Becoming a Franchisee of a KFC Non-Traditional Outlet

Are you interested in opening an ‘express’ KFC in a mall, college campus or airport? Here are some things to keep in mind when looking into what KFC dubs ‘non-traditional outlets’

What is a ‘non-traditional’ outlet?

KFC offers franchise licenses to what it calls ‘non-traditional outlets’ and ‘traditional outlets’. A full KFC menu is on offer at the traditional kind, where you can also eat in or take away. They also often have drive-thrus or delivery services.

On the non-traditional end are outlets with a more limited menu, including ‘express’ restaurants and kiosks. They can usually be found in places like malls, airports, college campuses, and amusement parks, among others.

If you are approved as a KFC non-traditional licensee, the fried chicken giant will grant you the right to operate one KFC outlet at an approved spot. The agreement you sign gives you a license to use various KFC branding, among other things like designs and layouts, but only at the non-traditional outlet they approve.

Unsurprisingly, your outlet would have to primarily offer an approved range of chicken products, including chicken strips and sandwiches, which they can amend or remove at prior written notice. This all comes in the form of the ‘Non-Traditional License Agreement’.

But hold your horses. Before the fast food multinational will sign this agreement, there are a couple of other things it’ll ask you to do. It gets a bit wordy and complicated so bear with us.

You also have to sign a ‘Non-Traditional Deposit Agreement’, which you use to apply for a site. Once KFC approves your proposed site, you’ll then be asked to sign yet another agreement – a ‘Non-Traditional Option Agreement’.

It seems like a lot of paperwork, but this is what lets you build your outlet at the approved site. Only once you’ve met the requirements of this ‘option agreement’ will KFC sign the main Non-Traditional License Agreement.

What’s the initial license fee for a non-traditional outlet?

KFC charges an initial license fee of $10,000 for a five-year term. Longer than five years and it’ll increase it by $1,000 for each additional….

Sadly it does not offer any form of financing for your initial investment in the outlet or even for running it. There is hope however, if you belong to a minority group.

Whether you’re African American, Hispanic American, Native American, or Asian Pacific American, among others, you can apply for the YUM (KFC’s parent company) Minority Lending Assistance Program.

Although, weirdly, it says YUM may deny your application for any reason, which seems a bit vague to say the least.

How much could you earn as a KFC franchisee at a non-traditional outlet?

While KFC won’t offer any financial performance information or projections for your outlet, it has disclosed that nearly 20 non-traditional outlets owned and operated by KFC licensees made $____ in the fiscal year ending December 2018. But the chicken chain makes it clear that there’s no guarantee you’ll earn just as handsomely. Before you sign anything, it wisely recommends you do your own research on whether your outlet may be profitable.

It claims that each licensee’s experience is unique. Your management skills, experience and business acumen, as well as the area’s demographics and economy, are all factors to consider.