AKFCF Quarterly Fall 2016

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MONEY MATTERS

Tax-efficient corporate structures can be beneficial for franchise owners

Also Inside: GAC Report • 2017 Convention Preview • REACH Scholars

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Cover

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Money Matters: TaxEfficient Corporate Structures

MONEY MATTERS

contents tabl e

of

F a ll

David Zammit explains how tax-efficient corporate structures are beneficial for franchise owners

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Also Inside: GAC Report • 2017 Convention Preview • REACH Scholars

features 16

departments 4

GAC Report: The Supreme Court and Its Impact on the AKFCF

By Dan Gans and Mia Wright

The October 2016 Supreme Court term begins before the election, and there are a number of important issues likely to go before the court this term, regardless of the outcome of the election.

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The 2017 AKFCF Annual Convention: ‘Coming Soon’ to the Heart of Texas

By Kelly Rodenberg

From Feb. 26 to Mar. 1, 2017, the AKFCF is bringing its Annual Convention to a city that has yet to host the KFC family—Austin, Texas.

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REACH Grant Program Expands To Include All KFC Restaurant Employees

By Krista Snider

All KFC U.S. restaurant employees at participating restaurants can now apply for college tuition assistance through the recently expanded KFC REACH Educational Grant Program.

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40 Money Matters: Tax-Efficient Corporate Structures

By David Zammit

This article affords a brief overview of the many factors important in determining a tax-efficient structure for a franchise or other type business.

As the structure of your business evolves or changes, many owners should go through an in-depth process of trying to design a structure that will provide the best potential benefits for their venture.

Read the full story beginning on page 40.

From the Editor

By Michelle Hunt

8 President’s Report

By Greg Atwell

10 NCAC Report

By Tom Slater

12 In the News

50 Finance Committee Report

By Jim McKenzie

52 AKFCF Treasurer’s Report

By Keith Cole

53 Beverages Report

By Jody Luihn

54 KFC NPC Report

By Dale Black

56 RSCS Member Programs

By Cindy Dahl and Heather Pitts

58 Regional Short

By Kevin Schlutz

46 Leadership: Follow Me

By Steve Gilliland

Leaders must understand that trust is the measurement that followers use to determine their own involvement.

60 Executive Director Update

By Kelly Rodenberg

62 Legal Update

By Ron Gardner

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64 Looking Back w ww. akf c f . c o m

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F ro m

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E d i t o r

Harvest Time

Official Publication of the Association of Kentucky Fried Chicken Franchisees AKFCF QUARTERLY MISSION STATEMENT

The AKFCF Quarterly is the voice of today’s franchisee family and supports the mission of the Association of Kentucky Fried Chicken Franchisees, Inc.

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I always enjoy this time of year (even if my allergies don’t!). Maybe part of that is living in America’s heartland where fields and farm equipment are a way of life, but it is definitely my favorite time of year. As the fields are cleared, football games are played, and pumpkin patches are conquered, I can’t help but find a sense of renewal in this time of year—both personally and professionally.

Speaking of professional renewal, our fall regional meetings are happening and the lead up to our annual Convention is building. I’m sure you’ve seen the Convention brochure, and many of you already have registered (good job!), but in this issue you’ll get a sneak peek into everything the Association has planned, including some great speakers and amazing entertainment. I can’t wait to join you in Austin, Texas for our next family reunion! Begin reading about the Convention on page 20.

We’ve had some great meeting speakers over the years and Steve Gilliland is no exception. We were lucky enough to get him to share an article for the Quarterly on one of his speaking topics—leadership.

Steve shares the importance of trust in the leader/follower dynamic. Check out his article on page 46.

Similarly, don’t miss the latest installment from former Convention workshop presenter, David Zammit. David shares insights on choosing a tax-efficient structure for your business and all the factors to consider when doing so. Find this business-building article on page 40.

Also in this fall issue, we celebrate our KFC employees honored as recipients of the KFC REACH Educational Grant and learn about new expansions to the program 4

A K F C F Quar te rl y

AKFCF EDITORIAL TEAM

AKFCF President Greg Atwell Editor Michelle Hunt

Assistant Editors Sharon Clawson Julie Mantlo

Editor Emeritus Jeanine Rosselot Darlene Pfeiffer AKFCF Administrative Director Debbie Newton

Communications Chair Kevin Schlutz

Past President Chris Fowler

By Michelle Hunt

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Fall 2016

from the KFC Foundation Director, Krista Snider. This is a great opportunity to help employees reach their educational goals; remember to promote within your organization. All recipients are listed within the article beginning on page 30.

As always, we have several columns and reports from key franchise leaders as well as the RSCS, our legal counsel, and executive director. If there is anything you’d like to see in the Quarterly, shoot me an email or give me a call and we’ll see how we can incorporate your ideas! If you’re not receiving the magazine, please contact your regional secretary to ensure you’re on our most updated member list!

I usually see many of you in the fall, but with the recent cancellation of the Super Regional meeting due to Hurricane Matthew, I’ll only be making it to one region this fall. However, I’m already registered for the AKFCF Convention in Austin, Texas and you should be too! Go to AKFCF.com to register.

On a personal note, this fall marks our oldest son’s last year of high school. It’s hard to believe we’ll be sending him off to college next fall and watching his adventures from afar. He’ll be headed to Iowa State University majoring in architecture and we can’t wait to see what he accomplishes during his years as a Cyclone. Bittersweet moments happening this fall in our household, but so fun to see the transformation! Happy fall in your neck of the woods and best wishes as we round out the last quarter of 2016.

Warm Regards,

The AKFCF Quarterly (ISSN 1071-9873) is published by the Association of Kentucky Fried Chicken Franchisees for its members and their friends. AKFCF is the independent Association of Kentucky Fried Chicken Franchisees.

Franchisee Editors: Michelle Hunt 14812 N Avenue, Columbus Junction, IA 52738 Phone: (319) 728-3282 Fax: (319) 728-2940 michelle@centraliowakfc.com

Sharon Clawson 70 Clinton Plaza, Clinton, IL 61727 Phone: (217) 935-3939, ext.15 SharonC@restmgt.com Julie Mantlo 855 Lovers Lane, Suite 111, Bowling Green, KY 42103 Phone: (270) 783-8880 julie@rogmancorp.com Zaira Guevara (International Liaison) Pty # 69328, P.O. Box 25207, Miami, FL 33102 Phone: (305) 384-4242 (U.S.) (011) 506 2208-7828 (Direct) zguevara@caribla.com

POSTMASTER: Send address changes to Lionheart Publishing, Inc., 506 Roswell Street, Suite 220, Marietta, GA 30060.

Copyright ©2016 AKFCF, Inc. All rights reserved. Articles may be quoted with credit to the source. Information in the AKFCF Quarterly (ISSN 10719873) represents the views of the authors and unless noted otherwise does not necessarily reflect the policies or position of AKFCF, Inc. Acceptance of paid advertising does not imply endorsement by the Association, or approval of the advertiser or its product or service by KFC Corporation.

AKFCF ADVERTISING AND EDITORIAL SUPPORT OFFICE

Send all advertising and editorial submissions for AKFCF Quarterly to:

Lionheart Publishing, Inc. 506 Roswell Street, Suite 220, Marietta, GA 30060 USA Toll Free: (888) 303-5639 Phone: (770) 431-0867 • Fax: (770) 432-6969 E-mail: lpi@lionhrtpub.com Web: www.lionheartpub.com

President John Llewellyn, ext. 209 llewellyn@lionhrtpub.com

Publishing Editor Cory Sekine-Pettite, ext. 220 cory@lionhrtpub.com

Art Director Leslie Proctor, ext. 228 leslie@lionhrtpub.com

Advertising Sales Aileen Kronke, ext. 212 aileen@lionhrtpub.com

Sharon Baker, 813-852-9942 sharonb@lionhrtpub.com

Reprints Kelly Millwood, ext. 215 kelly@lionhrtpub.com w ww. akf c f . c o m

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P re s i d e n t ’s

Re p o rt

Strategic Plan Update 6

By Greg Atwell

Last year, the AKFCF board identified three primary objectives for the next three years, as well as strategies for developing the accompanying performance measurements and work plans. I wanted to give you an update on what has been done to date.

The first objective is to identify ways that AKFCF can proactively partner with KFCC to strengthen the Brand. Of course, no strategic plan is worth the paper it’s written on if you don’t also agree on ways to measure performance. Some of the metrics we created to judge our performance include: making sure partnering initiatives are ongoing, monitoring for Partnership Survey rating improvement, and improved collaboration with NCAC in partnering efforts.

Our second objective is to undertake a comprehensive evaluation of the AKFCF organization to ensure it makes efficient and effective use of our volunteers. We will measure our success by implementing the findings of the evaluation; observing a more efficient and effective Board of Directors; helping Regional leadership run successful meetings, as measured by member surveys; and by making sure volunteer positions are filled and that we have a “bench” of potential volunteers.

To get there, we appointed a Governance Task Force. The Task Force will conduct outreach to Regions for feedback and consensus building and then, if it makes sense, make recommendations regarding the Regions. I am happy to report that this work is well under way. We tasked them to study the delegation of responsibilities among the EC, what to do about making AKFCF Board and committees more functional, and examine Regional structures and make recommendations to improve efficiency.

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We started by looking at a realignment of the duties of each member of the EC. Once we did that, it appeared that during the 1st and 2nd VP years, the officers in line to be president did not have as many responsibilities as they might, and that the job of president could be daunting. Therefore, we are shifting some of the current duties of the president to the VPs. We hope this leads to several benefits.

First, it will help the VPs become more known to people outside their own Region as they move up the ladder to lead the AKFCF. For instance, for many years AKFCF presidents have started their presentation at the fall Regional meetings by saying “you don’t know me, but… .”

We also believe that by spreading out the responsibilities of the president, we can dispel the myth that the job is too big.

In terms of HOW we rearranged things, the biggest change to the president’s responsibilities is under “Convention.” Planning a convention for 1,500 people is a lot of detailed work and takes considerable time. Some presidents want to make all those decisions and some don’t. The balance we are trying to find is giving the president the flexibility to make the decisions they want and to delegate the rest.

The Convention Planning Committee is fairly large and really shouldn’t be making all these minor decisions. So the idea is to free up the president and give our Executive Director the ability and other resources to help make the decisions on a day-to-day basis.

As we move to tackle the other parts of this objective, we’ve divided the Governance part into two groups. Ron Gardner

is leading the examination of the Board, and the review of the AKFCF Committees is being led by AKFCF 1st VP Eric Overcash. We will have more to come on this project, as we move toward helping recommendations about the AKFCF Board, its meetings, and its committees.

We then can turn our attention to making the Regions operate more efficiently.

Our third objective is to continue to own and operate a successful, well-attended Convention. Our hope is that by focusing on the “successful” part, the second will take care of itself. We will decide if we are successful by continuing to have meaningful KFCC involvement in the Convention; increasing our percentage of franchisees represented, and the percentage of restaurants represented; and seeing improvement in attendee satisfaction ratings.

To achieve these goals, we appointed a Task Force. Justin Stewart steers this committee and presented the group’s recommendations at the spring board meeting in Portland. Because the convention hotel contracts are completed at least three years out, some of the new ideas and initiatives proposed for Convention will have to be applied to future events. The 2017 Convention in Austin will showcase more marketing on the destination and specific aspects of Convention, not only KFCC-but AKFCFsponsored workshops and changes in our traditional program schedule.

Each goal and objective has been a big task and we will continue to move forward over the next few years to bring these work plans to completion for the success of the AKFCF. w ww. akf c f . c o m

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N C AC

Re p o rt

Focusing On The Subcommittees 6

By Tom Slater, NCAC Vice-Chair

2016 -­‐ 2017 KFC NCAC Sub-­‐Committees July 1, 2016 -­‐ June 30, 2017 Executive (Elected)

Brand (Fran Elected) Jason Marker Mike Kulp Pete Wasilevich

Marketing Tom Broome Joan Bowling Pushpak Patel Todd Stewart Anthony Gianino Jody Luihn Jim Olson Pete Wasilevich

Operations Jim Beglin Chris Fowler Tony Frazier Matt Hansen Noah Hommerding Bryan Robinson Marcus Shelton Larry Starkey

Kevin Hochman Trip Vornholt

Kevin Hochman

Brian Goldstein Kamau Witherspoon

KFCC/Other Support

Shindy Hodack (Calendar) Mike Wesley (Calendar) Karl Lucas (Calendar) Stephanie Mattingly (Media) George Felix (Advertising) Staci Rawls (PR) David Graves (Research) Jason Himber (Finance)

Doug Cook (Rest Excel) Daniel Roche (FIT) Mary Weaver (Q/A) Aaron Thomas (Engineering)

RSCS

Blaine Ratterman

Kevin O'Bryan

Operations ExcellenceContract & Facilities Tom Broome Greg Atwell Shawn Brady Joan Bowling Steve Dean Tom Broome Matt Hansen Brian Denman Teresa Kelly Jim Olson Jim McKenzie Todd Stewart Bryan Robinson Pete Wasilevich Justin Stewart

Restaurant Economics Michael Fulenwider Jaimie Jackson Mike Kulp

Beverages Brian Denman Anthony Gianino Jim Liguori Jody Luihn Kevin Schlutz

KFC

Kamau Witherspoon Brian Cahoe Brian Goldstein Melanie Bootes John Kurnick Chris Caldwell

Trip Vornholt

Kevin Hochman Shindy Hodack

KFCC/Other Support

Doug Cook Kathy Gosser Sumit Gupta

Ben Johnson, NCAC Legal Robert Lilienstern Ron Gardner, AKFCF Legal

Shindy Hodack Mike Wesley Christopher Caudill Ellen Scott

RSCS

N/A

N/A

N/A

Chair Franchisees

KFC

Chair Franchisees

Mike Kulp Tom Broome Tom Slater Pete Wasilevich

Jason Marker

N/A

NCAC Appointments to Other Committees National Purchasing Co-­‐op: Brian Denman, Tom Slater Technology: Marcus Shelton, Inman Hodges (NCAC Appointees); Brandon Robertson, Mike Kohlman (AKFCF Appointees) Note: BOLD indicates NCAC representative.

RED indicates Committee Chair.

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Nominating Committee (Bylaws) Marcus Shelton (R3) Pushpak Patel (R10) Brian Denman (R6) Todd Stewart (R12)

Fall 2016

In June, the NCAC held its annual meeting in Louisville, Ky. By the time you read this magazine, decisions from that meeting already have been communicated, either by KFCC via TeamKFC, or in our new NCAC Monthly Newsletter. However, I would like to take this opportunity to provide a little more detail about some of the “whys” of our decisions.

I’ll start with subcommittees, as much of the work is done here before it reaches the NCAC. Each subcommittee is responsible for a specific area related to what the NCAC does, be it marketing, operations, contracts, facilities, etc.

They must spend considerable time diving deep on topics to give KFC the very best input on behalf of the system. Sometimes these topics are related, especially around marketing programs where Marketing, Operations, and Ops Excellence always play a role. In other situations, one of the subcommittees may spend a great deal of time on a single topic, as the Contract & Facilities Subcommittee has done and continues to do. That is why it is so important to place people on these subcommittees who have the passion for their area of focus, as well as demonstrated excellence and the time to commit to this process.

In June, I was honored to be re-elected as vice-chair and given w ww. akf c f . c o m

the responsibility to appoint subcommittee members for the coming year. Of course, subcommittee members may be reappointed to a subcommittee each year. As I mentioned in my last column, I first aligned who I thought would make the best chair person, and then worked closely with them to identify who they felt would be the best franchisees from not only the NCAC but around the system to serve. In the case of Marketing, Ops Excellence, and Operations subcommittees, we also started a new process of soliciting nominations and applications from among the entire system.

When you look at the names of each subcommittee member (see the chart), I think you’ll find people who have demonstrated excellence in their subject matter, as well as a diversity of regions and thinking,

I think it’s SELF-

EXPLANATORY what each subcommittee

FOCUSES on, but if you have any

QUESTIONS, don’t hesitate to REACH

OUT to me, your NCAC REPRESENTATIVE, or one of the members.

and several people new to the committee process. We also moved people among committees this year, so that experience could be gained to

help build “bench strength” across all system leadership roles.

