KFC's franchising is an effective way to expand its business all over the world. In 1993, it began to try franchising in China. After a period of silence, since 2111, KFC's franchising in China has only adopted a form of "not starting from scratch". "Franchising" is the representative strategy of KFC's first brand strategy, which has "China characteristics". First, what is "not starting from scratch"? The so-called "not starting from scratch" means that KFC will transfer a mature and profitable restaurant to its franchisees. Franchisees don't need to do a lot of heavy preparatory work, such as choosing a site, opening a shop, recruiting and training employees, etc. These are ready-made. "Among them, site selection is often the key to success, and KFC has already done it for you." "This is the best way for KFC to franchise in the China market at this stage," said Su Jingshi, president of Yum! China Restaurant Group in Greater China, which owns well-known brands such as KFC and Pizza Hut. "If a profitable KFC restaurant is handed over to the franchisee, the business risk of the franchisee will be greatly reduced, and it will be successful only by maintaining it." The meaning of KFC's "current China market" is: on the one hand, some China enterprises are forming a certain economic scale and perfect management system, and chain operation is developing rapidly and gradually standardized; On the other hand, due to the development of various economic components, fragmentation is a major feature. There is no such special regulation according to the characteristics of regional business in China, but only a trial "Measures for the Administration of Commercial Franchise", which has simple provisions and cannot undertake the function of regulating regional economic cooperation, commercial asset operation and commercial capital expansion brought about by franchising. Under such circumstances, KFC's caution is justified. Since KFC publicly applied for franchise in China market in 198, KFC's China headquarters has received hundreds of telephone inquiries and letters asking for franchise almost every day. However, KFC's audit requirements for franchisees are very strict. Franchisees must have the background and practical experience in catering, service and tourism in addition to the expenses of joining, store decoration and equipment introduction. Considering the fierce competition in the catering industry in big cities, the restaurants that KFC can transfer are basically distributed in small cities with high consumption levels. Since August, 2111, when the first KFC franchise store in China was handed over in Liyang, Changzhou, over 11 such restaurants were authorized to join in January, 2114. At present, among the 1,111 KFC stores in China, 95% of the restaurants are directly operated and 5% are franchise stores. Second, the content and funds of "not starting from scratch" franchise: First, the initial franchise fee of $37,611 must be paid at the beginning of a franchise store. This fee is one-time and will be adjusted according to the price index of the United States in that year. At the same time, every franchisee must pay this fee when developing a new store. Second, the transfer fee of each restaurant is more than 8 million yuan. The business area of KFC restaurants ranges from 351 to 411 square meters. This 8 million yuan is the reference price for buying a KFC restaurant based on some comprehensive indexes. The actual transfer fee will depend on the sales and profit of the target restaurant. After paying this fee, the franchisee can take over an operating KFC restaurant, including all the decorations, equipment and facilities in the restaurant, and the trained restaurant staff, including the cash flow and profits generated in the future operation. But it does not include the cost of real estate rental. Third, the cost of going concern includes the franchise fee accounting for 6% of sales and the advertising share fee accounting for 5% of sales. These rates and fees are formulated on the current basis and will remain unchanged for ten years after the franchise contract is signed. Location: At present, it is mainly in small and medium-sized cities in China, where the non-agricultural population is more than 151,111 and less than 411,111, and the annual per capita consumption is more than 6,111 yuan, and there are already KFC restaurants opening, providing certain opportunities for joining. At present, KFC is not allowed to use its own stores to open new stores, only to transfer KFC restaurants that are already in operation. Time: the time from the beginning of application to the transfer of stores is about 6 months; The initial term of the franchise agreement is at least 11 years, and future franchisees must voluntarily engage in KFC franchise for more than 11 years, preferably 21 years. Training: Training is a necessary content when joining KFC. Successful candidates will be required to take part in a wide-ranging 12-week training program before running a restaurant. The 12-week restaurant training will enable franchisees to effectively master the duty management they need to know to run a successful restaurant, lead restaurants and other courses, and also include the study of various workstations such as Hamburg workstation and French fries workstation. After franchisees take over the restaurant, they will also arrange a 5-6 month internship in restaurant management. In the process of training, future franchisees will bear their own expenses (transportation expenses and living expenses). It can be seen that behind the strict rules of franchising, there is the interest relationship between KFC headquarters and franchise stores. The success of KFC depends on the success of each franchisee. The franchisor must give sufficient support to the franchisees. Only when each franchisee makes a profit can the whole franchise system become more powerful. On the one hand, these training courses improve the working ability of candidates and cultivate suitable management talents for KFC; On the other hand, candidates can identify with KFC corporate culture and have a strong service concept, so as to realize the growth of KFC headquarters and franchise stores. Third, win-win is the final result. As an advanced business model, franchising does have its advantages. For the franchisee, a mature profit model can be obtained immediately, thus greatly reducing the investment risk. The franchisee can not only use the franchisor's trademark and trade name, but also use the successful branch management mode and method verified by the headquarters to get all-round guidance and support from the headquarters. The brands, trade names and products of the headquarters have a basic guarantee for the franchise business; The unified distribution system of headquarters makes the product cost more competitive; Can be shared with headquarters resources in advertising; Joining a good franchise system also gives you a bargaining chip in purchasing and financing. Therefore, some people regard franchising as the most convenient investment method for entrepreneurs, which is "picking peaches on the shoulders of giants" and can quickly realize the dream of being a boss. As the franchise owner, attracting investors will also benefit: the franchisee will pay the franchisee a one-time franchise fee when joining; Royalty extracted from the franchise store turnover according to a certain proportion or quota; Profits from selling products (equipment) to franchisees; Fees charged for distribution and training of franchised stores. There is also a very important advantage: you can expand your brand and market without your own investment, thus suppressing your competitors. For KFC, for each store transfer, the initial franchise fee will be 37,611 US dollars, and the one-time transfer fee will be 8 million yuan. Every year, there are also franchise royalties accounting for 6% of sales and advertising sharing fees accounting for 5% of sales. Most of all transferred stores are C-class cities, which have relative development potential and less competitive pressure, which is conducive to investors to obtain good returns, and at the same time, it also reduces management costs and operations for KFC. By transferring the proceeds, we can continue to open stores, which is a risk-free high-speed expansion of Zhang Zhilu for KFC. For the franchisee, joining KFC, through training, you can master advanced enterprise management and manage KFC by yourself, which is often more careful than hiring a professional manager. After the transfer, the store will earn more income than before, which is why KFC is managed by the franchisee personally, and it also saves KFC a lot of management expenses. The franchisee stands on the shoulders of KFC, and through his hard work, he can also bring considerable benefits to himself. This brand-new franchise mode is called "China characteristics" by KFC, and its essence, that is, behind the strict regulations of franchise, is the interest relationship between KFC headquarters and franchise stores. The success of KFC depends on the success of each franchisee. Compared with some domestic chain store owners who only charge the initial fee, have no management and training for investors, KFC's strong brand awareness is another guarantee of its success. Among hundreds of franchise brands in China, KFC's "not starting from scratch" franchise is probably the most stable and the overall effect is the best. This way ensures the win-win situation that KFC has been pursuing-investors make money almost without risk, and KFC expands the market share of the brand without risk.