AKFCF Quarterly Winter 2016 by Lionheart Publishing Inc.

WINTER 2016

2017 Convention

PREVIEW We are entering this year’s Convention with a couple of major opportunities. The great news is we are united and have plenty of momentum to drive our vision into the future.

Also Inside: Volunteerism • Franchisee Heritage • GAC Report

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WINTER 2016

2017 Convention Preview

2017 Convention

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W i nt er

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PREVIEW We are entering this year’s Convention with a couple of major opportunities. The great news is we are united and have plenty of momentum to drive our vision into the future.

Also Inside: Volunteerism • Franchisee Heritage • GAC Report

features 16

GAC Report: Election Results By Dan Gans and Mary Donohue

Republicans are currently celebrating their victory of the White House, Senate, and House of Representatives, which took place on the same night for the first time in nearly 80 years.

The 2017 AKFCF Annual Convention: Join Us In Austin in February! By Kelly Rodenberg

We are entering this year’s Convention (from Feb. 26 to Mar. 1, 2017) with a couple of major opportunities. The great news is we are united and have plenty of momentum to drive our vision into the future.

Volunteerism: A Culture of Giving Back By Lori Murray

This year, we’re featuring both a KFC franchisee and an employee whose altruistic efforts and generosity are making a significant impact on the people and communities where they live.

44 Franchisee Heritage: Handing Down The Traditions

By Tom Slater

12 In the News

56 CARIBLA Report By Zaira Guevara

58 KFC NPC Report By Dale Black

60 RSCS Member Programs By Lindsay Krebs

62 Beverages Report By Jody Luihn

63 Leadership Development By Joan Bowling and Noah Hummerding

64 Partnership Survey Committee By Alessio DiFranco

66 By Mary Beth Hamilton

68 Executive Director Update By Kelly Rodenberg

70 Legal Update

By Michelle Hunt

By Ron Gardner

72 Looking Back

NCAC Report

Regional Short

From the Editor

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For many, the memories of franchisees’ children growing up around KFC restaurants evokes strong emotions. Continuing in the family business is something that just comes naturally.

departments

By Paul Gereffi

departments

Convention is a time to work hard and play hard. Engage in the business sessions, enjoy our vendor shows, absorb the vision and make your voice heard. Join us for the social activities and have fun in this incredible city. You’ve invested time and money to get there, now make this Convention your own. See y’all in Austin! Read the full story beginning on page 20.

President’s Report By Greg Atwell

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Momentous Changes 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.

By Michelle Hunt

AKFCF EDITORIAL TEAM AKFCF President Greg Atwell Editor Michelle Hunt Assistant Editor Julie Mantlo Editor Emeritus Jeanine Bagshaw Darlene Pfeiffer AKFCF Administrative Director Debbie Newton Communications Chair Kevin Schlutz Past President Chris Fowler

Here we are again…preparing for our next family reunion, the 2017 AKFCF Convention in Austin, Texas. I really wish sometimes life would slow down because I can’t believe we’ve said goodbye to 2016 and hello to 2017. It has been a whirlwind year once again with the election taking center stage; but on a personal note, somehow my oldest son has less than a semester left of high school and we’ll be packing him up for Iowa State University in a flash. My youngest somehow became a middle schooler, tearing up the basketball court then switching gears for winter baseball practice and going to school in there somewhere too. I’m beginning to hear “Pomp and Circumstance” playing in mind and I’m not sure how we got here so fast. Well, clearly there’s going to be some tears of pride and joy in my near future, but there also have been other momentous changes this past year. The country elected Donald Trump in November and he has now officially become our 45th president despite protests, ridicule, and rioting. One thing is certain, there will be a lot of change in 2017 from a political standpoint, and I’m anticipating what will be accomplished in his first 100 days in office. On a much more somber note, on the second-to-last day of 2016 our family had to say goodbye the patriarch of our family—Robert (Bob) Schlutz—and the one who initiated our KFC journey. I would not be writing to you or have the profession I have now if he hadn’t shaken hands on a KFC franchise in Galesburg, Ill., in 1968. As we reminisce over 2016 and sigh in relief that the election is over (especially here in Iowa where it was at least a threeyear ordeal), we hope you enjoy looking 4