One thing they all have in common is that they are highly respected by other franchisees in the system, as well as by KFCC. Each one of these people spends considerable time to completely understand their subcommittee roles, provides feedback to KFCC, and ultimately brings that information to the full NCAC board for alignment.

We all owe them a debt of gratitude for stepping up to serve on behalf of the system.

I think it’s self-explanatory what each subcommittee focuses on, but if you have any questions, don’t hesitate to reach out to me, your NCAC representative, or one of the members.

Thank you all for your support, and I wish you continued success as we close out the year.

Turnkey Development & Capital Solution As one of the nation’s leading single-tenant real estate developers, Verdad Real Estate has the expertise and capabilities to help KFC TM grow nationwide.

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KFC Fans Use Snapchat to Bring Out Inner Colonel Sanders An ever-changing lineup of actors and comedians have taken turns being Colonel Sanders for KFC over the past two years. Now everyone else can have a go.

On August 27, KFC released a Snapchat lens that allows fans to “Colonelize” themselves, with glasses, bowtie, goatee, age spots and all, the Louisville, Ky.-based chain said.

The move came the same week KFC announced the release of a limited-run of Extra Crispy fried chicken-scented sunscreen, which was free, but sold out online in minutes. Only 3,000 bottles

were initially available, but the company said, “the Colonel forgot to hit the off switch,” and more than 9,000 requests were made in about two hours, including 5,000 in the last 10 minutes.

Demand became so great, some buyers tried to auction off bottles with some priced at more than $200, company officials said.

So KFC released another round on August 26, offering another 3,000 bottles, with the reminder, once again, that it is sunscreen, so don’t eat it.

“We had no idea there would be such demand for fried chicken-scented sunscreen,” said Kevin Hochman, chief marketing officer for KFC U.S. Source: NRN.com

Have you booked your 2017 advertising yet?

Secure your spot in AKFCF Quarterly!

Contact your ad representative for more information or to receive your copy of the 2017 Media Kit! Advertising Contacts: (A-K) Aileen Kronke 888.303.5639, ext. 212 aileen@lionhrtpub.com 12

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(L-Z) Sharon Baker 813.852.9942 sharonb@lionhrtpub.com

Fall 2016

KFC Chooses Pittsburgh to Test New Georgia Gold Fried Chicken

Pittsburgh meets the gold standard.

Kentucky Fried Chicken has chosen the city, along with Mobile, Ala., to test its new Georgia Gold fried chicken. The regionally inspired fried chicken creation draws its flavors from Georgia and South Carolina, and has a honey-mustard barbecue flavor.

“Georgia Gold gets sweetness from the honey, a nice spice from the mustard and a kick from the vinegar,” said KFC Chief Marketing Officer Kevin Hochman. “It is crispy with a balance of sweet and tangy flavor that stays true to the Georgia original.”

He said Pittsburgh was picked because “we were also looking for a region that has different demographics that would replicate nationwide, and would give us a better read on how the product would perform across the country.” The Alabama city was chosen because “the market in Mobile is more familiar with this flavor profile,” he said.

While Mobile is a more traditional southern market, Pittsburgh encompasses the northern attitude and approach to food, and both will give the company different perspectives and the opportunity to assess customers’ reaction to the new flavor.

This is Pittsburgh’s second stint as a test-market for Colonel Sanders.

Last fall, it was picked to evaluate the performance of KFC’s Nashville Hot Chicken. The initial experiment was a success and KFC is hoping for similar results when it comes to Georgia Gold.

Georgia Gold is available through Sept. 4 in five KFC specialties, which are extra-crispy chicken, grilled chicken, tenders, sandwiches and wings. A meal of two pieces of Georgia Gold chicken served with coleslaw and biscuit costs $5.49.

The conclusions are not in yet, but so far patrons’ comments and feedback have been positive, Mr. Hochman said. It seems that “some people have a love affair with this product,” he said.

Source: post-gazette.com w ww. akf c f . c o m

WWE Superstar Dolph Ziggler Becomes KFC’s New Colonel Sanders

WWE Superstar Dolph Ziggler might just be the toughest Colonel Sanders yet, as the WWE Superstar debuts in a one-of-a-kind partnership between KFC and WWE. In a showdown with WWE Superstar The Miz (playing Puppers Cluckers chicken), Ziggler as the Colonel shows everyone that there’s no room in the ring for the secondrate chicken. The Miz does his usual good job as the foil/fowl.

The two-minute video debuted globally during SummerSlam on Sunday, Aug. 21 from Barclays Center in Brooklyn.

Here’s a look at the full video: https://w w w.youtube.com/wat ch?v=u8J3V6wchSE&feature=you tu.be

KFC worked with WWE to produce the stunt, and it will run in WWE Network broadcasts in 2016, concluding with Royal Rumble in 2017. The stunt plays off KFC’s existing brand

campaign where celebrities such as Jim Gaffigan, George Hamilton, and Darryl Hammond play the famous Colonel.

Source: miamiherald.com

Know Your Acronyms

In our business, there is a great deal of terminology and jargon. As more processes and systems are added, the acronyms continue to pile up. Thus, AKFCF Quarterly decided it is time for us all to brush up on the many acronyms you will hear in your daily lives and read about in this magazine. Be sure to pass this along to your employees, or post a copy in your offices.

76(5P) – 1976(5P) KFC Franchise Agreement AKFCF – Association of Kentucky Fried Chicken Franchisees ABR – Achieving Breakthrough Results ARL – Above Restaurant Leader ASAP – American Showman Asset Program AUM – Assistant Unit Manager BDP – Best Demonstrated Practices BOGO – Buy One Get One BOH – Back-of-house BSC – Balanced Scorecard COB – Chicken on the Bone CREST – Consumer Reports on Eating Share Trends CSTM – Customer Service Team Member DMA – Designated Marketing Area FA (or F/A) – Franchise Agreement FSC – Food Safety Consultation FSTM – Food Service Team Member FTF – Freezer to Fryer GAC – Government Affairs Committee HFFU – Heavy Fast Food Users IAYF – International Association of Yum Franchisees (formerly known as the IAKFCF, International Association of KFC

Franchisees) KFCC – Kentucky Fried Chicken Corporation LAC – Local Advertising Council LOR – Loss of Revenue NAC – National Advertising Cooperative (merged with NFAC to become NCAC) NCAC – National Council and Advertising Cooperative

NFAC NMS NPC NPS OEC PAC POP POS QSR RAF REC RGM RMI ROCC ROI ROMI RRP RSCS SBRA TCB

TOL TPWY TRP VOC WAR YUM YRI

– National Franchisee Advisory Council (merged with NAC to become NCAC) – National Marketing Subcommittee – National Purchasing Cooperative (i.e., KFC NPC) – Net Promoter Score – Operations Excellence Committee – Political Action Committee – Point of Purchase – Point of Sale – Quick Serve Restaurant – Refer a Friend – Restaurant Economics Committee – Restaurant General Manager – Restaurant Margin Improvement – Restaurant Operations Compliance Check – Return on Investment – Return on Marketing Investment – Restaurant Ready Process (aka The Model) – Restaurant Supply Chain Solutions (formerly UFPC) – Supplier Business Relationship Agreement – Technology Capability Builder (the KFCC support team for Merit installations) – Territory Operations Leader – Taking People With You – Targeted Rating Point – Voice of the Customer (formerly CBCC) – Weekly Activities Report – Yum! Brands – Yum! Restaurants International

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Yum Looks to be Leaner After China Spinoff

Yum! Brands (Yum) plans to broaden its global reach with thousands of new restaurant openings in the next several years as it shifts more restaurant ownership to franchisees.

Today, there are just 300 Taco Bell restaurants outside the U.S., in 22 countries, but in the next six years, the chain expects to be in 40 countries with more than 1,000 restaurants, the company said during an October investor meeting.

U.S.-based Yum will open the first Taco Bell in China this year.

The company currently opens a new KFC every eight hours, but Chief Executive Greg Creed told investors the company can open one every five hours going forward. Pizza Hut opens two restaurants a day now in overseas markets and plans to open three a day by 2020. The international expansion comes as Yum plans to become a leaner company operating fewer of its own restaurants after it spins off its volatile China business next month.

The company now owns 10,000 restaurants, which will fall to 3,000 when

the China business becomes its own stand-alone company. Yum plans to raise the percentage of restaurants owned by franchisees to at least 98% by the end of fiscal 2018, up from 77% now. The China spinoff alone will boost that figure to 93% because the China business will license the brands, paying Yum an annual royalty fee. By the end of fiscal 2018, Yum will own just 1,000 restaurants, making it one of the most-franchised U.S. restaurant companies, behind only Burger King parent company Restaurant Brands International Inc. and Dunkin Brands Group Inc., which are each nearly 100% franchise-owned.

Mr. Creed said the move to a more franchised business model represents a “mind-set shift” from thinking of Yum as a brick-and-mortar business to viewing it as the steward of three global brands. “We will be much more focused,” he said.

The company also announced plans to reduce its annual capital expenditures to about $100 million by the end of fiscal 2019 from $500 million and to reduce its general and administrative expenses by

about $300 million by the end of fiscal 2019. General and administrative expenses as a percentage of sales will drop to 1.7% from 3.4% after the cuts, the company said.

As part of the cost-cutting, Yum plans to eliminate 600 corporate positions globally by the end of the year through attrition, voluntary retirement, some involuntary layoffs, and the sale of restaurants to franchisees. An additional 1,500 jobs will be eliminated by the end of 2018.

Yum, based in Louisville, Ky., last month struck a deal to sell part of its China operations to a prominent Chinese deal maker and the financial affiliate of Chinese internet company Alibaba Group Holding Ltd. Primavera Capital, run by former Goldman Sachs Group Inc. Greater China Chairman Fred Hu, and Ant Financial Services Group will buy a combined $460 million stake in the Yum China Holdings Inc. spinoff. The China business will begin trading separately on the New York Stock Exchange on Nov. 1.

Source: post-gazette.com

Special Section: Industry News (A special advertising section)

T&S Brass Launches Redesigned Workboard Faucet

T&S Brass and Bronze Works, leading manufacturer of innovative foodservice and commercial plumbing products, has unveiled a redesign of its B-1100 workboard faucet series.

“The changes and enhancements were designed to increase the convenience of these widely used faucets, improve their water-conservation features and appearance, and offer even more of T&S’ legendary reliability,” said Ken Gallagher, vice president of global sales.

In addition to a sleek new look, the B-1100 faucets feature a heavy-duty forged brass body that has been redesigned to accept standard T&S compression and ceramic cartridges and is easier to maintain and install replacement parts.

Specific feature changes include: • A switch to T&S cartridges from spindle assemblies, which reduces the number of spare parts for plumbers to stock and standardizes cartridges across the T&S product line.

• Cartridges extend the life of the faucet body by eliminating spindle threads and wearable seats.

• Water-conserving 2.2 GPM aerators replace stream regulators, offering efficiency straight from the box.

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Fall 2016

• Swivel-to-rigid lock washers give installers a rigid nozzle option.

• Components including indexes, bonnets, packing nut and swivel nuts have distinctive new look. Lever and wrist-action handles feature streamlined design.

TheB-1100seriesofworkboardfaucets,availablein150models to accommodate a variety of applications, is ideal for hand-washing sinks, bar sinks, prep tables with sinks and blender stations.

For more information about this and other T&S products, visit www.TSBrass.com. w ww. akf c f . c o m

CONDOLENCES Vic West, 91, franchisee in Laurel, Miss., passed away on April 13, 2016. West worked for the phone company for 21 years before opening a KFC franchise in Laurel in 1967. With the success of that first business, he soon opened two more KFCs and from that, West Quality Foods (WQF) was born. At the time of his death, WQF had more than 70 eateries in four Southeastern states. His four sons and two grandchildren carry on the family business.

Jeffrey Hess passed away suddenly on April 14, 2016. Jeff was born in Kankakee, Ill., on April 11, 1957. Jeff was an executive with The Unilever Corporation and a Lipton representative. He is survived by his father, Hal Hess; his sister, Marsha Rose; a niece, Melinda Rose; and a nephew, Grant Rose all of Orlando, Fla. Michael Richard Hamby, 66, of Covington, Ga., died April 24, 2016 at Rockdale Medical Center.

Michael worked for Selecto, our water filter supplier, and was integral to our filter program. He is survived by his wife of 16 years, Gale Hamby of Covington, Ga., and sister and brother-in-law, Karla and Don Wood of Tyrone, Ga. Joan Christianson, 90, passed away on July 16, 2016 at St. Benedicts Senior Community in St. Cloud, Minn. Joan and her husband, Vernon, were longtime KFC franchisees; they opened their first KFC restaurant in 1961. Joan enjoyed fishing, traveling, skiing, flying, and golfing. She especially treasured all the time with her family. She is survived by her children, Brian, Marilyn (Kim) Kryzenski, and Susan (Milton) Schmidt; seven grandchildren; five greatgrandchildren; her sister, Lucille Clark; and many nieces and nephews.

Kenneth Winn, 94, of Longwood, Fla., passed away on July 25, 2016. Kenneth was a dedicated friend and associate employee of Gycor for many years.

He was involved as a supplier to the KFC System for nearly 40 years. A native of Dorchester, Mass., Kenneth was an infantry soldier in the armed services and fought in the Normandy Invasion, the Battle of the Bulge, and served 20 years in the Air Force Reserves in Boston.

George F. “Jeff” Washburn III, 72, of Laconia, N.H., and formerly Rutland, Vt., died Aug. 29, 2016. He was the franchise owner and operator of the Rutland Kentucky Fried Chicken for many years. Survivors include his wife, Nancy; a daughter, Leigh Truhan; two step-sons; five grandchildren; a sister, Pamela Coffey-Paine; a niece and a nephew.

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F INANCIAL A DVISORY

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The SUPREME COURT and its

By Dan Gans and Mia Wright

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IMPACT

on the AKFCF

A

s we approach the 2016 election, all eyes are on the White House and Congress, as well as Hillary Clinton and Donald Trump. However, an important consideration in this election will be the Supreme Court. With the passing of Justice Antonin Scalia in February of 2016, and the ages of Justices Ruth Bader Ginsburg, Anthony Kennedy, Stephen Breyer, and Clarence Thomas, the next president could have the opportunity to nominate five justices.

(While there is no constitutional requirement for a certain number of justices, and the number has fluctuated, nine has been the default since President Franklin D. Roosevelt’s failed court-packing plan.)

But also important to consider is the docket for the court’s October 2016 term.

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The current makeup of the court consists of four liberals (Ginsburg, Kagan, Breyer, and Sotomayor), three conservatives (Chief Justice Roberts, Alito, and Thomas) and Kennedy, the swing vote. Of the current eight justices, two are over 80 years of age and one is nearing 80. In the next eight years, Justice Thomas will be turning 75. Half of the bench is fast approaching retirement age, and there already is a vacant seat on the court. If the winner in 2016 is re-elected in 2020, he or she would be able to fill those five seats on the court, potentially creating a large majority.

Clinton’s policies and ideology would have the potential to create one of the least business-friendly Supreme Courts since the Burger or Warren Courts of the past century.

While Clinton herself started her campaign as business-friendly, the influence of Sen. Bernie Sanders’ campaign on the Democratic Party has resulted in the most progressive Democratic platform in electoral history. Clinton also has expressed positions contrary to the interests of the AKFCF on minimum wage and overtime reform, and we can assume that her Supreme Court nominees would have similar positions. However, because of Clinton’s personal history with small businesses (her father was a small-business owner) she could very well be ideologically between President Obama and the Republican Party, and her nominees have the potential to be so as well.

Much like many of his policies, Donald Trump has not given a clear position on potential Supreme Court nominees. He has said that he believed his sister, Judge Mariann Trump Barry, would make a “great” Supreme Court justice. However, Judge Barry’s positions are on the whole contradictory to her brother’s positions, making the potential of her appointment not much better than nepotism. On many key issues of the Republican platform, Barry simply is on the other side. Trump also has stated that he would delegate his nominee decisions to the Federalist Society, a conservative think tank focusing on legal and judicial issues. On other occasions, Trump has named the Heritage Foundation as another institution his administration would consult on judicial issues. The justices produced by the Federalist Society and Heritage Foundation no doubt would be more business-friendly than Clinton’s potential choices, but given the volatility of Trump’s policy and his mutability on many issues, we are forced to take the Republican nominee at his word that he would indeed delegate the duty of nominating justices to conservative think tanks.

