How to Open a KFC Franchise in 2026: Costs, Fees, Revenue, and the Full FDD Breakdown

KFC is the largest chicken restaurant chain on Earth by unit count. More than 33,000 locations in over 150 countries. A brand so deeply embedded in global culture that it became a Christmas tradition in Japan. And yet in the United States, where Colonel Sanders first pressure-fried his way to fame, the brand is shrinking.

That is the central paradox of buying a KFC franchise in 2026. You are investing in one of the most recognized restaurant brands in the world, backed by Yum! Brands (NYSE: YUM) and its enterprise-grade infrastructure. But the U.S. system has shed 314 net locations over the past three years, average unit volumes trail every major chicken competitor, and the combined fee burden eats into already thin margins. The question for prospective franchisees is not whether KFC is a big brand. It is whether the domestic economics justify a $1.85 million to $3.77 million bet.

This guide breaks down every cost, fee, and financial requirement from KFC's 2025 Franchise Disclosure Document, analyzes actual revenue data from Item 19, and lays out what the competitive landscape means for your investment decision.

Key takeaways:

New KFC franchise investment: $1,852,825 to $3,771,550 (2025 FDD, Item 7)

Average franchisee net sales: $1,346,289; median: $1,283,574 (FY2024, Item 19)

Franchise fee: $45,000 ($20K deposit + $25K option fee)

Ongoing fees: 4-5% royalty + 4.5% national advertising = 8.5-9.5% of gross revenue before local ad spend

Financial requirements: $1.5M net worth, $750K liquid capital

U.S. unit count fell from 3,952 to 3,638 between 2022 and 2024, a net decline of 314 locations

What It Actually Costs to Open a KFC

The 2025 FDD (Item 7) lays out two investment scenarios: a newly constructed traditional outlet and a reopened or remodeled location.

New Construction

Category | Low | High
Franchise Fee | $45,000 | $45,000
Real Property (Lease or Purchase) | $300,000 | $1,000,000
Building and Site Costs | $1,000,000 | $1,900,000
Equipment, Signage, POS, MERIT System | $375,000 | $606,000
Permits, Licenses, Security Deposits | $50,000 | $100,000
Training Expenses | $5,000 | $8,000
Working Capital (3 months) | $50,000 | $75,000
Other (Insurance, Inventory, Grand Opening, Misc.) | $27,825 | $37,550
Total | $1,852,825 | $3,771,550

Source: KFC US, LLC 2025 Franchise Disclosure Document, Item 7

Real estate and construction dominate the cost structure, accounting for roughly 70-80% of the total investment. A freestanding drive-thru build on a suburban pad site will land toward the upper end. An inline unit in a strip center or a conversion of an existing restaurant shell will come in lower.

Reopened or Remodeled Outlet

If you are acquiring an existing location or converting a closed restaurant, the FDD estimates a total investment of $1,052,825 to $2,521,550. The savings come almost entirely from reduced building and site costs, since the structure and much of the infrastructure already exist.

KFC restaurants require specialized kitchen equipment that many simpler QSR formats do not: commercial pressure fryers, breading stations, holding cabinets, bone-in chicken handling areas, heavy-duty ventilation hoods, and walk-in coolers sized for raw poultry inventory. These requirements push equipment costs well above concepts like Wingstop that rely on standard deep fryers and a smaller footprint.

Ongoing Fees That Eat Into Margins

Once your KFC is open, the recurring fee structure is where the economics get tight.

Fee | Amount
Royalty | 4-5% of gross revenue ($1,440/month minimum, CPI-indexed)
National Advertising (Co-Op) | 4.5% of gross revenue
Local Advertising | Up to 2% of gross revenue (varies by market)
Technology Fee | Varies
Renewal Fee (at end of 20-year term) | $9,600 (CPI-adjusted)

Source: KFC US, LLC 2025 FDD, Items 5 and 6

The royalty rate is tiered between 4% and 5% depending on the specific franchise agreement, with a monthly floor of $1,440 that adjusts annually for inflation. The 4.5% national advertising contribution funds television, digital campaigns, and promotional programs across the system.