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forward in our preview of the 2017 AKFCF Convention coming up in February. Start planning your days as you read through the article starting on page 20. But we can’t close the door on the election just yet because our GAC gives us a brief summary and a look at a potential, short-term path forward. We follow that with some heartwarming stories of giving back in “Volunteerism: A Culture of Giving Back” on page 34 and “Franchisee Heritage: Handing Down The Traditions” on page 44 that shares a common practice among franchisees to hand down businesses to the next generation. As a “Third-Gen,” I always love hearing these stories from our KFC family. If you have not made your plans to attend the 2017 AKFCF Convention, what are you waiting for? As you will see in our preview article, there are ample chance for business building, networking, as well as straight-up fun to be had while enjoying your fellow KFC family members and learning from each other. There’s still time to join us! And for those who have already made plans to attend, don’t forget to bring a new book or toy for the children at Shriner’s Children’s Hospital that we will be donating in lieu of a community service event. You can drop it off right at registration! I look forward to seeing many of you in Austin and am excited to continue to the turnaround of this great brand that has built families and communities, mine included. In 2017, let us all reflect on our blessings and create positive change in a country filled with so much violence and division. God bless! 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 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 ©2017 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, 678-293-5201 aileen@lionhrtpub.com Sharon Baker, 813-852-9942 sharonb@lionhrtpub.com Reprints Kelly Millwood, ext. 215 kelly@lionhrtpub.com

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A Look Back At The First Half Of Greg’s Presidency 6

By Kelly Rodenberg

Editor’s note: At roughly the halfway point of Greg Atwell’s term as AKFCF president, the staff of AKFCF Quarterly asked Executive Director Kelly Rodenberg to sit down with him to examine his term, to preview the second half of his presidency, and to talk about the upcoming Convention. What follows is their conversation.

Kelly: What have you learned during your term as president that you can pass on to the next president? Greg: Delegation and continued follow-up are critical to keep on top of all of the committees and projects. K: What have you most enjoyed during the first half of your term as president? G: The overall experience has been great. Meeting and interacting with each of the regions and their franchisees has been very rewarding. Seeing old friends and making new ones across the country. K: Of all your achievements in the KFC System, of which are you the most proud? G: The partnership with the NCAC, RSCS, and KFCC and the multiyear agreements we now have. K: Do you have a favorite compliment that you have received in your role as president? G: I think the statement that has been made to me most is “You seem happy and relaxed. It does not seem the pressure is getting to you.” I am thankful to have a great team at home that makes this possible. 8

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TAKE the LEAP! The experience is

PRICELESS! There is no way to MEASURE how MEANINGFUL this is for our SYSTEM and how FULFILLING this has been for my FAMILY and me.

K: As you look forward to the second half of your term, what are you concentrating on? G: Continuing to get the subcommittees functioning smoothly, continuing to enhance AKFCF communication, and currently making the Convention a great success. K: Given the level of responsibility as AFKCF president, which personal qualities of yours have been the most helpful? G: I think the ability to communicate with all types of people.

K: What surprised you the most after attending the fall regional meetings? G: How disconnected some franchisees still are over the role of the AKFCF and the lack of participation in many regions. K: How do you think this year’s Convention will be different from those in the past? G: I believe the work done on the agenda through the planning committee, task force, and you and I, will pay benefits to excite people for the upcoming Convention. K: Do you think that Donald Trump will have a positive impact on our industry and Brand? G: Not Trump personally, but the policies he brings to the country are positive for small business and the growth of the quick-service industry and the Brand. Disposable incomes should increase for most people in the country. K: What would you say to those members who are on the fence about becoming AKFCF president? G: Take the leap! The experience is priceless! There is no way to measure how meaningful this is for our system and how fulfilling this has been for me and my family. w ww. akf c f . c o m

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N C AC

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We Have Made A Lot Of Progress 6

By Tom Slater, NCAC Vice-Chair

It’s that time of the year again when we look back at our accomplishments, as well as try to identify what went wrong with mistakes that didn’t work out the way we planned. The NCAC and KFC system have made a lot of progress during the past year. 1. TEN STRAIGHT QUARTERS OF SAME-STORE SALES GROWTH. I can’t remember the last time we were able to celebrate such consistent and continued growth as a system. We set out on a journey to turn this great Brand around in early 2014, and we continue to see solid results from our efforts.