The October 2016 Supreme Court term begins before the election, and there are a number of important issues likely to go before the court this term, regardless of the outcome of the election. Immigration will be the court’s focus in Jennings v. Rodriguez and Lynch v. Morales-Santana, and is likely to come up again before the term’s end 18

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in June 2017. Also of note are several cases involving various federal regulatory agencies, such as the Securities and Exchange Commission, and the National Labor Relations Board. The issues in these cases center on insider trading and recess appointments, but should be noted since the rulings in these cases could indicate the court’s new position toward business now that its balance has shifted. The cases to watch are Shaw v. U.S., Salman v.

U.S., and National Labor Relations Board v. SW General.

An interesting aspect of the docket for this term is the court’s interest in voting rights and election processes.

While it does not have an immediate business impact on the AKFCF, the court’s renewed interest in election law could be a sign of a new “activist” contingent on the court. Since only four justices are required to grant a writ of certiorari (an order issued to a lower court that sends a case to the higher court for argument) to a case, and the four liberal justices are newly empowered by the balance shift on the bench, Justices Ginsburg, Breyer, Sotomayor, and Kagan could begin to force the direction of the court in their desired direction. The cases that have the potential to be the most controversial for this issue are Bethune-Hill v. Virginia State Board of Elections and McCrory v. Harris, which both center on racial gerrymandering. McCrory is the latest in a long series of cases surrounding North Carolina’s Congressional district map.

The Supreme Court also will tackle criminal justice reform; numerous cases on the docket have Fourth, Sixth, and Eighth Amendment questions, as well as issues regarding sentencing guidelines for both federal and state statutes. The cases Manuel v. City of Joliet, Bravo-Fernandez v. U.S., Manrique v. U.S., Pena-Rodriguez v. Colorado, Moore v. Texas, and Beckles v. U.S., make up this parcel of cases that have the potential to significantly impact the criminal justice system across the country.

Of the cases to watch, many will be argued in the court’s October sitting, the first of the term. Bravo, Shaw, Salman, Manrique, and Pena-Rodriguez will all be argued within the first two weeks of October. Argument dates for other important cases most likely will be announced after the justices’ September conference and the first two conferences in October.

While the focus may be on the legislative and executive branches as we move closer to the 2016 election, the Supreme Court should not be ignored. The October 2016 term will be one of the most fascinating terms of the Roberts Court, with critical issues going before the justices. The court’s new focus on criminal justice reform and the Voting Rights Act in the first part of the term will result in fascinating decisions. The Supreme Court is in a state of flux: whoever the 45th president will be will have the opportunity to shape the court for a generation to come. The stakes are high. w ww. akf c f . c o m

AKFCF – P o l i t i ca l A c t i o n C o m m i t t e e (PAC) The AKFCF created a Political Action Committee (PAC) to make sure our voices are heard in Washington, D.C. The AKFCF Government Affairs Committee and the AKFCF PAC Board of Directors would like to thank the franchisees listed below for their contributions to the AKFCF PAC. Each quarter, we list the names of the franchisees who have supported the PAC at time of print as a token of our appreciation. This list is all the contributions, broken down by region. We encourage you to please join your fellow franchisees and support your AKFCF PAC. For information on how you can become involved, or if you don’t see your name and should, please contact Ray Aley, treasurer of AKFCF GAC/PAC at (802) 318-4705, or via e-mail at KFCRay@aol.com.

GREAT LAKES Jeanine Bagshaw David Bell Kathy Bouwman Joe Campbell Keith Chambers John Coldwell Brian Denman Alessio DiFranco Anne Goodnight Kirk Gurney Mary Beth Hamilton Lesley Hottinger Teresa Kelly LaDonna Lewis Lynn Mayer Jim Mikula Diana Myers Marvin Payne Dana Rudoni Susan Stuver Scott Vorrath

Rodney Walker Brian Wheeler NORTHEAST Ray Aley III Adil “Eddie” Banani Tony Cameron Tom Cecconi Keith Cole Joe Farley Frederick Gallant Syed-Talal Kirmani Don Lopes Dale Moulton Jim Olson (Harman) Alex Rosenblum Larry Starkey James Waters David White NORTHWEST James & Sandra Beglin

Jeffrey & Debbie Gray Ralph Harman Brett Harris Fred Jackson James Jackson Joseph & Charlene Oleinik Sam Sibert Todd Stewart William Vollenhals Calvin & Janae White SOUTHEAST Bobby Davis Wiley Dean Eric Felker Chris Fowler Mike Fulenwider Owen Harris Joseph Kendall C. Doug Knipp Eric Overcash John Pankratz Larry Peak

Vic Peeples Terry Rogers Linda Rosenbalm Gurpreet “P2” Sandhu Leslie Sharp Bill & Bonny Shelton Marcus Shelton Jay & Kelly Shoffner Jack Sims Charles “Tim” West Bill West Richard West Steve West Daniel Yagoda SOUTHERN CALIFORNIA Charles Buckner Israel Diaz Robert Prendiville SOUTHWEST Debra Ashmore Sheila Boespflug

Krystal Burge Richard Cahill Rajeev Jain Franklin Nye UPPER MIDWEST Dale Black Joan Christenson Robert & Sharon Clawson Margaret Duenow Peg & Gene Duenow Peter & Holly Helf Michael Kohlman Michael Kulp Tery Moffit Kevin Schlutz Susan Schmidt Doug Smith Justin Stewart Pete & Mary Wasilevich

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2017 Convention Preview

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he 2017 AKFCF

ANNUAL NVENTION ‘Coming Soon’ to the Heart of Texas

By Kelly Rodenberg

Austin skyline.

Photo: Jean-Michel Dufaux

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F ro m F e b . 26 to M a r . 1, 2017, t h e AKF CF i s b r i n g i n g i t s A n n u a l C o n v e n t i o n to a c i t y t h at h a s y e t to h o s t t h e KF C fa m i ly — A u s t i n , T e x a s . T h e h e a rt o f t h e L o n e S ta r S tat e i s k n o w n f o r being one of the friendliest s p ot s i n t h e n at i o n .

Whether

i t ’ s a g r a c i o u s v i b e , a c r e at i v e c u lt u r e , o r t h e a b u n da n c e o f good food and music, we think there is something special about

A u s t i n , t h e L i v e M u s i c C a p i ta l of the World®, and we look f o rwa r d to s h a r i n g i t w i t h yo u .

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THE

WORST JOB

IS NOW

NO JOB! Above: The famous “Greetings from Austin Mural” at Roadhouse Relics. Photo: Austin Convention & Visitors Bureau.

Left: Convention attendees will be treated to a private concert by one of country music’s hottest bands—Little Big Town.

Hear the music

All the world’s a stage—and nowhere is that more true than in Austin. The city was designated as the Live Music Capitol for good reason. Austin’s entertainment districts are home to more than 250 live music venues. You’ll find everything from historic honky-tonks and jazz clubs to rock & roll concerts and down-and-dirty blues on every corner. But the music doesn’t stop on the streets. In fact, we will cue up a set list all our own at each event to bring you a taste of Austin’s best local musicians!

On Monday evening, February 27, we are excited to bring you a true concert experience at the iconic Austin City Limits Moody Theater with a private performance by one of country music’s hottest bands – Little Big Town.

Make sure you plan to stay on through Wednesday, March 1 for our Closing Celebration at Antone’s Nightclub. This legendary club has hosted the likes of B.B. King, Buddy Guy, Eric Clapton, and Stevie Ray Vaughan and still remains the home of the blues in Austin. This will be a fun way to celebrate an end to Convention with family and friends over a casual dinner, listening to soulful blues and dancing to one of Austin’s best cover bands.

Savor something new

Whether it’s Tex-Mex or BBQ, sushi or Southern comfort food, this city does not disappoint. If you have never visited Austin or experienced the food truck scene, you are surely in for a treat. Austin prides itself on “keeping it

Automatic and hands-free.

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2017 Convention Preview

This is your time to connect, collaborate and convene with the people who mean the most to our Brand’s future.

“

“

Left: Exterior of ACL Live at the Moody Theater.

Photo: Jonathan Jackson

weird.” For the food scene, that can mean taking familiar foods on a journey into unfamiliar territory.

One of my favorites and a very popular trailer is Gourdough’s. Reading the menu board leaning against the side of the airstream trailer, you know you’re not at a Dunkin’ Donuts. At Gourdough’s, some of the choices are the Mother Clucker (fried chicken strip with honey butter), Miss Shortcake (cream cheese icing with fresh cut strawberries), Slow Burn (habanero pepper jelly with cream cheese topping), Son of a Peach (peach filling,

cinnamon, sugar & cake mix topping), Dirty Berry (fudge icing with grilled strawberries) and Funky Monkey (grilled bananas and cream cheese icing with brown sugar) to name a few.

In Austin, food trucks materialize everywhere; the way dandelions pop up on a wet lawn in the spring. Driving around town, you’ll stumble upon groups of food trailers that create a county fair atmosphere. Don’t worry; if you don’t have time to get out, we will be bringing the food truck lunch experience to you in our Exhibit Hall.

Above: Boots at Bullock Texas State History Museum.

Photo: Bullock Texas State History Museum Right: JW Marriott Austin Capitol View Terrace.

Photo: JW Marriott Austin

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Above: Austin Convention Center Atrium.

Photo: Austin Convention Center Right: The 2017 AKFCF Annual Convention brochure cover.

But since we are in Texas, you will want to try some of the local BBQ. Long a favorite of both tourists and locals, The Salt Lick remains an institution: the scenic drive out, the BYOB policy, and the huge crowds all make it an experience everyone should have when visiting Austin.

Similarly, Franklin’s continues to attract lines up to five hours long. Franklin’s brisket is simply one of the best things you can eat in the state of Texas, and his consistency is a model for the craft. Eating here requires planning and patience, but brisket fans should accept the challenge at least once.

Years ago, I was heading out with some friends for BBQ so we asked where the locals go, and we were directed to Rudy’s Country Store. The taxi dropped us off at a gas station. Inside was some of the most delicious BBQ I had ever eaten and I can still taste it to this day!

In a city known for having an endless list of around-the-clock entertainment and food possibilities, you may not want to spend a lot of time in your guest room. But when you do take time to re-charge and relax, we think you will find no Fa ll 2 016

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better place than our host hotel, the new JW Marriott.

It is in the heart of downtown and only two blocks from the Austin Convention Center.

Take it outside

With more than 300 sunny days each year, we invite you to get out and explore all that Austin has to offer.

Kayak or paddleboard on Lady Bird Lake. Cycle on the Barton Creek Greenbelt, or take a dip in the Barton Springs pool, which is 68 degrees, year-round. Or head out of Austin for the day to enter Texas Hill Country, an expansive landscape filled with rolling hills, twisting rivers, and tiny towns filled with antiques and quaint shopping.

Don’t be afraid to get a little batty! Austin is home to North America’s largest urban bat population, with anywhere from 750,000 to 1.5 million Mexican freetailed bats roosting under the Congress Avenue Bridge from March through October. This is truly a sight to experience.

On Wednesday, swing away with your fellow golfers at the Omni Barton Creek’s Crenshaw Course. You will see why Austin was named #1 on the Golf.com list of the “10 Best Golf Cities in America.”

Educate yourself and embrace our culture

We understand how hard it is to take time away from your restaurants. However, this is the one circumstance where you deserve to give yourself a “hall pass.” Only at the AKFCF Annual Convention will you obtain the most relevant information, tools, and networking time to make your business better.

Jason Marker, KFCC president, and members of the KFCC Leadership Team will provide an update on key Brand results, as well as share insights into strategic plans. Find out how KFC is regaining Brand relevance through our extensive marketing, operations and development efforts, and how we’ll continue to drive the success of KFC and achieve our goal to be #1 on Taste.

Below: Sunset over downtown Austin skyline. Photo: Geoff Duncan/Austin Convention & Visitors Bureau

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So much more than just beans.

See what Del Monte® can do for you.

You’ve relied on our green beans for years. Now, we invite you to explore our full offering of fruits, vegetables and tomatoes. Visit www.delmontefoods.com/foodservice or contact Patrick Fitzgerald, National Account Manager, Del Monte Foodservice, phone:865-288-3269 email: Patrick.fitzgerald@delmonte.com © Del Monte Foods Inc. All Rights Reserved.

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Above: Evening at Texas State Capitol Building. Photo: Texas State Capitol Building

On Tuesday, our keynote speaker, NFL Hall of Famer and Superbowl Champion Mike Singletary will drive home the importance of creating a winning team. He is perhaps most recognized as the middle linebacker for the 1980s Chicago Bears with the ferocious eyes peering across the line into the opposing quarterback’s face.

He participated in Super Bowl XX and made 10 trips to the Pro Bowl in his 12 years of professional football. He also led the NFL as Defensive Player of the Year three times, and was the Bears’ team captain for 10 years.

Since retirement as a player in 1993, he spent 10 years in the corporate world as a motivational speaker and consultant. His expertise extends to many areas of business, particularly issues relating to teamwork, success, and cultural diversity. Several Chicago-based corporations formed a working relationship with him, capitalizing on his marketing strengths.

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We will have a powerful lineup of nine workshops that will empower you with the tools to implement changes that will help you drive success in your restaurants.

Our culture is about family, and we strongly encourage you to come to Austin to engage in dialogue with your fellow franchisees, vendors, corporate partners, and AKFCF leadership. This is your time to connect, collaborate and convene with the people who mean the most to our Brand’s future.

Live some history

Like KFC, Austin’s colorful history is etched in its architecture. Take a guided tour of the State Capitol, visit the Bob Bullock Texas State Museum, take in the Governor’s Mansion or stop by for a drink at the Austin’s oldest hotel, The Driskell. w www. ww. akf c f . c o m

In traditional format, you will again have the opportunity to voice your thoughts, ideas and concerns at your Regional Association meetings, as well as the AKFCF Town Hall.

Both Austin and the AFKCF will have the welcome mat rolled out for you when you arrive at the 2017 Annual Convention. Review your Convention brochure, which mailed in mid-September, for more details. Or visit www.afcf.com.

Left: Our keynote speaker in Austin will be NFL Hall of Famer and Superbowl Champion Mike Singletary.

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REACH Recipients

REACH

GRANT PROGRAM Expands To Include All KFC Restaurant Employees

BY KRISTA SNIDER, FOUNDATION MANAGING DIRECTOR

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All KFC U.S. restaurant employees at participating restaurants can now apply for college tuition assistance through the recently expanded KFC REACH Educational Grant Program.

The decision to expand the REACH program, one of several employee-focused offerings from the Kentucky Fried Chicken Foundation, makes restaurant general managers and assistant managers eligible to apply for the award, in addition to hourly team members and shift supervisors. RGMs and AUMs who are selected will receive $3,000 to help pay for college tuition and other school-related fees. The change will take effect with the 2017 REACH Grant application early next year. Winners may reapply for the funds every year.

KFC U.S. restaurant employees also now can earn college credit for completing training. Earlier this year, the American Council on Education’s (ACE) College Credit Recommendation Service recommended college credit for five KFC restaurant-level and field-level training programs.

The expanded REACH Grant program, coupled with employees’ ability to earn college credit for workplace training, enables even more KFC restaurant employees to accelerate their learning and progress toward earning a college degree. More than 2,000 colleges and universities consider ACE Credit recommendations for transfer to degree programs. Employees can earn up to nine college credit hours through the approved programs. With the average college credit hour costing $253, employees completing all the ACE-recognized

training earn an additional $2,277 in value toward his/ her degree.

With the support of KFC franchisees and KFCC, the Foundation—an independent non-profit organization— also offers the REACH HIGH–High School Equivalency Program, in partnership with GED Testing Service. Every eligible KFC restaurant employee who seeks assistance through REACH HIGH is admitted into the free, all-inclusive program that provides unlimited access to GED preparation and testing, all with the help of a personal GED Advisor™ and a test-pass guarantee.

“Our goal is to help people be their best selves, no strings attached. So, we’re providing a spectrum of educational development opportunities for employees— from GED through college,” said KFC Chief People Officer and Foundation Board Member John Kurnick.

