Our own index measures what South Africans search for when they are thinking about buying a chicken franchise. The result is not close.
KFC takes roughly five times the search interest of the next brand. It is also, on the public record, close to impossible to get.
SA Franchise Brands describes new KFC franchises as "hard, if not impossible, to come by", with the brand historically prioritising existing owners with a proven track record. Nando's, second by name recognition and near-invisible in franchise search, requires an owner-operator and reports that most applicants do not make it through the process.
So the brand carrying almost all of the demand is the brand releasing almost none of the supply. That is not an accident and it is not a scandal. A mature network protects its existing operators' territories, and the way you protect them is by not selling next door. But it means the search data and the availability data point in opposite directions, and only one of them is on your side.
The number everybody quotes
Entry cost is what gets asked first and it is the least useful of the three figures that matter.
Those figures are from February 2023 and are now more than three years old. Treat them as a shape, not a quote. They are useful for one thing only: showing you that the range across a single category runs from under a million to over seven.
The number that actually compounds
Ongoing fees get a fraction of the attention and do far more damage.
- KFC, Nando's and Chicken Licken each sit around 12% of turnover, combining royalty and marketing.
- Pedros and Honchos are around 7%. Chicken Xpress about 6.5%. Bird & Co about 5%.
On R6m of annual turnover, the gap between 12% and 7% is R300,000 a year. Over a ten-year term that is R3m, which is roughly the entry cost of the cheaper brand all over again. You pay the entry cost once. You pay the royalty every month for the length of the agreement, and the agreement is long.
That is not an argument that the cheap brand is better. A 12% rate attached to a brand that fills a drive-through from day one can be the better deal, and often is. It is an argument that comparing brands on entry cost alone compares them on the one number that stops mattering the day you open.
What to actually ask
Four questions, in this order. Only the last one is about price.
1. Are you releasing new outlets to first-time owners in my province this year, and how many did you release last year? A number, not a sentiment. 2. What is the total ongoing rate, and what does the marketing portion buy? Combined, not split, so it cannot be presented as two small numbers. 3. What is the term, and what happens at renewal? Renewal is where a good deal quietly becomes a bad one. 4. What is the all-in cost to open, including working capital? Working capital is routinely excluded from the headline figure and it is the line that sinks undercapitalised first-timers.
The Playbook covers what happens after you have those answers and somebody puts an agreement in front of you.