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2. The American Showman Acceleration Program is underway. Your NCAC representatives will be the first to admit this program has not gone as smoothly as we would have liked, but we are working closely with KFCC to get this important program back on track. With about 100 restaurants already remodeled, we are seeing very strong results in both transaction and sales growth. 3. Even with remodeling restaurants, it’s clear that we must start opening more restaurants than we are closing. We worked closely with

KFCC to develop a New Build Incentive Program that provides a rebate on royalties and advertising contributions for 30 months. 4. We “Recolonelized” our signature Original Recipe chicken, and customers noticed. Our product taste and quality scores have increased, and our overall satisfaction ratings are up. 5. We moved our value scores for the first time in many years with $5 Fillups; $20 Family Fillups; and more recently, $10 Chicken Share, all offerings with reasonable food

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and paper costs and an attractive consumer proposition. 6. We introduced a simple to execute new product that our customers loved (especially the elusive millennials) and paid a premium price for—Nashville Hot Chicken!

Those are just a FEW of

7. Our advertising and marketing efforts created consumer excitement and buzz—Extra Crispy Sunscreen even sold for $300+ on Ebay—resulting in KFC being named one of the top two advertisers this year.

PARTNERSHIP

Those are just a few of our “wins” that came about because of the unprecedented partnership

our “WINS” that came about because of the

UNPRECEDENTED between KFCC and

FRANCHISEE LEADERSHIP on the NCAC and AKFCF.

between KFCC and franchisee leadership on the NCAC and AKFCF. And we are winning at the expense of our competition! For a look at the third-quarter competitive results, see the chart at the bottom of page 10 We don’t doubt that the next year will be tough— accelerating the remodel program, getting new units in the ground, and rolling over strong sales growth won’t be easy. But we believe we have the right marketing calendar—with two new product launches and ongoing support for our core business—and the right leadership to continue our journey to making this Brand great again. I wish you all a peaceful and prosperous New Year. See you in Austin!

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KFC launches ‘hilarious’ football game on Instagram Instagram might be thought of as primarily a place for pictures, clips and captions, but brands are now experimenting with using the Facebook-owned social media platform as a new way of gaming. KFC will launch “Colonel Sanders’ Kentucky Fried Chicken Football Challenge,” where Instagrammers can “play” on an American Football field across different animations on the social media platform. The game tags Instagram accounts, which players can click on to reach a new stage. It’s also a way for the Brand to get more followers and likes without having to pay for advertising or sponsored posts. George Felix, director of advertising for KFC US, said in an emailed statement: “As the football season comes to an end, we wanted to create a unique gaming experience that combines everyone’s love of football, fried chicken, and social media.

The Kentucky Fried Football Frenzy utilizes Instagram’s native features in a creative and hilarious way that hopefully entertains fans for hours on end.” KFC has been posting about the NFL season since it kicked off in September, and has been working with agency Wieden + Kennedy on the Instagram football game since fall 2016. It has previously used its @KFC Instagram account to highlight news of the “World’s first inflatable KFC franchise” and showed a woman being hugged by a giant piece of fried chicken on New Year’s Day. While Instagram isn’t a traditional gaming platform, other brands have used it to encourage interaction from followers. Reebok used it to get people to “Hunt for the pump” in 2015, where users were invited to like and follow a tag

on certain images to be in with the chance of winning a pair of ZPump sneakers. KFC did not give specific details of how it would measure the success of the football initiative, but a spokesperson told CNBC via email: “We love to do innovative, unexpected things on platforms that our fans enjoy, like Instagram. Success to us is using platforms (in this case Instagram) in unique ways that engage our fans where they are.” Source: CNBC

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 COGS – Cost of Goods Sold CREST – Consumer Reports on Eating Share Trends CSTM – Customer Service Team Member DMA – Designated Marketing Area FA (Or F/A) – Franchise Agreement FIT – Food Innovation Team 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