“That said, research shows investing in someone’s education makes them more likely to stay with a company and improves overall engagement in our Brand and with our guests. For that reason, we know our franchise partners will continue to leverage these offerings as tools for recruitment and retention.”

For more information on the Foundation’s REACH Educational Grant and REACH HIGH–High School Equivalency Programs and the ACE College Credit Program, visit TeamKFC.

Giving

A Legacy of Colonel Sanders was passionate about helping people be their best selves through education. It started with a hitchhiker who happened to be a college student.

The Colonel gave him a ride and a full scholarship. That act of kindness inspired the KFC Foundation, which has since provided $14 million in scholarships to 2,600 students.

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Meet Kymberly REACH Educational Grant Recipients Jayeisha Gettings

“I’ve traveled a bumpy road to get to where I am today, but those obstacles gave me strength and helped me appreciate the truly important things in life. Being from a minority background, hearing that you cannot do something based on statistics, only drives me to go the extra mile and perform to the best of my ability.”

Jayeisha Gettings is a shift supervisor at Restaurant #H950035 (Zanesville, Ohio), where she has worked for over four years. Jayeisha attends Ohio University– Zanesville, where she’s studying Preschool Education.

She is the first person in her family to attend college.

KFC shift supervisor and single mom Kymberly Reeves recently earned her GED through the Foundation’s REACH HIGH–High School Equivalency Program.

Kymberly, 26, describes herself as someone who always did well in school, but had lost confidence in her academic abilities after being out of school for years. She says the program’s study materials and personal GED Advisor™ made all the difference.

Kymberly entered the REACH HIGH program—a free, all-inclusive program for employees at participating KFC restaurants—to be a better example for her 7-year-old daughter, Mady.

“I encourage her to be very focused on her school work,” Kymberly said. “I always tell her how knowledge is power and the more you know the farther you will go. Well, I felt like a hypocrite. I didn’t even have my high school diploma. I realized for her to be the best she can be I needed to be as well.”

As for what’s next, Kymberly plans on starting college in the spring. “After being with KFC for five years…and hearing my bosses talk about me as an RGM one day, I am definitely interested in business. So, who knows? Now that I have taken that first step, the skies are the limit and I can only go up from here!”

You can meet more REACH HIGH graduates and REACH Grant winners who are being their best selves by following the Foundation on Facebook.

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Jessica Gallardo

“Over the course of my life, I have faced many obstacles. Yet, I never gave up. I went from being bullied to standing up to a bully. I went from being shy to not being afraid to speak my mind. I went from being insecure to being a girl who loves herself past her flaws. The way I see it, what matters most is how you view yourself.”

Jessica Gallardo is a team member at Restaurant #K485004 (Port Chester, N.Y.), where’s she has worked for nearly three years. Jessica is attending Concordia College, where she is majoring in nursing. Jessica also is a first-generation college student.

Jamison Bunge

“From cleaning the lobby at KFC, to studying for exams, I put my all into everything I do. I believe if I’m going to put my name on something, it should be a reflection of the best I have to offer. I take pride in calling myself a hard worker and I believe it’s one of my defining characteristics. This company has taught me a lot about myself and about my capabilities as an employee.”

Jamison Bunge is a team member at Restaurant #C002100 (Fredonia, N.Y.), where he has worked for more than three years. He is a computer science major at Fredonia State University of New York.

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REACH Education Grant Winners NAME OF EMPLOYEE

FRANCHISEE

Kayla Lofland.............................. Anthony Cameron Jasmira Brown............................ Anton Lambos Legacy Lewis.............................. Anton Lambos Rachel Gatsios............................ Anton Lambos Deondre Grays............................ Aramark Muhammad Rashid..................... Ashfaq Shabandri Alexius Martin............................. Bill Shelton Alexus Smith............................... Bill Shelton Alyecia Laing............................... Bill Shelton Atlanta Dial.................................. Bill Shelton Diclecis Millner............................ Bill Shelton Samantha Collins........................ Bobby Hannon Dallas Cuellar.............................. Brandon Robertson Chelsey Randle........................... Brian Denman NaStasha Whitson...................... Brian Denman Rhonda Spagnola....................... Brian Denman Ryan Sitts.................................... Brian Denman Bryce Pietila................................ Brian Wheeler Isabelle Thomas.......................... Bruce Bagshaw Bryan Quinones.......................... Bryan Robinson Kyle Hawrot................................ Bryan Robinson Natalie Coldiron.......................... Bryan Robinson Zantasia Dye............................... Bryan Robinson Anthony Smith............................ C. Douglas Knipp William Stanley........................... C. Douglas Knipp Kylie Hamilton............................. C.M. Fulenwider Liliana Ramirez............................ Calvin White Natalie Delgado.......................... Calvin White Rachel Brawley........................... Calvin White Dominique Beneker.................... Chad Wheeler Rachel Zeimet............................. Chad Ellett Marta Soto.................................. Charles Clark, Jr. Alisha Burnheimer....................... Charles Fulenwider II Karley Fate.................................. Charles Fulenwider II Alfonso Taylor............................. Chris Fowler Ericka Hughes............................. Chris Fowler Gavin Harris................................ Chris Fowler Mylicia Anthony.......................... Chris Fowler Tammer Halimah......................... Chris Fowler Ashley Breeding.......................... Craig Lee Lillian Dembrow.......................... D. Naughton & M Dahlene Tiarah Hayes............................... D. Naughton & M Dahlene Miguel Guerra............................. Dan Yagoda Troy Farley.................................. Darlene Pfeiffer Amber Dennis............................. David & Eleanor York Jamarious Davis......................... David Barr Jessica Haney............................. David Barr Destiny Morris............................. David Bell Liberty Collins............................. David Bell Miranda Becker.......................... David Bell Stuart Bushnell........................... David Bell Christopher Cunningham............ David & Mary Ann Evans

NAME OF EMPLOYEE

FRANCHISEE

Daniela Barbosa......................... David & Mary Ann Evans Edmilson Lopes.......................... David & Mary Ann Evans Ernest Arhin ............................... David & Mary Ann Evans Ivelisse Lawrence........................ David & Mary Ann Evans Matthew McKenna...................... David & Mary Ann Evans Tatyana Moriarty......................... David & Mary Ann Evans Alejandra Vazquez...................... David Hines Quazi Rahman............................ David Kerr Cheyanne Jackson..................... David Sparks Madelynn VanMeter.................... Debra Ashmore Chloe Saholt............................... Dennis Bohm Anyjhia Wilkins............................ Diane Overcash Joseph Clark............................... Diane Overcash Keara Starkes............................. Diane Overcash Nyasia Rhodes............................ Diane Overcash Jessica Vlastelica........................ Don Herber Anthony Haden........................... Don True Jordan Schumacher................... Don True Kaja Tenney................................. Don True Marissa Jennings........................ Don True Zandra Kelly................................ Don True Jamiah Madison......................... Donald Lopes Chassidy Jackson....................... Dwight Fraser Kendra Griffin.............................. Dwight Fraser Foini Tupolo................................ E.V. Bonner Alyssa Osborne........................... Edward Thomas Gustavo Magana Jr..................... Edward Thomas Jessica Torres............................. Edward Thomas Miriam Rivera- Martinez.............. Edward Thomas Colter Goodman......................... Estate of Jerry Haynie Joshua Dow................................ Estate of Jerry Haynie Miranda Kennessey.................... Estate of Jerry Haynie Tyesa Franklin............................. Estate of Jerry Haynie Tyler Goodman............................ Estate of Jerry Haynie Alicia Ruiz................................... Estate of Joseph Desmond Jorge Agripino............................ Estate of Joseph Desmond Vang Moua.................................. Estate of Joseph Desmond Adam Johnson............................ Estate of William Alford Maverick Houston....................... Estate of William Alford Violetta Konopka......................... Eugene Skowronski Tyrik Langston............................. Farzin Ferdowsi William Capps............................. Frank Mitchell Alyssa Eakins.............................. Frederick Bauer Alexandra Pitts............................ Frederick Gallant Benjamin Fontaine...................... Frederick Gallant Halvert Estrada........................... Frederick Gallant Lindsay Doole............................. Frederick Gallant Kassandra Dellarma.................... Frederick Thurston MacKenzie Dwyer....................... Frederick Thurston Nicholas Haas............................. George Lambos Theresa Luboviski....................... George Ruiz Angel White................................. Greg Federico Fa Fallll 22016 016

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REACH Recipients

REACH Education Grant Winners NAME OF EMPLOYEE

FRANCHISEE

Carlos Camargo.......................... Greg Flynn Ana Solis..................................... Gregory Atwell Joseph Stephens........................ Gurpreet Sandhu Mack Deloatch............................ Gurpreet Sandhu Megan Amsler............................. Gurpreet Sandhu Chelsey Augustine...................... Hal McCoy Taylor Cook................................. Hal McCoy Catriona Downey........................ Harry Latshaw Jordan Sterner............................ Harry Latshaw Nathaniel Tyson.......................... Harry Latshaw Dione Hamilton........................... Hassan Charara Haley Croke................................ Hassan Charara Irac Chaney................................. Hassan Charara Ajay Edwards.............................. Hiren Patel Britany Wagstaffe........................ Hiren Patel Daniel Gomez............................. Hiren Patel Katie Wagner.............................. Hiren Patel LingYi Ke..................................... Hiren Patel Lisbeth Peralta............................ Hiren Patel Raphael Ma. Claret Santos......... Hiren Patel Rhea Henry................................. Hiren Patel Ronald Gray................................ Hiren Patel Sapna Patel................................ Hiren Patel Yasmine Thames......................... Hiren Patel Ramon Rivera............................. Imran Ahmed Alexander Goembel.................... J. Michael Barrett Zachary Zygmunt........................ J. Michael Barrett Jessie Daniel............................... J. Wiley Dean Fernando Penate-Chavez........... Jacob DeWitt Julia Crum .................................. James Booth Peyton Pendergrass................... James Shoffner Cedric Norfleet ........................... James Treadwell David Eason................................ James Treadwell David Spitale............................... James Treadwell Jessica Guice............................. James Treadwell Michaela Ueberroth.................... James Treadwell Miguel Aguilar............................. James Treadwell Myesha Mines............................. James Treadwell Skye Lynn Boughton................... James Treadwell Nicholas Storck........................... James McKenzie Brian Hampton............................ Jeanine Bagshaw Chyla Jones................................ Jeanine Bagshaw Codie Weddington...................... Jeanine Bagshaw Cole Vineyard.............................. Jeanine Bagshaw Devin Bainter.............................. Jeanine Bagshaw Emily Baxter................................ Jeanine Bagshaw Heith Brown................................ Jeanine Bagshaw James Walker............................. Jeanine Bagshaw Jaycie Munyon............................ Jeanine Bagshaw Keionna Riddlebarger................. Jeanine Bagshaw Robin Rice.................................. Jeanine Bagshaw Taryn Lowe.................................. Jeanine Bagshaw Michaela Baumann..................... Jeffrey Firari Gabrielle Coffin........................... Jerome Zakaras

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FRANCHISEE

Aaron Hale.................................. Jerry Weaver Alyssa Cruise.............................. Jerry Weaver Emily Gabaldon........................... Jerry Weaver Felicia Billings............................. Jerry Weaver Tyler Larson................................. Jerry Weaver Alejandra Robles......................... Jim Olson Alexis Pacheco........................... Jim Olson Alexis Rodriguez......................... Jim Olson Alyssa Silva................................. Jim Olson Alyssa Zumwalt........................... Jim Olson Amy Rodriguez........................... Jim Olson Anahi Cortez............................... Jim Olson Ashley Olson............................... Jim Olson Avery Decosta............................. Jim Olson Bailey Hyatt................................. Jim Olson Beverly Bridget Berioso.............. Jim Olson Bianca Zatarain........................... Jim Olson Brandon Aguilar.......................... Jim Olson Brenda Garcia............................. Jim Olson Chase Patton.............................. Jim Olson Chelsie Conrad........................... Jim Olson Crystal Boyd............................... Jim Olson Desmond Bryant......................... Jim Olson Dyllan Calwell............................. Jim Olson Emily Ocampo............................ Jim Olson Ernesto Onate............................. Jim Olson Esmeralda Yepez........................ Jim Olson Frida Mugica............................... Jim Olson Hannah Karg............................... Jim Olson Henry Ho..................................... Jim Olson Hiram Stout................................. Jim Olson Ivan Gonzalez............................. Jim Olson Jackson White............................ Jim Olson Jeffrey Urbanik............................ Jim Olson Jer Thao...................................... Jim Olson Jessica Rosas............................. Jim Olson Joshua Grove.............................. Jim Olson Joshua Sepanski........................ Jim Olson Juan Reyes-Raya........................ Jim Olson Juliana Raines............................. Jim Olson Julianna Guerrero....................... Jim Olson Kayla Vasquez............................. Jim Olson Kierra Tinsley.............................. Jim Olson Kuljinder Dhami........................... Jim Olson Lafe Howard............................... Jim Olson Larissa Brewer............................ Jim Olson Lourdes Gil.................................. Jim Olson Ma. Patricia Omega.................... Jim Olson Makenna Bylund......................... Jim Olson Marcelino Valladolid.................... Jim Olson Maria Contreras.......................... Jim Olson McHale Talerico.......................... Jim Olson McKenzie Allen........................... Jim Olson Mercedes Romero...................... Jim Olson

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REACH Education Grant Winners NAME OF EMPLOYEE

FRANCHISEE

Miguel Cervantes ....................... Jim Olson Moses Garduno ......................... Jim Olson Musa Taha................................... Jim Olson Nadya Fuentes............................ Jim Olson Pang Yang................................... Jim Olson Ramandeep Bola........................ Jim Olson Renz Dario.................................. Jim Olson Rhianna Dix................................. Jim Olson Riley McKinney........................... Jim Olson Rosanellie Ochoa........................ Jim Olson Roxette Isidro.............................. Jim Olson Skye Karlinsey............................ Jim Olson Sonia Gutierrez........................... Jim Olson spencer brown............................ Jim Olson Spencer Elliott............................. Jim Olson Stephanie Roman....................... Jim Olson Sugeynsarahy Gonzalez Arias........Jim Olson Sydney Warren............................ Jim Olson Tiavonna Ridout ......................... Jim Olson Tiffani Oliveto.............................. Jim Olson T’Keyah Driskell.......................... Jim Olson

NAME OF EMPLOYEE

FRANCHISEE

Tyler Ruden................................. Jim Olson Veonna Temple........................... Jim Olson Wendy Duran.............................. Jim Olson Whitney Mitchell......................... Jim Olson Zachary bailey............................. Jim Olson Samantha Moss.......................... Joanne Solomon Samantha Saunders................... Joanne Solomon Shanoya Jugar............................ Joanne Solomon Cori Hill....................................... Joe Oleinik Isaac Hamilton............................ Joe Oleinik Londyn Moody............................ Joe Oleinik Orion Ross.................................. Joe Oleinik Kelsey Person............................. John Bush Damian Riley............................... John Thomas, Jr. Christina DeMalia........................ John Arsenault Kalene Farley.............................. John Sims Coumba Niang............................ John Marsella Fiseline Jeannite......................... John Marsella Nicole Molina.............................. John Marsella Jenna Sassin............................... John Masters Mina Ghobrial............................. John Masters