Combined, the royalty and national advertising fees take 8.5-9.5% off the top of every dollar in gross revenue. Add the potential 2% local advertising requirement, and total fee exposure can reach 10.5-11.5%.

On a KFC generating the system average of approximately $1.35 million in annual sales, those fees translate to roughly $115,000 to $155,000 per year, depending on the royalty tier and local ad requirements. That is money out of your gross revenue before you pay for chicken, labor, rent, utilities, or anything else.

For context, a McDonald's franchisee pays 4% royalty plus 4% advertising (8% total). A Popeyes franchisee pays 5% royalty plus 4.5-7.25% advertising. KFC's fee structure is competitive but sits at the higher end when you include the local advertising component.

What KFC Franchisees Actually Earn

Item 19 Financial Performance (FY2024)

The 2025 FDD includes financial performance data based on 2,881 single-brand KFC outlets that operated for the full fiscal year ending December 30, 2024.

Segment | Units | Average Net Sales | Median Net Sales
All Single-Brand Outlets | 2,881 | $1,346,365 | $1,283,149
Company-Owned | 31 | $1,353,270 | N/A
Franchisee-Owned | 2,850 | $1,346,289 | $1,283,574
New Outlets (open 13-104 weeks) | 51 | $1,518,207 (annualized) | N/A

Source: KFC US, LLC 2025 FDD, Item 19

Two things stand out. First, the average and median are relatively close, meaning the system does not have a small number of outlier locations pulling the average up dramatically. This is a fairly uniform revenue distribution. Second, new outlets outperform established ones by roughly 13%, averaging $1,518,207 on an annualized basis. Ground-up new builds in strong trade areas are generating better initial volumes than the aging system average.

Cost Structure (Company-Owned Data)

The FDD discloses cost breakdowns for the 31 company-owned outlets:

Cost of product (COGS): 32.0% of sales ($433,046 average)

Labor cost: 35.8% of sales ($483,879 average)

Those two line items alone consume 67.8% of gross revenue. Now layer on the fee structure.

Estimated Unit-Level Economics

Here is a rough annual P&L for a franchised KFC at the system average, using FDD data and standard industry benchmarks for occupancy and other operating costs:

Line Item | % of Sales | Annual Amount
Gross Sales | 100% | $1,346,289
Cost of Product | 32-35% | ($430,800 - $471,200)
Labor | 28-32% | ($377,000 - $430,800)
Royalty + National Advertising | 8.5-9.5% | ($114,400 - $127,900)
Occupancy (Rent, CAM, Tax) | 8-10% | ($107,700 - $134,600)
Other Operating Expenses | 10-12% | ($134,600 - $161,600)
Estimated EBITDA | 1.5-6.5% | $20,200 - $87,600

Note: Franchisee labor costs are typically lower than company-owned locations, which often pay higher wages and benefits. The 28-32% range reflects franchisee norms.

At the system average, a single KFC generates somewhere between $20,000 and $88,000 in EBITDA. A well-run location in a strong trade area can push EBITDA margins toward 8-10%, yielding $108,000 to $135,000 annually. But on a $2.5 million total investment, even the optimistic end of that range implies a payback period of 18 to 23 years on a single unit.

The math only works at scale. Operators running five to ten locations spread fixed overhead across multiple units, negotiate better vendor pricing, and generate enough aggregate cash flow to justify the capital deployed. Single-unit KFC ownership is a difficult path to attractive returns.

The Shrinking Footprint Problem

The U.S. KFC system has been contracting for three consecutive years.

Year | Franchised Change | Company-Owned Change | Net Change
2022 | -30 | -1 | -31
2023 | -127 | 0 | -127
2024 | -157 | +34 | -123
3-Year Total | -314 | +33 | -281

Source: KFC US, LLC 2025 FDD, Item 20

The franchised system lost 314 units over three years. Yum! Brands added 34 company-owned locations in 2024, partially offsetting the net decline, but the trend is clear: franchisees are closing or selling locations faster than new ones are opening.

The closures are not evenly distributed. In August 2024, EYM Chicken, a multi-unit operator, closed approximately 25 KFC locations across the Midwest. When large franchisee groups exit, it signals that the unit economics in certain markets have deteriorated past the point of viability.

