will be refunded the Deposit Fee, provided you execute a general release agreement on a form KFCLLC approves. Option Fee You will pay KFCLLC the remaining balance of the initial license fee upon signing the NonTraditional Option Agreement (the “Option Fee”) in consideration of KFCLLC granting you the Option (as defined in Item 11) to build the Non-Traditional Outlet. The Option Fee is non-refundable, however, if the Non-Traditional Option Agreement terminates as result of a bona fide zoning or building restriction beyond your control, KFCLLC will refund you half of the overall initial license fee. Training Fee In addition, you are required to pay a training fee of $550 for any person that attends initial training. KFCLLC will charge you this training fee if you complete the restaurant portion of your initial training in one of the Company-Owned Outlets. If you do not conduct any training at a Company-Owned Outlet, you will pay third parties for KFCLLC’s training program. The fee you pay third parties varies depending on the third parties’ cost to train you. In either case, the training fee will be payable prior to beginning KFCLLC’s initial training program and is not refundable under any circumstance.

Financing

Except as described below, KFCLLC does not offer, directly or indirectly, any arrangements for financing your initial investment or the continuing operation of the Outlet. KFCLLC is unable to predict whether you will be able to obtain financing for any part or all of your investment; and, if you are able to obtain financing, KFCLLC cannot predict the terms of the financing. Except as described below, neither KFCLLC nor YUM guarantees your note, lease or obligation YUM Minority Lending Assistance Program YUM offers an optional lending assistance program for qualified minorities (the “YUM Minority Lending Assistance Program”). The term “minorities” is defined by the United States Small Business Administration for its business development programs at 15 U.S.C. Section 631(f)(1)(C) and it includes African Americans, Hispanic Americans, Native Americans, Indian tribes, Asian Pacific Americans and other minorities. If you are a qualified minority, you may apply to YUM for lending assistance for your licensed business under the YUM Minority Lending Assistance Program. YUM is not obligated to provide lending assistance to your licensed business and it may deny your application for any reason. The YUM Minority Assistance Program covers financing for new minority licensees purchasing an existing NonTraditional Outlet or developing a new Non-Traditional Outlet. YUM will guarantee 25% of the principal of your franchised business loan, up to a maximum of $3,000,000 per loan or franchisee. You will be required to identify and agree to terms with a lender of your choosing who will fund the underlying loan. Required Terms of the Loan > The term of the loan must not exceed twelve years for leasehold sites and fifteen years for feesimple sites. > For fee-simple sites, you must sign a note and mortgage giving the lender a first-lien priority or security interest on each of your fee-simple sites on which you will operate a KFC NonTraditional outlet. > For leasehold sites, you must sign a note and leasehold mortgage giving the lender a security interest on each of your leasehold sites on which you will operate a KFC Non-Traditional outlet. > If, before the natural expiration of either a fee-simple mortgage or leasehold mortgage (as applicable), any fee-simple site or leasehold site (as applicable) that acts as collateral for that mortgage is sold or permanently closed, you must pay the lender the principal still owed under the mortgage for those sold or closed sites, plus any applicable interest. > Your owners will be required to personally guaranty the loan. > YUM must be notified if a loan is more than thirty days past due. > In the event of a default under the loan, YUM (or its designee) will have the right, but not the obligation, to buy out any licensee loan at any time for the then-outstanding principal balance of the loan plus the accrued interest. > In the event of a default under the loan, KFCLLC will have the right to terminate the Franchise Agreement. Even if you meet all of the requirements set forth above, YUM may decide to not permit you to participate in the YUM Minority Lending Assistance Program. In addition, YUM can discontinue the YUM Minority Lending Assistance Program at any time. KFCLLC will provide a full list of eligibility requirements for the YUM Minority Lending Assistance Program upon request.

Franchisee Revenue and Profit

The financial information contained in the chart below represents 19 Non-Traditional Outlets that were owned and operated by KFCLLC’s licensees for the entirety of KFCLLC’s fiscal year ended December 24, 2018 (“FYE 2018”). GENERAL NOTES: The numbers provided in this Item 19 are historic numbers for certain Non-Traditional Outlets. Written substantiation of the financial performance representations will be available to prospective licensees upon reasonable request. This analysis is intended to be used as a reference when you conduct due diligence before signing the Non-Traditional License Agreement. KFCLLC recommends that you conduct your own independent investigation, including consulting with the appropriate legal and financial advisors, to determine whether or not a Non-Traditional Outlet may be profitable. Some franchises have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much. A new licensee’s financial results may differ from the stated financial performance representation. Each licensee’s experience is unique and may vary depending on a number of factors, such as the quality of individual management skills, experience and business acumen, demographics of the territory and other local economic and market conditions. Except as disclosed in this Item 19, KFCLLC does not make any financial performance representations. KFCLLC also does not authorize its employees or representatives to make any such representations either orally or in writing. If you receive any other financial performance information or projections of your future income, you should report it to KFCLLC’s Franchise Counsel, Director Legal, Sarah Osborn Hill, 1900 Colonel Sanders Lane, Louisville, Kentucky 40213, at (502) 874-8300, the Federal Trade Commission, and appropriate state regulatory agencies.