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REACH Recipients

REACH Education Grant Winners NAME OF EMPLOYEE

FRANCHISEE

Holli Long.................................... John England Jacob Beaty................................ John England Toribio Navarro............................ John England Alania Salazar............................. Jose Israel Diaz Alain Eglaus................................ Juan Gavilan Blandine Loizeau........................ Juan Gavilan Nico Bastien............................... Juan Gavilan Hannah Rose.............................. Keith Chambers Jacob Dilldine (Waymire)............ Keith Chambers Keelin Haynes............................. Keith Chambers Jillian Lemos............................... Kenneth Rianna Katelyn Duca............................... Kenneth Rianna Olivia Brueck............................... Kevin Schlutz Alba Gomez................................ KFCC Brendan Brock............................ KFCC Charlene Fergerson.................... KFCC Connor Beam.............................. KFCC Evelyn Callie................................ KFCC Kandice Coburn.......................... KFCC Kenneth Geathers....................... KFCC Kunjan Patel................................ KFCC Nancy Gomez............................. KFCC Naomi Cruz................................. KFCC Nicole Williams........................... KFCC Rosemary Boateng..................... KFCC Taylor Goit................................... KFCC TeeShawn Davidson................... KFCC Violet Arreguin............................. KFCC Zeamittria Gardner...................... KFCC Shanda Badette.......................... KFCC Simone Van Niekerk.................... KFCC Jennifer Trujillo............................ KFCC Kylee Meyer................................ Ladonna Lewis Amber Adams............................. Larry Wheeler Caleb Hood................................. Larry Peak Kenia Rodriguez......................... Larry Peak Sydney Mullins ........................... Larry Peak Alexa Wilbur................................ Larry Starkey Jacob Carreiro............................ Larry Starkey Katelyn Nobre............................. Larry Starkey Malik Edwards............................ Larry Starkey Rebecca Souza........................... Larry Starkey Sierra Farias................................ Larry Starkey Marissa Colburn......................... Laura Thurston Hayley Stanford.......................... Lawrence Helms Erica Castillo............................... Linda Alvarado Kristin Buchanan......................... Linda Rosenbalm Christopher Harvey..................... Lisa Haynie Glidewell Monna Lisa................................. Lokman Chowdhury Alliyah Jamison........................... Manish Patel Andre Chaney............................. Manish Patel Arati Thapa ................................ Manish Patel David Linaburg............................ Manish Patel Giovanni Paulino......................... Manish Patel Jean Pierre Monlandjo................ Manish Patel 36 36

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FRANCHISEE

Karoline Robb............................. Manish Patel Khadijah Garnett......................... Manish Patel Khaleema Everette...................... Manish Patel Ky’ahna Johnson ....................... Manish Patel Matthew Lassus.......................... Manish Patel Oluwagbenga Awofala................ Manish Patel Sahara Bhattachan..................... Manish Patel Shakera Harris............................ Manish Patel Temitope Oludare........................ Manish Patel Victoria Quiroga.......................... Manish Patel Zahir Williams............................. Manish Patel Chudi Mbonu.............................. Manish Patel Kamran Malik.............................. Manish Patel Angela Diaz................................. Manuel Galhandro Sarah Hernandez........................ Manuel Galhandro Jared Raya.................................. Marcus Shelton Meagin Vizecky........................... Margaret Duenow Breanna Williams........................ Marilynn Pankratz Heather Dame............................. Mark Fikes Janiece Beauregard.................... Mark Fikes Jordan Harrington....................... Mark Fikes Ricky Null.................................... Mark Fikes Sterling Kirkpatrick..................... Mark Fikes Jasmine Washington................... Mark Peterson Johan Martinez........................... Mark Peterson Kelly Glenn.................................. Mark Peterson Tranay Williams........................... Mark Peterson Jacob Brown............................... Matthew Thurston Tiana Gordon.............................. Matthew Thurston Shayna Donley............................ Michael Davis Aaliyah Carter............................. Michael Kulp Alexis Bryant............................... Michael Kulp Amanda Ansbro.......................... Michael Kulp Ana Martinez-Valles.................... Michael Kulp Arianna Boone............................ Michael Kulp Bianca Best................................. Michael Kulp Braxton Sumpter........................ Michael Kulp Carmen Martin............................ Michael Kulp Cavonte Davis............................. Michael Kulp Cullen Sickler.............................. Michael Kulp David Sebastian Felipe............... Michael Kulp Deashawn Thurmond.................. Michael Kulp Desiree Gonzales........................ Michael Kulp Destiny Rivera............................. Michael Kulp Dwayne Wright............................ Michael Kulp Enrique Vargas............................ Michael Kulp Haley Banks................................ Michael Kulp Jacarra Dukes............................. Michael Kulp Jaime Torres................................ Michael Kulp Kajauna Mccray.......................... Michael Kulp Kara Klemm................................ Michael Kulp Lanie Justus................................ Michael Kulp Mathew Anderson....................... Michael Kulp Myrriame Dosso.......................... Michael Kulp Nicholas Lanza........................... Michael Kulp akfccff..ccoom m wwww. ww. akf

2016 NAME OF EMPLOYEE

FRANCHISEE

Nyheim Foster............................. Michael Kulp Samantha Noel........................... Michael Kulp Shaquille West ........................... Michael Kulp Tajaughn Anderson..................... Michael Kulp Tiffanie Nanzer............................ Michael Kulp Zachary Snell.............................. Michael Kulp Carley Swanson.......................... Mike Kohlman Danja Schrader........................... Mohamad Khorshad Emily Mullens.............................. Mohamad Khorshad Doreen Amoako.......................... Nanette Walker Brandy Anderson........................ Nicholas Peters Casey Austin............................... Nicholas Peters Diamond Leary............................ Nicholas Potter Rachel Mullins............................. Peggy Rasmussen Andrea Villasenor........................ Pete Wasilevich Andrew Spiel............................... Pete Wasilevich Brianne Robinson....................... Pete Wasilevich Christopher Hernandez............... Pete Wasilevich Kassandra Jimenez.................... Pete Wasilevich Maddison Walldan...................... Pete Wasilevich Madelyn Skalecki........................ Pete Wasilevich JazmineRose Moore................... Peter Braun Lucas Ammel.............................. Peter Roubekas Jabari Judkins............................. Phil Festoso Lorrin Gupton.............................. Ray Popp Rose Poteau............................... Ricardo Rozier David Myers................................ Richard & Alice Schleicher Quanisha Briley........................... Richard & Alice Schleicher Alexandria Bailey........................ Rob Rianna Kelli Balensky.............................. Robert Alred Ashley Hays................................ Robert Clawson Caleise Monat............................. Robert Clawson Christian Pesina.......................... Robert Clawson Gage Jones................................. Robert Clawson Guadalupe Jasso De Arcos........ Robert Mosesso Makayla McElwee....................... Robert Mosesso Isabel Cerano.............................. Robert Prendiville Jonathan Hernandez ................. Robert Prendiville Vanessa Herrera ......................... Robert Prendiville Allison Zeck................................ Ron Switzer Jasmine Sullivan......................... Ron Switzer Aaron Sunde............................... Samuel Sibert Amanda Minneker....................... Samuel Sibert Angelina Zaytseva....................... Samuel Sibert Brandon Sanchez....................... Samuel Sibert Kevin Hance................................ Samuel Sibert Alba Benzan................................ Sanjiv Chand Antonino McInnis........................ Sanjiv Chand Jennifer Jadotte.......................... Sanjiv Chand Cesar Clarke............................... Sanjiv Kanwar Mohamed Aboelenin................... Sanjiv Kanwar Naira Abou-Ghali........................ Sanjiv Kanwar Bishwas Thapa........................... Satwinder Singh Sabrina Perez.............................. Satwinder Singh Autumn Cooper.......................... Scott King

Members & 642 Team Shift Supervisors are receiving over in college 1.3 million grants this year

$

#2016

PAY TO THE ORDER OF

$$$

Winners in 46 states; all 7 AKFCF regions

27% of 2016 winners received the grant previously

% 95 are at Franchisee-owned restaurants

Only Team Members at restaurants participating in the Cole Slaw Donation Program are eligible. Š2016 Kentucky Fried Chicken Foundation, Inc. The Kentucky Fried Chicken Foundation is a non-profit, 501(c)3 organization.

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REACH Recipients

REACH Education Grant Winners NAME OF EMPLOYEE

RANCHISEE

Ramon Echeverria ..................... Scott King Davin Tackett.............................. Sean Tuohy Deonna Robinson....................... Sean Tuohy Diana Gomez.............................. Shamin Ahmed Camorynne Shaw....................... Shirley Vangeloff Kenneth McGee.......................... Shirley Vangeloff Mark Masters.............................. Shirley Vangeloff Moeshia Mitchell......................... Shirley Vangeloff David Seville............................... Sikander Bana Brittney Celaya........................... Steve Declerck Jon Beckerich............................. Steve Declerck Jourdan Bell................................ Steve Declerck Desiree Holmes........................... Steve Paris & Estate of Ralph Potter Jessica Willard............................ Steve Paris & Estate of Ralph Potter LaKeisha Braxton....................... Steve Paris & Estate of Ralph Potter Ranisha Brower.......................... Steve Paris & Estate of Ralph Potter Alex Irwin.................................... Steve Rudoni Sara Potes.................................. Steve Rudoni Taylor Washe............................... Susan & David Myles Aubrey Eirhart............................. Susan Stuver Mariah Cardoza.......................... Susan Stuver Darby Boontarue......................... Syed & Aesha Jafrey Adrianna Nicholson..................... Tabbassum Mumtaz Aliya Hancock............................. Tabbassum Mumtaz Aliyah Brooks.............................. Tabbassum Mumtaz Eric Dombroski........................... Tabbassum Mumtaz Erin Eberly................................... Tabbassum Mumtaz Jazmen Trent.............................. Tabbassum Mumtaz Jonathan Kurish.......................... Tabbassum Mumtaz Marcel Majors ............................ Tabbassum Mumtaz Maya Oliver................................. Tabbassum Mumtaz Sean Spencer-Palm.................... Tabbassum Mumtaz Zackary Gmitter.......................... Tabbassum Mumtaz Brenda Gonzalez........................ Tanweer Ahmed Brett Tighe.................................. Tanweer Ahmed Diego Chavez.............................. Tanweer Ahmed Gerardo Ixehuatl Mendez........... Tanweer Ahmed Jacqueline Garcia-Gonzalez....... Tanweer Ahmed Jeselle Ybanez............................ Tanweer Ahmed Karina Lopez............................... Tanweer Ahmed Kiara Miranda.............................. Tanweer Ahmed Nathaniel Willis........................... Tanweer Ahmed Spencer Ellsworth....................... Tanweer Ahmed Tyree Hall.................................... Tanweer Ahmed Connie Detillion........................... Teresa Kelly Jessica Dunn ............................. Teresa Kelly Dalton Hendricks........................ Terry Rogers Elizabeth Bentley........................ Terry Rogers Erica Hamilton-Patterson............ Thomas Broome Meagan Harris............................ Thomas Broome

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NAME OF EMPLOYEE

FRANCHISEE

Mikel Patrick............................... Thomas Broome Ronnie Kruse.............................. Thomas Broome Sarah Mott.................................. Thomas Broome Katie Holliday.............................. Thomas Lowry Lexi Taylor................................... Thomas Lowry Shakeira Harden......................... Thomas Neil Cocolin Ashley Leonard........................... Tim Fitzpatrick Cassandra Green........................ Tim Fitzpatrick Deaja Todd.................................. Tim Fitzpatrick Derek Kamin............................... Tim Fitzpatrick Ethan Potts................................. Tim Fitzpatrick Ni’Kaja Flowers........................... Tim Fitzpatrick Amelia Hansen............................ Todd Stewart Cameron Whiteside.................... Todd Stewart Christina Terrazas....................... Todd Stewart Jacob Bledose............................ Todd Stewart Jade Berry.................................. Todd Stewart Kassandra Vigil........................... Todd Stewart Kayla Kotosky............................. Todd Stewart Leila Ali........................................ Todd Stewart Lorena Hernandez...................... Todd Stewart Meredith Crofoot-Middleton....... Todd Stewart Nallely Sepulveda....................... Todd Stewart Nicolle Wilhite............................. Todd Stewart Skylar Ashcraft............................ Todd Stewart Joseph Kirkpatrick...................... Tom Slater Katlyn Mock................................ Tom Slater Brittany Smith............................. Tommy Cecconi Anahit Markosian........................ Tony Frazier Brian Alvarez............................... Tony Frazier Carmela Ramirez........................ Tony Frazier Daniel Mendez............................ Tony Frazier Eddie Outlaw.............................. Tony Frazier Emanuel Solis............................. Tony Frazier Evelin Chinchilla ......................... Tony Frazier Jasmine Solis.............................. Tony Frazier Joel Molina.................................. Tony Frazier Jose Andrade.............................. Tony Frazier Jose Peralta................................ Tony Frazier Juan Hernandez.......................... Tony Frazier Karla De La Cruz......................... Tony Frazier Karla Iniguez............................... Tony Frazier Katrina La Madrid....................... Tony Frazier Marisol Moreno........................... Tony Frazier Shuchi Patel................................ Vijay Patel Jirani Smith................................. William Cutrer, Jr. Lisa Kennedy.............................. William & Mary Golden Raymond McBrayer.................... William & Mary Golden Gabriella Mayer........................... William Luehrman Hannah Smith............................. William Luehrman Steven Stanton........................... William Wood Anthony Candelas...................... Zubair Kazi Enrique Orantes ......................... Zubair Kazi Nicole Tahar................................ Zubair Kazi

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2016 REACH Rising Stars REACH RISING STARS ARE PREVIOUS REACH GRANT WINNERS WHO ALSO HAVE A HIGHER GPA (3.0 OR HIGHER)

NAME OF EMPLOYEE

FRANCHISEE

Jayeisha Gettings.......................Anton Lambos Aunna Steward...........................Bill Shelton Kyle Grabendike.........................Brandon Robertson Hayden Grindstaff.......................C.M. Fulenwider Tiffany Branch.............................C.M. Fulenwider Megan Wallace...........................Chris Fowler Kylie Blenkhorn...........................David Bell Stephanie Case..........................David Bell Michael Monahan.......................David & Mary Ann Evans Tom Feathers..............................Debra Ashmore Antonio Martinez.........................Dennis Bohm Celina Thies................................Dennis Bohm Darron Bruck...............................Diana Myers Ryan Rider..................................Don True Savannah Carr............................Don True Firmino Fatuda............................Donald Lopes Marissa Cortes............................Edward Thomas Sarabeth Schmoker....................Estate of Jerry Haynie Amarya Jones.............................Frank Mitchell Shelby Dixon...............................Frank Mitchell John Shields...............................Frederick Gallant Staci Tiedeken............................Gary Tiedeken Daniel Wharton...........................George Lambos Jessica Gallardo.........................Gilbert Rozier Devante Edwards........................James Treadwell Jamison Bunge...........................James Treadwell Laura Nash..................................James Treadwell Taylor Freeman...........................Jeanine Bagshaw Allyson Boone.............................Jeanine Bagshaw Cora Cornett...............................Jerry Weaver Hillary Line..................................Jerry Weaver Katelin Bertling............................Jerry Weaver Tristan Martin..............................Jerry Weaver Adrianna Garcia..........................Jim Olson Cortney Anderson.......................Jim Olson Jessa Nario.................................Jim Olson Judy Nguyenvo-Lovato..............Jim Olson Kenya Hilliard..............................Jim Olson Kuljot Dhami...............................Jim Olson Melina Cruz.................................Jim Olson Noemi Zarate..............................Jim Olson Olivia Santangelo........................Jim Olson Paige Ruberg..............................Jim Olson Shelby Conn...............................Jim Olson Stephanie Gomez-Limon............Jim Olson Stephanie Simandl......................Jim Olson Victoria Wright............................Jim Olson William Peterson.........................Jim Olson Xavier Hamilton...........................Jim Olson Yuliana Hernandez-Mora............Jim Olson Haley Wolfe.................................John England Leanna Taylor..............................Jon Byrd, Jr. Bridgett Booth............................Joseph Booth Alexandra Pacifico......................Kenneth Rianna Natalie Smith..............................Kenneth Rianna Ghadir Amin................................KFCC Bradly Lams................................KFCC Diana Herrara..............................KFCC Rachel Montgomery...................KFCC Ashley Crawford.........................KFCC

NAME OF EMPLOYEE

FRANCHISEE

Scott Stiegelmeyer.....................KFCC Abdulaziz Hamid.........................KFCC Aba Abdurahim...........................KFCC Samantha Plewes ......................KFCC Alyssa Hubbard..........................KFCC Brandon Baker............................Kurt Aarsand Megan Peters..............................Kurt Aarsand Chelsea Walker...........................L. Inman Hodges Makayla Juergens ......................Larry Wheeler Haley LeRoux..............................Larry Starkey Sean Campeau...........................Larry Starkey Farheen Chowdhury...................Lokman Chowdhury Jannatun Nessa..........................Lokman Chowdhury Anthony Caviness.......................M. Larue Kohl Ashley Stegall.............................Manish Patel Kiana Jones................................Manish Patel Amber Jackson...........................Michael Kulp Corey Boykin..............................Michael Kulp Craig Francis ..............................Michael Kulp David Vasquez............................Michael Kulp Dustin Hageman.........................Michael Kulp Gaelan Venturi.............................Michael Kulp Jessica Martin.............................Michael Kulp Komlan Guedze..........................Michael Kulp Mary Barker................................Michael Kulp Taylor Tanner...............................Minton Hester Alysa Zimmermann.....................Pete Wasilevich Arranda Gardner.........................Pete Wasilevich Kira Schmidt...............................Pete Wasilevich Lauren Standish..........................Pete Wasilevich Natalie McLane...........................Pete Wasilevich Timothy Ciolek............................Pete Wasilevich La-shay Collins...........................Robert Noyes III Taylor Duncan.............................Sam Fiori Adrian Scott................................Samuel Sibert Gurvinder Singh..........................Sanjiv Chand Breyon Manigault........................Seenu Kasturi Ni’Chelle Samuels.......................Shirley Vangeloff Myah Quirin.................................Susan Stuver Akoye Simpson...........................Tabbassum Mumtaz Andrew Koenig ..........................Tabbassum Mumtaz Chelsea Sarring..........................Tabbassum Mumtaz Kailan Allison .............................Tabbassum Mumtaz Quinton Sams-Coffield...............Tabbassum Mumtaz Chaz Draper................................Tanweer Ahmed Briana Graham............................Thomas Broome Joshua Graham..........................Thomas Broome Candace Smart...........................Thomas Lowry Kortney Fisher.............................Thomas Lowry Kaitlynn Kitchen..........................Thomas Neil Cocolin Ryan Kitchen...............................Thomas Neil Cocolin Carly Giesseman.........................Tim Fitzpatrick Amber Cain.................................Todd Stewart Kelsey Thompson.......................Todd Stewart Kristen Ponce.............................Todd Stewart Alexander Case...........................Tom Slater Sarah Draper...............................Tom Slater Nicholas Shipe............................Tommy Cecconi Shauna Moultrie..........................Wallace Fowler, Sr.