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NFAC – National Franchisee Advisory Council (merged with NAC to become NCAC) NMS – National Marketing Subcommittee NPC – National Purchasing Cooperative (i.e., KFC NPC) NPS – Net Promoter Score OEC – Operations Excellence Committee PAC – Political Action Committee POP – Point of Purchase POS – Point of Sale QSR – Quick Serve Restaurant RAF – Refer a Friend REC – Restaurant Economics Committee RGM – Restaurant General Manager RMI – Restaurant Margin Improvement ROCC – Restaurant Operations Compliance Check ROI – Return on Investment ROMI – Return on Marketing Investment RRP – Restaurant Ready Process (aka The Model) RSC – Restaurant Support Center RSCS – Restaurant Supply Chain Solutions (formerly UFPC) SBRA – Supplier Business Relationship Agreement TCB – Technology Capability Builder (the KFCC support team for Merit installations) TOL – Territory Operations Leader TPWY – Taking People With You TRP – Targeted Rating Point VOC – Voice of the Customer (formerly CBCC) WAR – Weekly Activities Report YUM – Yum! Brands YRI – Yum! Restaurants International w ww. akf c f . c o m

North Carolina KFC honors coupon from 1986 One Marion, N.C., man got himself a “finger lickin’ good” deal by holding on to a 30-year-old coupon. Back in 1986, Paul Boyd got a coupon at the Kentucky Fried Chicken restaurant on Rutherford Road, which is now Eddie’s Pizza & Pasta. This coupon made him a member of the Tuesday Special Club and it bears the likeness of Col. Harland Sanders, the chain’s founder. By presenting this coupon, you could get a three-piece meal on any Tuesday for the low price of $2.59. The customer would present it at the eatery and it would be punched for every time it was used. And it could only be used at KFC restaurants in Marion, Boone, West Jefferson, North Wilkesboro, Morganton and Albemarle. The expiration date was Dec. 31, 1986. Rather than discard it, Boyd held on to this coupon long past the expiration date and kept it in his wallet for the past 30 years. “It’s been kind of a conversation piece since then,” he said. “My wife says I never throw anything away.” In addition to his regular job at West Rock, Boyd, along with his wife Marian, are the pastors of His Place Worship Center, located at 1423 U.S. 70 West. Boyd said he got to joking about how pastors love chicken, especially fried chicken. A couple of weeks ago, he took a good look at this old coupon in his wallet and noticed it had an expiration date of Dec. 31, 1986, which was 30 years ago. “I just saw the date and I thought it was neat,” he said. “Thirty years ago, KFC was the only show in town.” There was no Bojangles or Zaxby’s back then, he added. “I thought about how much different Marion looked 30 years ago,” said Boyd. He also knew that the Kentucky Fried Chicken restaurant located off N.C. 226 South and next to Love’s Truck Stop was going through an extensive remodeling, like other local fast-food eateries have done.

Customer Paul Boyd, center, holds his 30-year-old KFC coupon along with Restaurant General Manager Chris Chappell, left, and Assistant Manager Paul Platt. Photo: Mike Conley/McDowell News

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“They are renovating there to change with the times,” said Boyd. So, he went to that KFC to see if they would redeem his worn three-decade-old coupon. He showed it to the manager and sure enough, the restaurant honored it. “We’re always going to honor any [KFC] coupon that comes across our path,” said Assistant Manager Paul Platt. Platt said a similar meal today would usually cost $8.53. Right now, the lobby and inside dining area at that restaurant are closed as extensive remodeling is underway. But the kitchen and drive-through are still open for business. Restaurant General Manager Chris Chappell said the KFC on N.C. 226 South will have a different exterior and interior once the remodeling is completed by mid-January. It will be similar to what was done to the one in Morganton. This KFC building is around 12 to 13 years old and covers approximately 3,000 square feet. Both KFC locations in Marion

are owned and operated by Fulenwider Enterprises, based in Morganton. The new Kentucky Fried Chicken on N.C. 226 South will have booths and a family table in the middle. The buffet will no longer be there. The restrooms will be redone as well. “The outside will be totally different,” said Chappell. He added that Marion’s other KFC restaurant, located at 96 U.S. 70 West, will go through a makeover as well in the near future. “We’re trying to stay current with the times,” said Platt. “We’re trying to make it convenient for the customers.” Source: Winston-Salem Journal

Meet Donald: KFC Family Fund in action In June 2016, torrential rain caused flooding in West Virginia and parts of nearby Virginia. Twenty-three people lost their lives and

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KFC Team Member Donald Blake.