Overall 2024 performance was weak. System-wide U.S. sales came in roughly 5% below 2023 levels, and monthly traffic data showed declines ranging from 2% to 12% throughout the year. The brand entered 2025 needing a clear inflection point.

There are early signs of stabilization. KFC U.S. posted +1% same-store sales in Q4 2025, marking the second consecutive quarter of positive comps after a prolonged decline. Globally, same-store sales grew 3% in Q4 2025, and KFC opened nearly 3,000 units worldwide during 2025, a record for the brand. The domestic turnaround, if it materializes, will take time.

The Turnaround Bet: KFC Original and Next Gen

Yum! Brands is not standing still. The company has launched several initiatives aimed at reversing the U.S. decline.

Next Gen and American Showman Remodels

Since January 2021, KFC has been rolling out "Next Gen" and "American Showman" remodel programs across the U.S. system. These updated designs feature modern interiors, digital menu boards, improved drive-thru layouts, and updated exterior signage. The goal is to bring aging KFC locations closer to the visual standard consumers expect from newer concepts.

Remodels typically cost $250,000 to $600,000 per location, a significant capital commitment for franchisees already running tight margins. Yum! Brands has offered some development incentives and co-investment support, but the bulk of the cost falls on operators.

KFC Original

The bigger bet is "KFC Original," a new concept format that KFC began testing in Florida and is expanding to Texas in 2025. KFC Original features a streamlined menu focused on the brand's core products, self-service ordering kiosks, a tech-heavy layout designed for speed and efficiency, and a refreshed aesthetic that targets a younger demographic.

The concept represents KFC's attempt to build a next-generation format that can compete with the cleaner, faster experiences offered by Chick-fil-A and Raising Cane's. If KFC Original proves successful in test markets, it could redefine the development pipeline for new franchisees and give the brand a format worth building around.

For prospective buyers, the KFC Original concept is worth watching closely. The success or failure of this format will likely determine whether KFC's U.S. trajectory bends back toward growth or continues its decline.

Who Qualifies to Open a KFC

KFC sets high financial and operational bars for franchise candidates.

Financial requirements:

Minimum net worth: $1,500,000

Minimum liquid capital: $750,000

These thresholds are firm and apply to all ownership structures

Operational requirements:

KFC strongly prefers experienced multi-unit QSR operators. If you have $750,000 in the bank but no restaurant management experience, KFC is unlikely to approve your application. The brand's U.S. development strategy centers on existing operators expanding their portfolios, operators acquiring units from exiting franchisees, and co-branding with other Yum! Brands concepts (Taco Bell and Pizza Hut).

First-time franchisees are occasionally approved, but typically only when they bring significant relevant experience (food service management, hospitality operations, or multi-unit retail) and commit to a multi-unit development agreement.

Training

KFC requires approximately 10 weeks of hands-on training in a certified KFC restaurant, plus classroom instruction. The brand covers travel and lodging. Training expenses for the franchisee run $5,000 to $8,000 per the FDD.

The Application Process

Here is the typical path from inquiry to opening day:

Submit an inquiry through KFC's franchise portal, including financial statements and operating background

Financial verification by Yum! Brands ($1.5M net worth, $750K liquid minimum)

Background checks on all principals ($575 to $2,500 per person)

Discovery process with interviews, market analysis, and preliminary site discussions

FDD review with a mandatory 14-day review period (hire a franchise attorney)

Discovery Day at Yum! Brands offices, including a training restaurant tour

Franchise agreement signing, including territory commitments and development timeline

Site selection and approval by KFC's development team

Construction and build-out (6-12 months depending on format and market)

Training (10 weeks hands-on plus classroom)

Grand opening ($5,000 minimum investment)

Expected timeline: 12 to 24 months from initial application to your first location opening.

The franchise term is 20 years. At renewal, you pay a $9,600 fee (CPI-adjusted), which is significantly lower than brands that charge the full then-current franchise fee. Renewal is not automatic. Yum! Brands may require updated terms, remodels, or equipment upgrades as conditions.