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Tax-Efficient Corporate Structures

By David Zammit

Over the past few years, many of you have asked significant questions regarding the structure of your company. Some of you are involved in a new business operation, some of you are part of a generational business operation, and others are part of a blend of the two. As the structure of your business evolves or changes, many owners should go through an in-depth process to design a structure that will provide the best potential benefits for their venture. Assembling a team of advisors to take you through the process of considering a host of important factors, from cost of formation to legal liability to succession and exit planning is key to any business’ long-term success. This article affords a brief overview of these and other factors important in determining a tax-efficient structure for a franchise or other type business.

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Money Matters

Strategic Issues

There are a variety of strategic issues to consider that will arise at different points of an organization’s lifecycle. Among the most important are: • Legal liability. How much net worth outside of the business do you want to expose to company creditors?

• Cost of formation and ongoing administration. How expensive is it to set up the business, and what types of capital can be expected to keep the entity in good standing?

• Flexibility of ownership. How many owners are there?

Will there be full equity ownership or limitations? What is the capital structure, and how will equity or debt be used?

• Succession and exit planning. This is the primary area where most of the work has been done with franchisees.

What happens if you die or become incapacitated? How will the succession of key employees or family members be addressed? This is one of the more difficult considerations to address because it’s difficult to wrap your mind around the endgame at the beginning stages of a company. Still, these questions must be addressed.

But perhaps the consideration that weighs most heavily on your mind is the tax implications. While those factors listed above (and others) may wax and wane through a business’s lifecycle, tax considerations are consistently of high importance.

Tax Implications

It is important to secure consulting professionals to look for opportunities to minimize tax and identify and assess risks, all in an effort to assist in managing a company’s capital for operations and growth. The goal is to consider both short- and longterm issues, including the following: 1. How can income taxes on the profits of the business be minimized, deferred, or both?

2. How can tax losses incurred in the business enterprise be used advantageously? In particular, can these losses offset other income, including possibly the business owners’ income?

3. How can increases in the value of the equity of the business best be protected from future income and estate tax liabilities?

4. How can assets be transferred into and out of the entity in the most tax-efficient manner?

5. Do special tax rules, such as the at-risk provisions and the Alternative Minimum Tax regime, apply differently to certain types of entities or certain activities of an enterprise so as to encourage the use of one entity form rather than another?

The answers to these tax questions, in part, are dependent upon the taxpayer’s entity structure. Additionally, the taxpayer’s operational, financial, and managerial strategy will significantly influence how the planner arrives at options for tax-efficient recommendations and improvements.

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Factoring in Change

Most companies don’t remain constant. In fact, change is the one thing that we can depend upon in business, as in life. Additionally, tax rules change often—at least annually.

Quite often, an external influence or internal decision may cause a very real need to reconsider the planning around the tax structure of the business enterprise. There are a variety of changes and influences that can cause a need for reevaluation, including the following: • A change in profitability or a new source of revenue (new product or service) • Operations in a new or different geography • Regulatory changes • Management and ownership adjustments • A change in capital needs or structure • A change in an owner’s succession plan • Once the change has been identified, the planner must now consider whether there are opportunities to react and offer ideas to once again improve the tax efficiency.

Some of the more common questions that come up in many of your organizations are “what is the best type of corporate structure to have?” Although we cannot answer all of your questions in an article—as it would take a comprehensive review of your current operations, as indicated above—let’s take a look at a comparison of two of the most common corporate structure comparisons.

Choosing the LLC Over the S Corporation

The Limited Liability Company (LLC) and the S Corporation (S Corp) are both business organizations which are “pass-through entities” under the Internal Revenue Code: they escape taxation because all items of income are picked up by the owners of those organizations on their own tax returns. Of late, there are many who say that the S Corp may be becoming a thing of the past, because of the advantages that the LLC has over it. Here are 10 factors you may want to consider in evaluating these advantages: 1. Choice of tax regime. Each LLC is a pass-through entity by choice: its members have the right to elect to have it treated as a partnership for federal income tax purposes, as a regular C Corporation, or even as an S Corporation. The overwhelming majority of LLCs take the first option, and we will assume that choice whenever we mention LLCs in this memo. No choice exists for the owners of an S Corporation. The organization and the shareholders must be subjected to all the rules and regulations of Subchapter S of the Internal Revenue Code. This ability to choose taxation method provides LLCs with a lot of tax flexibility to fit the business needs. w ww. akf c f . c o m

2. Who can own. For the most part, S Corporations corporate veil is generally easier for a court to do can only have individuals as shareholders. There than piercing an LLC’s protection. One thing that are some extremely limited exceptions for certain allows disregarding the entity is the failure to obtrusts and estates of deceased owners. Even some serve the legal formalities set forth in state law for individuals are forbidden to be shareholders (i.e., operating in a particular form. In corporate law, non-resident aliens). There are no such restricthis typically encompasses the requirement to hold tions on the identities of LLC members. Not only regular meetings of the board of directors, and of individuals (domestic or foreign), but also C Corthe shareholders, at dates and places set forth in porations, partnerships, various trusts, and other the by-laws and in accord with the state statutes; to entities, can be owners. keep accurate minutes and records of such meet3. Number of owners. An S Corporation cannot have ings, duly attested by the corporate secretary and more than 100 shareholders (with some funny approved by the board; and to have certain actions arithmetic for family members, which could allow and payments approved by a formal vote of the that number to be a little higher). An LLC has no board and carried out by certain officers. Inattensuch limitation. That places some transfer plantion to any of these matters of form can cause the ning limitations on S Corporation shareholders for shareholders’ personal assets to be reached by corfear of violating the number of shareholders rule. porate creditors.

4. Piercing the corporate veil. The original reason S LLCs, in contrast, do not have legal requireCorporations (originally known as “Subchapter S ments anywhere near as many or as stringent as Corporations”) were created in 1969 was that tracorporations concerning the formalities of operaditional corporations provided protection of the tion. They are not required by law to have board shareholders’ personal assets from corporate liabilmeetings, since they aren’t even required to have a ities, but at the price of double taxation: corporate board, and more informality and flexibility about income was taxed to the entity on its return, and one LLC member acting for the entire LLC is then could only be paid out to the shareholders as dividends, which were then taxed to them on their returns. In contrast, a partnership avoided that double taxation, but all the personal assets of all general partners were available under state law to satisfy judgments against the partnerships. Both the S Corporation and the LLC give us the best of both worlds: no double taxation and protection of personal assets from liabilities of the entity.

There is, however, a “bad boy” Lemon & Double Chocolate Chip exception to that protection. The Mini Bundt & 16oz Bundt Available “veil” (or “shield” or “wall”) of protection for your personal assets can be pierced if you do not observe the formalities of operating the business as a separate legal entity from yourselves. Essentially, the courts say that if you did not honor the separateness of the entity, neither will we, and if there is a Great for a judgment against it, we will reach MINI MEAL DEAL! your personal assets to satisfy it.

For any business, of course, using Call Ted Pilato the entity’s checking account for 714.612.3851 cell personal debts and vice versa can 602.278.2909 ext 2141 invite trouble on this front. tpilato@cafevalley.com As to other things that can dewww.cafevalley.com stroy asset protection, piercing the

Perfect Finish!

ANY MEAL! FOR

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Money Matters

allowed. Therefore, there are fewer circumstances in which the courts can claim a violation of “separateness” as the basis for reaching LLC owners’ personal assets.

5. Special allocations. The shareholders of an S Corporation must recognize income, deductions, credits, and losses passed through from the corporation pro rata in precise proportion to their stock ownership. For example, if Anthony owns 50 percent of the stock, and Barbara 33 1/3 percent, and Carol 16 2/3 percent, and the corporation’s income is $1.2 million, Anthony must pick up $600,000 on his 1040; Barbara $400,000 on hers; and Carol $200,000 on hers. There is no flexibility to do otherwise.

An LLC, on the other hand, has the right to allocate income and loss to its members in a manner that does not track the relative ownership interests of each member, as long as there is a substantial economic reason for the allocation (i.e., it is not a subterfuge to create tax avoidance). For example, Dave and Elaine each own 50 percent of the LLC, “one person, one vote,” but Dave contributed $500,000 in original capital to the creation of the business, and Elaine contributed $250,000. The LLC could elect to have, for example, 66 2/3 percent of the profits allocated to Dave and 33 1/3 percent to Elaine, until Dave has received $250,000 more than Elaine, at which point they wish to switch to a 44

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6.

7.

8.

9.

50/50 split. This flexibility is another clear plus for LLCs over S Corporations.

Ownership classes. With the exception that an S Corporation can have voting and non-voting stock, an S Corporation cannot have different classes of stock (i.e., it cannot have common and preferred). An LLC can provide to some of its members higher rights to cash distributions and liquidation proceeds than others, which is similar to what would be available to holders of preferred stock in a C Corporation.

Distributions of appreciated property. As with C Corporations, if an S Corporation distributes appreciated property, it is treated as having sold the property for its fair market value, and then having distributed cash. Thus, for example, if land with a basis of $100,000 and a current value of $300,000 is distributed to a shareholder, there is $200,000 of gain at the entity level. This rule is inapplicable to LLCs. Ownership interest in return for performing services. If an individual receives S Corporation stock in exchange for rendering services, it is taxable. If a person receives the equivalent in an LLC (a so-called “profits interest”), that is not a taxable event.

Entity basis. An S Corporation’s basis in its assets is not changed by a sale or distribution of an asset. In contrast, a so-called “Section 754 election” w ww. akf c f . c o m

allows a step-up to the entity on sales and distributions on death for a LLC. 10. C ounting liabilities in basis. The rules for both S Corporations and LLCs state that the owners of those entities can only deduct passed-though losses to the extent of the respective owner’s basis. With respect to loans made by the entity and guaranteed personally by the individual owners, the rules for calculating basis favor the LLC.

A Client Example: The Challenge

Here’s an example where external and internal factors arose that required a need to strategically restructure a company.

A particular client formed an LLC to house operations of a retail concept that contemplated opening multiple units in a single state. Originally, the company was formed and funded by two family groups. Post-formation, the company began to execute its operational strategy.

The strategy proved successful, and the company began to grow. Sometime thereafter, an opportunity arose to acquire the operations of two geographically distinct businesses.

Because of these new opportunities, the company now needed a more significant financial partner to assist in taking advantage of growth opportunities and to continue to fund operations in the existing business. Additionally, this new financial partner also would require equity in the companies as part of its participation. The company’s advisory team at the time suggested that acquiring the two new operations in separate LLCs was the smart choice. So they did.

The new multi-entity company began to operate and, after a couple years, significant tax problems arose, causing the owners great concern. The first issue related to the timing of deducting certain tax losses that were being generated in the two new entities from significant tax depreciation. The problem had surfaced because the owners lacked direction in how the losses should be funded in order to take advantage of the tax benefits being generated. In other words, the losses were currently required to be suspended in two of the three entities, while the third was actually generating taxable income. Unfortunately, certain specific at-risk provisions hadn’t been considered, so current deduction of the losses wasn’t possible.

The second significant issue was that the company was paying quite a bit in state and local income taxes. The problem was that no one had considered the potential benefits of combining the income of all entities as a tool for managing the various state tax liabilities. Additionally, high, ongoing administrative tax-compliance costs and uneven ownership between the entities left the owners very frustrated.

A Client Example: The Solution

First, our example company’s owners and the advisory team were gathered to thoroughly discuss the issues and

current operational and financial strategies. Once we understood these goals, we were able to work toward designing an appropriate solution.

The solution comprised several pieces. First, to set up a new LLC holding company. As part of this step, the interests of the three prior LLCs were contributed to the new holding company in exchange for interests in the new holding company. Adjustments were made to the new LLC to provide for different classes of ownership, and improvements and clarity were penned into the exit opportunities for the members. Effectively, each of the old LLCs became 100-percent-owned subsidiaries of the new holding company.

Second, a management company was formed (an S corporation) as the new manager of the holding company.

The tax benefits of this planning were as follows: • A better use of the combined basis of the entities, which allowed current loss utilization from any of the subsidiaries or parent. Additionally, the previously suspended losses became immediately usable.

• The combined reporting of income provided the opportunity to minimize state and local taxes to the company. By using a management company, they were able to minimize self-employment taxation and provide the owners with federal and state withholding opportunities, including the following: • Tax compliance costs to the client were reduced.

• Opportunities to simplify the state and local tax reporting for the owners were reduced.

• The non-tax benefits were equally as significant and include simplified financial reporting, clarified ownership of the entire entity, simplified exit strategies, and more flexibility in compensating managers and owners.

In Conclusion

There are a variety of factors franchise owners must consider when embarking on a business venture. Tax considerations are at the top of the list. While “one size fits all” conclusions are inappropriate in financial and business planning, the wind does seem to be blowing in the direction of the LLC. About the author: David Zammit is a financial strategist with Alliance Financial Group in Miami/Ft. Lauderdale, Fla. For more information, visit www.afgfl.com.

IRS Tax Disclosure: Information contained herein is not intended or written to be used, and cannot be used, for the purpose of avoiding any tax obligations or penalties. This is not tax advice or guaranteed. This information is written to support in general consumer education and is not to be relied upon in any decision whether to enter into an installment sale. This information is not intended to provide legal, tax, or investment advice. Individual taxes are subject to total individual earnings that tax year, for individual advice, consult your legal or tax advisor.

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Leadership

FOLLO

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w www. ww. akf c f . c o m

OW ME

BY STEVE GILLILAND

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Leadership

I

f you want people to follow you, they have to trust you.

If you do not have trust, you will not have substance.

It’s like inviting people over for a barbecue without the meat. We have all met people who think their leadership title designates them to be served. These are demanding, high-maintenance people who shouldn’t be in leadership positions. Leaders must understand that trust is the measurement that followers use to determine their own involvement. Trust is established by the manner in which we serve others. There are four criteria that followers examine as a means for measuring if we can be trusted: the person, the purpose, the process and the product.

The person is about character and confidence. A person can be knowledgeable, capable and even charismatic, but if they have questionable integrity, we shouldn’t follow them down the street. Your character, not your ego, is the priority for the people you lead. Delivering your competence in a confident manner also is imperative.

Demonstrate self-confidence in your ability to do what needs to be done and people will follow you.

Leaders must understand that trust is the measurement that followers use to determine their own involvement.