thousands more were affected. KFC Team Member Donald Blake was one of those people. The water got as deep as 16 inches inside Donald’s Covington, Va., home, where he lives with his wife and step-daughter. It took two days for the water to recede and, after that, mud and debris caked the home, making it unlivable. The damage was extensive. Donald applied for assistance through the Kentucky Fried Chicken Foundation’s KFC Family Fund, which is a crisis assistance program for KFC restaurant employees. He received money that helped get things back to normal. “I just received a check from the KFC Family Fund. It was a very generous amount. Thank you, thank you, thank you so much,” said Blake in a note to the Foundation. “My eyes watered up and I cried like a baby—tears of joy, not sadness. This will help Sherry and I get back on our feet and back to where we were before the dreaded flood. From the bottom of our hearts, thank you!” Since its launch in December 2015, 27 KFC families have received $40,000 in assistance via the KFC Family Fund. For more information, visit KFCFoundation.org. Source: Yum.com w ww. akf c f . c o m

THE

CONDOLENCES Nancy M. Mook, 86, of Valrico, Fla., passed away on Oct. 3, 2016. She was preceded in death by her husband, Phillip G. Mook, and is survived by her son, Christopher Mook; daughters, Pamela Gorbics and Jennifer Mook; sisters, Joyce Jones and Barbara Welch; and four grandchildren. Phil and Nancy opened their first KFC in 1963 and she remained fiercely proud to be a part of this great company until her last day with us.

WORST JOB

Charles James Wentz, Sr. passed away at the age of 95 on Oct. 7, 2016. Charlie was a past president of the Southeastern KFC Franchisee Association (1973-74). Before getting into the restaurant business, Charlie spent 20 years in the U.S. Army, retiring as a Lt. Colonel after tours of duty in both WWII and the Korean War. In 1969, Charlie became president of Scottish Foods Systems, where he was involved nationally with the Hardees, KFC, and Pizza Inn franchises. His leadership with this corporation earned him the nickname of “The Colonel,” which was enjoyed by the real Colonel Sanders on a number of occasions. Charlie “officially retired” after 16 years with this company, but continued making pizza and chicken deliveries to community newcomers for years. Owen D. Harris, 82, of Valdosta, Ga., passed away Oct. 20, 2016. Owen joined the KFC family in 1965, opening his first restaurant in Valdosta. He would eventually own four restaurants and work as a franchisee for more than 50 years. Owen was very active in the community. A member of the Chamber of Commerce for more than 50 years, he served as president of the chamber in the mid-1980s. He also served as president of the Southeastern KFC Franchisee Association and as president of the Valdosta Country Club. Survivors include his wife of 55 years, Nelda Harris; his son, Tim Harris and his daughter, Marsha Harris, all of Valdosta

IS NOW

NO JOB!

Long-time franchisee Don De Laria passed away on Dec. 11, 2016. Donald George De Laria, was born in Minneapolis, Minn., on March 5, 1943. He became a fixture at Camp Lincoln and later an accomplished inland sailor of C-boats. Don and his father became the first KFC franchisees in Minnesota, bringing pressure cooked chicken initially to their De Laria’s restaurant and then opening the first free-standing KFC in Minneapolis, at 25th and Hennepin Avenue. Don would go on to become one of the longest tenured KFC franchisees in the system with nearly 60 years of experience. While good fortune eventually resulted in Don and his family owning and operating eight KFC restaurants, the family presently operates one KFC in Wayzata, Minn. Janet Kuhn, director of training execution for Yum! Brands/KFC, passed away suddenly December 19. She was 54. Janet was a valued member of the KFC family with more than 27 years of dedication to the Brand. Her leadership and presence at the RSC and in our restaurants will be missed. A memorial scholarship fund with the Kentucky Fried Chicken Foundation has been established in Janet’s memory— the Janet Kuhn Scholarship Fund. Through the generosity of two franchisees, Chris Fowler and Pete Wasilevich, and KFCC, the scholarship is currently funded at $15,000. An additional $15,000 has been pledged as matching funds for added contributions. If you’d like to make a donation to the Foundation in honor of Janet, visit kfcfoundation.org for more information. Former AKFCF President Robert (Bob) Schlutz, 80, died Friday, Dec. 30, 2016, in Sarasota, Fla. Bob—who served as AKFCF president from 1984-85—was involved in many different business ventures and associated activities. Bob and his family were always quick to help out with needs they saw. They donated to many community activities, including the Civic Center/Library, establishment of the Colonel’s Kids Childcare Center, the Louisa County Fair Youth Center and Grandview Academy Park Shelter House, as well as the Blue Ribbon Foundation, University of Iowa, and the Iowa Foundation for Agricultural Advancement. Bob and his wife, Marillyn, became franchisees in Iowa and Illinois in 1968. Their son, Kevin, now owns and operates the family’s 16 restaurant operation.