KFC vs. the Chicken Competition

The U.S. chicken QSR segment is fiercely competitive. Here is how KFC compares to the major alternatives on the metrics that matter most to franchise buyers:

Brand | Investment Range | Franchise Fee | Royalty + Ad Fees | Est. AUV | U.S. Units
KFC | $1.85M - $3.77M | $45,000 | 8.5-9.5%+ | $1,346,000 | ~3,638
Popeyes | $505K - $3.92M | $50,000 | 9.5-12.25% | ~$1,700,000 | ~3,177
Wingstop | $298K - $1.01M | $25,000 | 10.5-11.5% | ~$1,900,000+ | ~2,200
Chick-fil-A | $10K operator fee* | $10,000 | ~15% + 50% profit | ~$9,000,000 | ~2,900

Chick-fil-A is not a traditional franchise. Operators do not own real estate, equipment, or equity. The $10K fee covers a management-style arrangement with profit sharing.

Sources: Respective 2024-2025 FDDs; Restaurant Business; Technomic

What the Numbers Reveal

KFC has the worst investment-to-revenue ratio in the group. At the midpoint of its investment range ($2.8M) against its $1.35M AUV, the ratio is roughly 2.1x. Wingstop, by comparison, delivers nearly $1.9M in AUV on an investment that tops out at $1.01M, producing a ratio well below 1.0x. That gap in capital efficiency is enormous.

KFC's AUV is the lowest among major chicken chains. At $1,346,289, it trails Popeyes (roughly $1.7M), Wingstop ($1.9M+), and Chick-fil-A ($9M+). Volume covers a multitude of operational sins. Lower volume means every percentage point of cost control matters more.

Popeyes is KFC's most direct competitor in terms of format, price point, and customer base. Popeyes has been gaining market share, in part from the sustained momentum of its chicken sandwich launch. Its wider investment range offers more flexibility, with smaller formats starting below $600,000.

Wingstop is the capital-efficient alternative. Smaller footprint, simpler menu, lower build-out costs, higher AUV. The trade-off is a mandatory multi-unit commitment for new territories and higher combined fees.

The Bottom Line for Franchise Buyers

KFC is a global powerhouse operating in a difficult domestic market. The brand carries enormous name recognition and benefits from Yum! Brands' technology, supply chain, and multi-brand ecosystem. Internationally, KFC is thriving, opening nearly 3,000 units globally in 2025 alone.

But the U.S. story is more complicated. The system has contracted by over 280 net units in three years. Average unit volumes of $1.35 million are the lowest among major chicken QSR chains. The combined fee structure of 8.5-11.5% compresses already thin margins. And the initial investment of up to $3.77 million for a new build creates payback timelines that demand patience and operational excellence.

Who should consider a KFC franchise:

Experienced multi-unit operators who can commit to five or more locations and leverage scale economics

Existing Yum! Brands franchisees looking for co-branding opportunities with Taco Bell or Pizza Hut

Operators who believe in the KFC Original concept and want to develop new-format locations in strong trade areas

Investors with a long time horizon who see the early signs of domestic stabilization (+1% comps in Q4 2025) as the beginning of a turnaround

Who should look elsewhere:

First-time franchisees without QSR operating experience

Single-unit operators seeking a standalone investment with strong cash-on-cash returns

Buyers prioritizing capital efficiency (Wingstop's investment-to-AUV ratio is dramatically better)

Anyone unable to absorb 12-24 months of below-target performance during ramp-up

Before making any investment decision, obtain the current FDD directly from KFC US, LLC, retain a franchise attorney to review the agreement, and speak with existing franchisees listed in Items 20 and Exhibit G of the disclosure document. The numbers in this guide are drawn from the 2025 FDD and public filings. Your results will depend on your market, your operations, and the trajectory of a brand that is betting heavily on reinvention.

All financial figures cited in this article are sourced from KFC US, LLC's 2025 Franchise Disclosure Document (FYE 2024), Yum! Brands public filings and earnings releases, and industry data from Restaurant Business and Technomic. This article is for informational purposes only and does not constitute investment advice.