The purpose is about clarity and defining why you do what you do. Leaders who can articulate the direction and stay focused on an organization’s priorities instill confidence in others. The ability to concisely express that vision also enhances trust. Some time ago, I spoke to an organization that was facing an exodus of employees, and I remember asking the VP of sales & marketing what the company’s vision for the future was. His response: “Not really sure, but I guess I’ll see when we get there!” Yikes!

How can you call yourself a leader if you are just part of a group in management that is maintaining the status quo?

You can’t. Brilliant leaders focus on one decision when it comes to leading others: the direction. People want clarity of purpose. As a leader you have to set the direction, be clear on where you’re going, and get moving.

The process is based on cultivating community. Organizations that have fully engaged team members and are most admired in the marketplace are those that have leaders who intentionally encourage a culture of community.

Open communication, collaboration, and permission to be innovative are not just encouraged but expected. Instead of talking at people and then asking them, “Do you understand?” Talk with them and ask the question, “What do I need to understand?”

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When you open the door for greater collaboration, you ultimately elevate expectations because people always will support what they help to create.

You need to be prepared to do whatever is necessary to make people around you successful. In contrast, you will find groups that are dysfunctional and ineffective primarily because the leader has become a bottleneck in the process of being too controlling and obsessed with his or her résumé. His or her very presence in a meeting causes people to withhold great ideas and begin to do only what they must do to get by. Trust is accentuated when we entrust others with the process.

The product is about creating results. Showing promise as a leader is not enough. Delivering on what you promise is what separates you from the crowd. The bottom line is business leaders are expected to produce results. They see a need to roll up their sleeves and do what needs to be done. Great leaders must recognize that most of their results are through the people they lead. They are asked to take on responsibility, and they prove they are responsible not only for completing the task, but by improving the process. Trust is given to those who do more than is expected. When you make people feel valued and treat them better than they envisioned, they will not only trust you, but also follow you. You will have arrived as a leader when people follow you because they want to, not because they have to.

About the author: Steve Gilliland is an author and is recognized as one of the most in-demand and top-rated speakers in the world. Presenting to more than 250,000 people a year, more than two million have now heard him speak, with audiences encompassing more than 30 industries.

Learn more about Steve at http://stevegilliland.com. w ww. akf c f . c o m

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Finance Committee Report

Looking Back On Recent Accomplishments 6

By Jim McKenzie, Finance Committee Chair

The Finance Committee consists of myself and four other members: Keith Cole (AKFCF Treasurer), Joe Oleinik, Roger Sparks, and Adam Sibert. Dave Evans serves in a special advisory position, and Deb Newton and Kelly Rodenberg both provide invaluable support. We are fortunate to have such capable people!

Joe, Roger, and Adam are beginning

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As I look at 2016 and see the accomplishments the AKFCF has made for franchisees, I can say that our col-

lective monies are serving us as an association and as franchisees well!

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their first year on the committee.

Thank you for agreeing to serve!

The committee acts as the “eyes” of the franchisee members in an oversight capacity in all budgetary matters. While the committee does not have approval authority over Association spending decisions, we do influence the AKFCF Executive Committee and Board of Directors on the appropriateness and normalcy of such decisions.

As chairman of the Finance Committee, I commit to understand the AKFCF annual budget in detail, and am confident that every dollar spent supports the AKFCF and our members. As time unfolds and priorities change, I commit to making sure our Executive Committee and Board members are well informed and understand the financial implications that come with every decision. I commit to use the collective knowledge and experience of our committee members to best serve our franchisees.

As I look at 2016 and see the accomplishments the AKFCF has made for franchisees, I can say that our collective monies are serving us as an association and as franchisees well. Here is a brief list of our accomplishments in just the last year: • Planned and hosted a very informative, entertaining, profitable, and pivotal Annual Convention.

• Supported the “Re-colonelization” RGM rallies throughout our system.

• Began the development of an AKFCF mobile app that will be functional throughout the entire year.

• Supported significant influence in Washington, D.C., on many issues directly impacting our businesses.

• Began the process of developing an AKFCF Strategic Plan that will direct us into the next decade as an association.

• Supported the AKFCF Quarterly magazine, in print and online. This publication exists

to educate, inform, and provide special recognition for our franchisee members. The Quarterly also links us to our dedicated vendors and suppliers.

• Supported the thorough and detailed archiving vault of pertinent AKFCF business documents.

• Developed, or assisted in the development of, pertinent

training and educational resources available to all franchise members.

I look forward to a great year with the AKFCF Executive Committee and to serving our members well. I encourage all of you to take advantage of every benefit your membership affords you … and if the opportunity comes your way, to serve in some capacity.

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Tr e a s u r e r ’s R e p o r t

Holding The Line 6

By Keith Cole

In 2011, then-AKFCF President, Dale Black, reached out to me as the finance chair to help him implement tighter controls around all line items of expense. He felt we were doing a good job, but he wanted to try to make it easier for future executive teams to maintain good cost control.

With Debbie Newton’s assistance, we developed our Budget Worksheet that is still in use today. This is the single most important financial document that we have to watch those line items and to react quickly to any variations from our set budget. That’s not to say we cannot improve this document; in fact, we are making some changes to enhance its accuracy.

Although the document itself is morphing, I’m happy to say a lot of the line items have remained constant. Even better, those constant line items have had little change in the budgetary numbers we placed on them back in 2011. When we have made changes, those changes have been to lower these budget numbers because we were able to beat previous performance.

Every fiscal year we look at each line item to determine if we have managed to beat that set number. Then we make the appropriate changes to our next budget. The importance of holding the line on these budgetary constants is most evident 52

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when we find ourselves in a position of needing to spend big money on things like “The Econometric Study” or “Larry Light and Arcature.” Without keeping our eyes on every line item, we would find ourselves unable to finance the big projects when our members need them most.

In fact, not once since the

inception of the Budget Worksheet has a president gone over budget on his or her fall/ spring combined meeting budgets.

Our GAC and AKFCF Legal Counsel, Ron Gardner, have both done a super job of keeping their line items under budget. These are two of our highest line items, historically, and I can’t say enough about the hard work that has gone into holding the line on these expenditures.

Big thanks to Peg, Ray, Leslie and everyone on the GAC, and of course, to Ron.

Two line item performances of which I am particularly proud are our spring/fall board meeting budgets. Hosting these meetings in different locations can be a great challenge in cost control. Having Kelly Rodenberg and Kris Stage working on these locations has been a huge help to the Association. The proof is in the Budget Worksheet: The cost for these meetings has remained constant since 2012. If a fall meeting slightly overshoots budget, the sitting president gets his spring meeting under budget enough to make up the difference. In fact, not once since the inception of the Budget Worksheet has a president gone over budget on his or her fall/spring combined meeting budgets.

While still maintaining a strong treasury, we have been able to give our volunteer board nice places to enjoy while they work on behalf of the franchise system. In August, Kelly sent me the budget for our upcoming fall meeting. I smiled when I saw the bottom-line number. This will be Greg Atwell’s first fall board meeting as president, and I can see that he is continuing our practice of holding the line. He is going to do a great job working on behalf of all franchisees. But knowing he is equally mindful of his fiscal responsibilities is what makes a treasurer happy. w ww. akf c f . c o m

Beverages Report

Beverage Update 6

By Jody Luihn

As the start of the second half of the year plays out, there is good news and some bad news in the beverage world.

As we knew, our challenge of lapping the 2015 “free” Colonel’s lemonade promotion was going to be difficult. We saw declines in lemonade volume of 75 percent, which is more than 130,000 gallons during that time period. Thanks to the success of the Extra Crispy advertising, the good news is that our fountain soft drink volume is up more than 21 percent, which as a system puts our total volume up 4.2 percent year-to-date through P7.

Other encouraging news includes Aquafina. More than 76 percent of the KFC system is currently selling Aquafina and year-to-date volume is up 21

percent. Bottled water continues to be the fastest growing beverage segment.

According to a recent USA Today article (based on a report from Beverage Marketing), bottled water is poised to surpass soda as the most consumed beverage early in 2017. Bottled water was the first beverage to be consumed for health reasons and the only beverage that is consumed all day long. Even though bottled water is not as profitable as soda, your customers want that option with their meals.

Your Beverage Committee continues to focus on fewer, bigger, and better: The August Chicken Little Window included a FREE upgrade of Dole Lemonade in the $5 Fill Up, which included

media, digital, and merchandising support. The program also was supported by 2 free Bibs of Dole Lemonade from Pepsi.

The Colonel Rewards program continues to support suggestive sell and upsell at the restaurant level. Currently in our 4th Colonel Rewards contest, the KFC system continues to be engaged. The average Drinks per Trans for the TOP 3 winners in the 12 regions has grown from 1.38 to 1.39 to 1.47 respectively from Contest 1 to 2 to 3. We are looking forward to seeing the results from Contest 4, which ended August 27. Consider using the Colonel’s Rewards cards for your own recognition programs and beverage contests.

Thanks for all your continued support!

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K F C / N P C

Re p o rt

More Profit, Less Risk, And Less Time: The Future Of Your Co-Op 6

Dale Black

We often only pay attention to RSCS when we have a supply problem, or when our costs are increasing. As a result, many of you probably haven’t thought about RSCS in a while. Because of this, I would like to take the next couple of paragraphs to talk about how your co-op is working diligently to continuously improve and evolve.

Farm to Fork Procurement to increase profit by millions

The RSCS Procurement Team has been focused on using technology and insights to drive full supply chain visibility for our products. Over the past year, a new paradigm in procurement has been in pilot at a sister concept. The Procurement Team has partnered with an external technology vendor and our suppliers to drive substantial deflation and lower costs. Through this process, real-time cost information from our suppliers is collected to understand every cost driver in our products — from the time they leave the farm to the time they reach the restaurant. Our buyers then partner with our suppliers to identify and eliminate inefficiencies.

This process guarantees a consistent and fair profit to our suppliers, while passing on the reduction of costs to our franchisees. During the next few years, this successful process will roll out to KFC spend categories, including poultry and produce.

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You may have noticed the

lack of supply outages over the last year. This is largely due to the new supply chain modeling and the S&OP process that has been rolled out in your KFC Supply Chain Team.

S&OP thwarts supply outages

You may have noticed the lack of supply outages over the last year. This is largely due to the new supply chain modeling and the S&OP process that has been rolled out in your KFC Supply Chain Team. Through this process, RSCS Supply Chain, RSCS Procurement, RSCS Distribution, KFCC FIT, KFCC Finance, and KFCC Marketing work closely to model future demand and supply for our products. Using these models and processes, potential supply disruptions are identified months in advance when action can

be taken to intervene. These models have prevented several disruptions in our system, on average providing six or seven months of lead time before a supply risk.

Equipment ordering innovation will improve how you buy

RSS is testing a process to improve the way they serve you through a new online ordering portal for many routine items. Franchisees will be able to log into the RSS Equipment website, search for items, see all options and pricing, then make a purchase.

The goal is a seamless, easy process designed with increased efficiency to serve you better, and to allow our talented team of RSS sales reps to focus on more complex projects such as new builds and remodels. Over the next few months, RSS will be piloting this process with a sister concept. Data and franchisee feedback from that pilot will be incorporated into a larger, more comprehensive site for KFC franchisees.

So while you may not be thinking much about your co-op these days, the professionals there are feverishly working on improving profit, ensuring the supply of high-quality and safe food ingredients, and enabling innovation through technological enhancements and continual process enhancement. w ww. akf c f . c o m

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R S C S

M e m b e r

P ro g ra m s

‘How I saved $5,000 per store in just one hour — using the RSCS Waste Program’ 6

By Cindy Dahl (left) and Heather Pitts

“My son, Sean [who runs our stores], was just in HEAVEN when he

Your RSCS Member Programs team is focused on providing national operator programs and employee programs for the entire Yum! Brands system.

Our programs provide unique value through negotiated pricing, as well as favorable terms and conditions.

In this article, we would like to highlight two programs: Waste, by sharing some information from our team member who cares for this program (Cindy Dahl) — and Energy, by providing an overview of how you can start cashing some rebate checks!

Talkin’ Trash

Cindy — how did you start supporting the waste business?

Since I began my career in fashion merchandising, I ask myself: how does one go from being a fashion buyer to a trash manager? Several years ago, when I was with Yum!, my manager gave me the opportunity to become our subject matter expert for waste and recycling.

At that time, waste was the number-two facilities spend for Yum!. Once I began researching and learning more about

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saw how much he could SAVE on our waste service. Our BILLS had been going up and up, and we knew we had to do SOMETHING. Then we saw that EMAIL come through RSCS ADVERTISING the possible DISCOUNT, so we decided to call Cindy. We could not believe the SAVINGS. We SIGNED UP in November 2015 and by December we were SAVING over $5,000 per store annually!” — Donna Young, KFC of Ludington, Mich.

the industry, I became fascinated. And I began focusing on cost savings measures that could be implemented to take some of the sting out of this enormous spend. I get to continue caring for this program here at RSCS! How does RSCS get great rates on waste services?

While we cannot guarantee volume, our suppliers understand that their special pricing and terms are available to our entire system, and that our goal is to help our suppliers gain market share

so that our operators gain savings. We have four national suppliers in our program, and they are very competitive in order to gain your business. Two of our suppliers are national haulers, and two of them are brokers who primarily deal with regional and local haulers.

I have been told by our suppliers that we are truly unique in the way that we manage our program, in that by having RSCS manage the program we eliminate the savings split that waste consultants would charge if they are able find a savings for a client (up to 40 percent is

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often kept by consultants). I always encourage our operators to look at the total package when comparing the RSCS waste rates to any other vendor. Quite often, the base rate is only a portion of the cost. Fuel fees, environmental fees, and administrative fees can add substantially to the cost. The national discount rates in the RSCS waste program are fully inclusive, with the exception of taxes.

What’s been the largest savings you have seen?

The largest single-store savings that I have seen so far with the RSCS program is $14,500 annually! And there have been several locations with savings well over $10,000 per year. There is no greater feeling than finding these savings for our operators! And in many cases, we can apply savings for an operator with no hauler or service level changes. On average, our operators save about 30 percent. Currently, there are 759 KFC locations in the program who are enjoying a combined savings of $1.57 million per year! And the system-wide Yum! operator savings within the RSCS program are $3.6 million annually. While we recognize that some locations are in closed markets and cannot take advantage of the program, we believe that with our current participation rate of 17 percent within KFC, we still have a lot of opportunity to bring savings to a lot more KFC operators.

How can KFC operators who are not on the program start gaining savings?

To have your locations analyzed for potential savings opportunities, please send a copy of your recent invoices and your current service levels to me at cindy.dahl@rscs.com.

Energy Hot Spot

In addition to the Electric & Gas Procurement solutions that have been offered by RSCS for many years, we have expanded our programs to now also include Energy Rebates, Utility Bill Management, and Energy Tracking.

All of these programs can be used as separate services, or can fit seamlessly

together via one supplier to provide a complete overview of your energy processes.

Energy Rebates: If you are replacing dated equipment, remodeling, or building a new store, sign up for the RSCS Energy Rebate Program — and cash your check! Check out a few of the recent rebates our operators have received: • Fryers: $734 • HVAC: $645 • American Showman: $532 Sign up for the Energy Rebates program and start cashing checks to offset the cost of your equipment. To enroll, we just need your signature on two documents and a list of your utility information — all of which you can complete electronically via the RSCS Digital Directory (www.rscs. com/memberprograms). Once you are enrolled, the supplier automatically searches for all available rebate opportunities in your area for every purchase that you make through RSCS. And you can revisit the RSCS Digital Directory at any time to view all of your recent purchases, pending rebates, and rebates that you have already received through the program.

Utility Bill Management (UBM): Sign up for UBM to manage your receipts and make on-time payments of invoices for multiple facilities — including electric, natural gas, water, wastewater, and trash. UBM also ensures that your invoices are accurate by capturing every piece of information from your invoices for auditing purposes.

Energy Tracking: Energy Tracking gives you access to Resource Advisor, a software tool to monitor your energy

use and spend at the individual site level as well as across your enterprise, providing interactive graphs and raw data. The program also allows you to benchmark your progress against your budget, historical data, or other variables — all while alerting you to market conditions.

How can KFC operators who are not on the Energy programs get signed up? To sign up for any or all of these Energy programs, visit the RSCS Digital Directory at www.rscs.com/ memberprograms, or contact RSCS Member Programs at memberprograms @rscs.com.