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ELECTION

Results By Dan Gans and Mary Donohue

he world on Capitol Hill has changed dramatically and Donald Trump is our 45 th president, taking the oath of office on Jan. 20, 2017. Republicans are currently celebrating their victory of the White House, Senate, and House of Representatives, which took place on the same night for the first time in nearly 80 years.

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Photo Courtesy of 123rf.com | Iacob Bogdan-Forin

G AC R E P O RT

It is safe to say that nobody predicted such an overwhelming victory for Trump in the Electoral College. He won perennial swing states such as Florida and Ohio; he won Pennsylvania, a state that has evaded many previous Republican candidates for decades; and he won Wisconsin, a left-leaning state supposedly safe for Clinton. Polling data significantly miscalculated the support for Trump throughout the cycle; except for one or two, which had him polling steadily above Clinton on the campaign trail. Some of the inaccuracy has been attributed to a decrease in home phone lines (making it harder for pollsters to collect data) as more and more Americans rely on their cell phones as a primary source of communication. Additionally, the introduction of the do-not-call list has contributed to inaccuracy in the polls as well. Trump’s unexpected strength in key states carried several Republican lawmakers to victory. Among them were wins for Sens. Ron Johnson (R-WI), Richard Burr (R-NC), and Pat Toomey (R-PA), who each held off strong challenges for their seats. Sen. Mark Kirk (R-IL) lost to Tammy Duckworth and Sen. Kelly Ayotte (R-NH) conceded to Maggie Hassan in New Hampshire. Rep. Todd Young (R-IN) defeated Evan Bayh for an Indiana Senate seat and Catherine Cortez Masto defeated Rep. Joe Heck (R-NV) for a Nevada Senate seat. In the House, the Republicans escaped what could have been a slaughter with only six incumbent seats lost; the projected loss was approximately 10-15 seats at least. Currently, the Democrats hold 194 seats and the Republicans have a vast majority with 241 seats. The Republicans have maintained a strong hold of the

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House and Speaker Ryan, in his address to the public post-election, expressed how happy he is with the election results and that he’s looking forward to working toward unity in this cycle.

Path Forward Like the rest of us, Congressional GOP staff were surprised by the election. Leadership began the night anticipating President Clinton and Majority Leader Schumer being in charge next year. The surprise of the election results has led to an uncertainty of how things will proceed in the short-term. GOP leadership on both sides of the Capitol are trying to get a sense of what the Trump team wants to do. President-elect Trump has met with Leader McConnell and Speaker Ryan. The expectation is that Congress will pass a 3-month Continuing Resolution (CR) into March. A short-term CR also was endorsed by the House Republican Study Committee Chair, which makes up the largest caucus in the conference. Assuming a short-term CR is the path forward and that it would be the last bill passed in this Congress, the question of what else can be moved during this lame duck period probably boils down to the following: • NDAA (defense authorization); • WRDA (including money for Flint, Mich.); • 21st Century Cures; and • Pension/healthcare bill for mine workers that passed out of the Senate Finance. For more information, please do not hesitate to reach out to your local GAC representative or Mary Donohue (mdonohue@polariswdc.com) at Polaris Consulting.