More RSCS Operator Programs

In addition to Waste and Energy, our members are leveraging excellent savings on operator programs such as parcel, office supplies, CO2, oil management, paint, floor/floor mat cleaning, linens, pest, payroll, cars, and in-store music. Members can view our operator programs via our alwayscurrent and secure digital directory: www.rscs.com/memberprograms.

A snapshot of your individual savings from our Top 10 Programs was mailed out to each of our members earlier this year. Get in touch with us for another copy of your 2015 Operator Savings Report or to learn more about how you can Grow Your Savings at memberprograms@rscs.com.

RSCS Employee Program

To assist our members in building employee loyalty, we also provide unprecedented cell phone and safety shoe discounts for all employees, as well as great savings for everyday items such as child care, movie tickets, and retail outlets. Your employees can access the employee discounts conveniently through our mobile app or website: https://rscs.hrdiscounts.com/perks/ (use code SAVENOW).

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Regional Short

Upper Midwest: A Best Practice for New Board Member or Officer Success 6

By Kevin Schlutz

In our region, we all get excited when a member decides to get more involved with our Association, whether it is to serve on a committee, to join the board as a state director or committee representative, or to stand for election as an officer.

To the rest of us, this is an affirmation that what we do and spend our

time working on is worthwhile and valuable to the membership. Unfortunately, many committees and boards are established but don’t accomplish much, and that is where we want to differentiate ourselves from the norm.

Communication is one of the keys to committee success, and we

try to keep the board aware of what is being accomplished. However, the real best practice for a new board member or officer is to find something he or she can do that makes a difference. This helps them to grow their confidence, feel accomplishment, and gain respect from the other board members. They go

The theme for the spring meeting was “Pirates.” These folks took it very seriously. Well done!

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through an orientation session and are assigned to a mentor who can answer their questions and help them grow in the position.

The tasks they are assigned differ depending on the position and what strengths they already have.

Everyone involved at this level of our business already is a leader, but all have different talents, strengths, and areas where they need more development. Some are great communicators, some are great organizers, some are great problem-solvers, and some are born leaders, but everyone needs experience to be more effective in their new position. A good example of a task for a new state director is to have him or her contact any members or non-members in their state who aren’t actively involved and ask them some questions to gain information and develop a better relationship.

State directors are our members’ first link to the Association and they need to be familiar with all franchisees in their area. For a new officer, there are many tasks that need to be done in planning and executing our regional meetings. Every year, at the AKFCF Convention, we solicit vendor partners to attend our spring regional RGM meeting. Our philosophy on spring vendors is that they need to be a company with which the RGMs are familiar and directly involved at the restaurant level. We limit the number to approximately 15 vendors. The task assigned to our new officer is to choose the vendors to be invited, go and invite them, get commitments, and then coordinate with them to register and attend the meeting. In the past, this was more of a group exercise and sometimes wires got crossed, but this year our new officer, 2nd VP Jason Zakaras, did an outstanding job of meeting with the vendors, getting commitments, and coordinating with them regarding speakers or product demonstrations. This will become our new standard on how this process should be done. It was incredibly well done for someone who was new

to the process, even with the help of a mentor.

Another rite of passage for new officers is joining in the fun of entertaining the RGMs at our spring meeting. Part of making the meeting as memorable as possible is to dress up in costumes and act silly. I think sometimes it’s as much a stress reliever for them as it is entertainment for the attendees. The theme this year was “Pirates” and we had

some very realistic buccaneers indeed. You know the costumes are good when you have to stop and think about exactly who it is. Doing this obviously entertains the attendees, but it also contributes greatly to the teamwork and camaraderie of our officers and board members.

I’m sure that Jason will be a great success as an officer as we continue to develop new leaders for the future of the association.

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Executive Director Update

Have No Fear; It Just Might Be Okay to Miss Out 6

By Kelly Rodenberg

Many of the survey responses we receive each year after Convention note that franchisees are afraid to take time away from their restaurants because they will miss out on what’s going on in them while away. I’m sure you all have at least one person in your life who suffers from a severe case of FOMO, or fear of missing out.

If I had to pick that one person, it would be my good friend Sherry. And she’s the first to admit it. She wants to be a part of every text, email, and conversation she can—and she hates when she’s not. Of course, her FOMO is harmless, and being the loving friend that I am, I am sure to not only mock her about it but also egg it on (e.g., leave her off a group text).

But FOMO can have its downsides.

Consider its negative impact in the workplace: Employees suffering from workplace FOMO are more stressed out and frazzled. Workplace FOMO is driven by the fear of missing important tasks and lost opportunities.

It’s all about the dread of incurring the wrath of customers, coworkers, and managers. To alleviate workplace FOMO, we unceasingly check our computers, tablets, and phones for new updates. Most likely, workplace FOMO will get worse before it gets better. Thanks to mobile devices, it’s easy to call, text, or email someone to find out what’s going on at the office while we’re away.

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Like me, if you are responsible for putting together events, you need to think beyond the office and consider how workplace FOMO can invade our Convention and events. Are at-

WORKPLACE FOMO is DRIVEN by the FEAR of MISSING important

TASKS and LOST OPPORTUNITIES. It’s all about the DREAD of incurring the WRATH of customers, coworkers, and managers.

tendees constantly so distracted by what’s going on back at work that they’re unable attend or to connect to our meetings and make the most of the professional development opportunity?

Unfortunately, there’s no easy way to cure workplace FOMO. After

all, mobile devices aren’t going anywhere—and neither is people’s reliance on them.

At Convention, we could take an extreme position, like requiring attendees to silence their devices, or to lock up their phones and tablets in a dedicated space before entering a session room. There is a downside to such a position, though. We take away attendees’ ability to share their experiences in social spaces in real time. Sure, they can tweet after the fact—and minus photos (what the what?!)—but does that cause our meeting to lose traction?

On the other hand, consider whether we can turn FOMO to our advantage. In other words, as we’re planning our events, we need to think about what to offer our attendees so that they come down with a severe case of meeting FOMO. How can we get them to “turn off ” the office for a few days because they can’t imagine missing any part of our meeting?

I’d like to think that adults can be adults, and people who are at a meeting are there to learn. There needs to be a balance. Sure, there may be an occasion when an email needs to be responded to immediately, but be respectful of our fellow attendees and the speakers, step out for a few minutes to take care of business, and then return ready to listen and engage. w ww. akf c f . c o m

C a rd s

B u s i n e s s

Include your business card ad in each issue of AKFCF Quarterly

Advertising contacts: (A-K) Aileen Kronke (L-Z) Sharon Baker 770.431.0867 813.852.9942 aileen@lionhrtpub.com sharonb@lionhrtpub.com

Have you booked your 2017 advertising?

Secure your spot in AKFCF Quarterly.

Contact your ad representative today for more information or to receive your copy of the 2017 Media Kit! Advertising Contacts: (A-K) Aileen Kronke 888.303.5639, ext. 212 aileen@lionhrtpub.com

2017 RESOUR

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ENSIVE GU ACC OUN TING and IDE TO PRO • BENE COM PUTE DUCTS & FITS , INSU R SYST RAN CE, • CON EMS SERVICES • DIMEN ETC. • ADVE RTIS FOR AKF TS • C BEVE RAG • DIST ING/ PUB ONSTR RIBU CF ES & BEVE LIC RELA UCTIO RAG E SYST SYST EMS TORS • DRIV N & RE TION S MODEL E-TH RU • EMS • • EXHA ADVE RTIS ING • TECH NOL • LIGH COU NTER EXTE ING/ PUB TING , INDO UST VENT ILAT OGY • SYST EMS LIC RELA ON SYSY HEAD SETS R I O R • I N • POS OR/O UTDO • CHIC TION S TERIOR TEM S SUPP LIES KEN SUPP OR • • ORD FOU NDAT • • • REST FINA R ER CON MEN UBO • POS LIER S ION NCIA L AUR ANT FIRM ATIO O O F I N G • /REG ISTE • ARD S • CLEA SERV ICaE AIR CUR S E AT I N EQU • FRYE NING & • MUS N SYST RS/B OH S & FINA TAIN S G & DÉ SANI TATIO EMS • IC, MES R EQU IPME IPME NT • EQU IPME NCIN COR • SAG AWN INGS SYST EMS BREA DING G • N SUPP and STOR NT • CRE NT • ING, INTE FLAG POLE LIES & D I T, HVAC AGE • & SIFT ING & SOFT WAR E • TIME RCO M PRO GRA • ICE RS • WIND D E B I T a n d S/FL AGS RECO GNIT STEA MER • OUT • PRIN MAC HINE MS MAC HINE AT M P R DOO TING S • TOAS ION • • OWS S R DÉC OR, FLOO RING /MAI LING OCESS S • OVEN • BUFF • ENER SUPP LIES SAFE TY, TERS ING PLAY GRO ET CAB SERV ICES GY MAN SECU RITY • HUM S • PACK • • SIDE INET S UND S AGEM AN RESO & REST ITEM S • PRO & SUR VEIL WAR MER S STAT IONS • COO • PACK AUR ANT • REFR URC E SOLU ENT MOT IONA • BEAN LANC E KING COM AGIN G, SUPP LIES IGER ATIO • REFR S • BUFF L PRO DUC TION S • BULL BAG S, PUTE RS IGER ATIO N, WAL ET PRO ET RESI • TIME LINE RS, TS/L OGO and TIME K-IN COO N, WAL DUC TS STAN CE & LABO WRA PS WEA R RS K-IN LERS • DESS R MAN • CCT/ • REAL COO LERS • DISH • BUFF AGEM ENT ERT • SUR VEIL WAS HERS ESTATE ET CAB • REPL FREN CH SOLU TION LANC E INET S ACEM ENT • FREE FRIE S • VIDE S • UNIF • • MAC ZERS REST O PART S INTE GRAT ROO M ARO NI ORM S, • SHEL SUPP LIES ED SYST & CHE ESE NON -SLIP VING EMS • SHO ES, • REW • SHO RTEN ARD S and NAM E BAD SIGN AGE – INTE ING MAN RIOR & GES • AGEM ENT EXTE RIOR WAL LCO & VERI NGS • SMA LLWA RES • WAS TE RECE PTAC LES

(L-Z) Sharon Baker 813.852.9942 sharonb@lionhrtpub.com

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Legal Update

You Have A New Franchisor 6

By Ron Gardner

Earlier this year, you received a communication from KFC General Counsel Melanie Bootes, advising you that you have a new franchisor: KFC US LLC. I wanted to take a few minutes to discuss with you why this reorganization happened, and what it means for you personally as a franchisee, as well as to the AKFCF. The reason for this change was driven solely by the Yum! Brands Board; it did not have anything to do with KFCC directly. However, the decision had a direct effect on KFCC’s ability to continue to operate as it always had in light of state and federal regulations that govern the sale and renewal of franchises.

As franchisees, you probably know that every franchisor, including KFCC, is required to file a new Franchise Disclosure Document (FDD) every year in several states. Under the federal rule that governs what material must be put in an FDD, franchisors are required to disclose their own audited financial statements or, alternatively, the franchisor’s parent company’s audited financial statements.

In the case of KFCC, it has, for more than a decade, used Yum! Brands audited financial statements to meet this requirement.

Additionally, in most states, and under the FTC Rule that governs the sale of franchises, much of the paperwork and scrutiny of the FDD can be avoided through an exemption for large franchisors. What this means is that if a franchisor has a net worth of 62

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somewhere between $5-$15 million dollars, depending upon what state you are in, the government will assume that your FDD is compliant with the law, and allow you to sell and renew franchises without the state having to give you express permission to do so. Not surprisingly, as one of the iconic franchisors in the history of this country, KFCC has taken advantage of this exemption for many years based on Yum!’s financial worth.

We have made CERTAIN that simply because there has been a TRANSFER in NAME of who your

FRANCHISOR is, KFCC will remain

ULTIMATELY LIABLE and RESPONSIBLE for discharging their DUTIES.

Recently, however, the Yum! Board has voted to do two things that have had a dramatic effect on

the company’s net worth. While most of these changes are merely temporary balance sheet changes, they have been enough to require KFCC to make some changes. First, Yum! has embarked on a program to buy back approximately $4.2 billion worth of stock. Second, in order to fund this buy back of stock—and to pay a large amount of shareholder dividends (for a total of up to $6.2 billion in return to stockholders)—Yum! has taken large loans against the value of Taco Bell. This comes shortly in advance of Yum!’s spinning off the assets that make up Yum! China. In other words, on the balance sheet, the assets are going down (with the sale of China), while the liabilities (having to repay the debt on the Taco Bell loan) are going up. The short-term effect of all of this will be to drive Yum!’s net worth temporarily below the amount necessary to qualify for the exemption.

Under these circumstances, KFCC will be subject to a review by the states in order to continue to sell or renew franchises. This review will likely take months and, in some states, could result in a temporary suspension of the right of KFCC to do any business as a franchisor. Obviously, that created a problem for KFCC. One alternative that KFCC considered to resolve this problem was the use of its own audited financial statements, rather than those of Yum! Brands. Unfortunately, because of the complex history of KFCC, and the fact that their own financial statements w ww. akf c f . c o m

have not been audited for several years (as it operates as a wholly owned subsidiary of Yum!), KFCC has been advised that this process will take at least eight months and several million dollars to complete. That would put KFCC in a position where it might not be able to sell franchises (including renewals) for up to a year. That was obviously going to be problematic.

The solution then, as KFCC saw it, was to create a new franchisor entity, KFC US LLC. This entity has been created, and $15 million has been deposited into an account for purposes of determining KFC US LLC’s net worth, thereby qualifying for the large franchisor exemption.

Having created this new franchisor, KFCC has transferred, or “assigned” its obligations under the franchise agreement to this new entity, KFC US LLC. That is a legal right that KFCC likely had under the laws that governed your agreements with them. However, there are many other agreements that KFCC has with the NCAC and the AKFCF (e.g., the Acceleration Agreement, the Definitive Agreement, the Merit Agreement, the 2008 Settlement Agreement, etc.) that have implications for the performance of duties by whoever is the franchisor of the KFC franchisees.

Recognizing this fact, and recognizing the fact that all of you want to make sure that your franchisor is performing whatever obligations they have to you, the AKFCF, NCAC, and KFCC have negotiated an agreement that gives increased security to the franchisees and assures all parties that everyone will continue to perform as they always have.

More specifically, in exchange for our acceptance and acknowledgement of KFCC’s assignment of its franchise agreements to KFC US LLC, KFCC had agreed to unconditionally guarantee the performance of all the franchisor’s obligations under all of the franchise agreements that it has with all of you—as well as under all of the “ancillary agreements” that KFCC has entered into with the AKFCF and the NCAC over the years. In other words, working together, we have made certain that simply because there has been a transfer in name of who your franchisor is, KFCC will remain ultimately liable and responsible for discharging their duties. KFCC has assured all of us, as you saw in Melanie Bootes’ announcement in July, that the KFCC support to you and your restaurant operations does not change. Your contacts at KFCC do not change, who you pay does not change, the level of training and who provides it does not change, etc.

So, while KFCC may no longer be your technical franchisor, you should see no change in either the relationship or the day-to-day operations between you and your franchisor.

This column is for the general information of members of the AKFCF and should not be relied upon as legal advice. Please see your own attorney or professional advisor for questions concerning your franchise agreement. Ron K. Gardner is General Counsel of the AKFCF and Managing Partner of the law firm of Dady & Gardner, PA.

advertiser INDEX Page ADVERTISER

59 American Security Products

15 Auspex Capital

43 Café Valley Bakery

55 Coca-Cola

C2 The Dallas Group of America Inc.

27 Del Monte Foods Inc.

C3 Dr Pepper Snapple Group

3 Ecolab Kay Chemical Company

23 Frontline International Inc.

61 FSV Payment Systems

61 George H. Pastor & Sons

49 Gycor International

37 KFC Foundation

51 Koch Foods

5 Pacific Premier Franchise Corporation

1 Pepsi Cola

29 Pilgrim’s Pride 9 Procter & Gamble Distributing 35 R.F. Technologies 6, 7 RSCS

19 T&S Brass

11 Verdad Real Estate

C4 Winston Industries

61 Worcester Industrial Products

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