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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 Bruce 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 Robert Widder

NORTHEAST Ray Aley III John Arsenault Jennifer Arsenault Adil “Eddie” Banani Tony Cameron Tom Cecconi Keith Cole Joe Farley Frederick Gallant Ronald Giles Michael Houston Syed-Talal Kirmani Don Lopes Dale Moulton Scott Peterka Robert Rianna Alex Rosenblum David Rudnick Eugene Skowronski Larry Starkey James Waters David White NORTHWEST Rita Basra

James & Sandra Beglin Manuel Galhandro Jeffrey & Debbie Gray Ralph Harman Jim Olson (Harman) Brett Harris Fred Jackson James Jackson Joseph & Charlene Oleinik Sam Sibert Donald Steinke Todd Stewart William Vollenhals Calvin & Janae White SOUTHEAST Bobby Davis Wiley Dean Eric Felker Chris Fowler Mike Fulenwider Michael Galloway Owen Harris Minton Hester Joseph Kendall C. Doug Knipp

Larue Kohl Doris Lewis Allan Luihn Walter Lyon 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 Shahid Chaudhry Israel Diaz

Patricia McBrayer Robert Prendiville SOUTHWEST Debra Ashmore Greg Atwell Sheila Boespflug Krystal Burge Richard Cahill Rajeev Jain Franklin Nye Doyle Sanders UPPER MIDWEST Dale Black Joan Christenson Robert & Sharon Clawson Margaret Duenow Peter & Holly Helf Michael Kohlman Michael Kulp Terry Moffit Kevin Schlutz Susan Schmidt Doug Smith Justin Stewart Pete & Mary Wasilevich

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2017 CONVENTION PREVIEW

Join Us In

Austin

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

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February! The 2017 AKFCF Annual Convention is just around the corner.

By Kelly Rodenberg

e are entering this yearâ&#x20AC;&#x2122;s

Convention ( f r o m F e b . 26 t o M a r . 1, 2017) w i t h a c o u p l e o f m a j o r o p p o rt u n i t i e s . T h e

g r e at n e w s i s w e a r e u n i t e d a n d h av e p l e n t y o f m o m e n t u m to d r i v e o u r v i s i o n i n to t h e f u t u r e .

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Above: The famus “Greetings from Austin Mural” at Roadhouse Relics. Photo: Austin Convention & Visitors Bureau.

You know the saying that “everything is bigger in Texas.” In many ways, that is true, including this year’s AKFCF Annual Convention. Join us in Austin, Texas from Feb. 26 to Mar. 1, 2017 for what promises to be an unforgettable event. We’re featuring more workshops to help you gain insights into how to better run your businesses. We have a guest speaker who is in the NFL Hall of Fame. And we have more networking events scheduled this year, including a Texas Shindig at Austin City Limits with musical guests Little Big Town. See…everything is bigger! So gather up your posse and mosey on down to Austin. We’ll be waiting for you at the JW Marriott & Austin Convention Center where you’ll be guaranteed to learn a lot and have a great time with your AKFCF family. You have worked hard and had a great year, so it is time to celebrate! Make sure you are front and center at the opening General Session to hear more from AKFCF President Greg Atwell on how we can better unite as franchisees, as a Brand, and as a family! On day one of General Session, Jason Marker, KFCC President, and members of the KFCC leadership team will provide an update on our key achievements in 2016,

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as well as reinforce the clear vision and strategy that is fueling KFC’s brand turnaround. They will share results from our marketing, operations, and development efforts, and reveal more about our exciting menu innovation work—including the Zinger launch and beyond, and how we’ll continue to drive business results and achieve our goal to be number-one in taste. On day two, we present you with a keynote address by two-time NFL defensive player of the year, Super Bowl Champion, NFL Hall of Fame Inductee, and former 49ers Head Coach, Mike Singletary. He will show us that drive, focus, loyalty, and faith are unmatched assets in sports and life. This great player, motivator, and true believer will coach us on how to be the number-one winning team! If you have time before or after the Convention, be sure to check out some of the culture and entertainment that Austin has to offer. The city is unmatched for live music; after all, it is known as the “Live Music Capital of the World.” Austin is home to more than 250 music venues, as well as a vibrant arts scene. The city hosts a wonderful ballet, world-class museums, one-of-a-kind shopping, and beautiful outdoor spaces. There is plenty to see and do, no matter what your tastes may be.

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Above: Palmer Event Center Photo: Thomas McConnnell.

WORKSHOPS Our comprehensive approach to the workshops involves all levels of our system to develop an aligned culture, which ensures maximum buyin and positive change. AKFCF and KFCC have created a lineup of workshops to help you think differently as we communicate fundamental business concepts and share real-world examples from within our own restaurants. It’s a combination of hardproven data and personal experiences that reveal the true approach to help you thrive. We support your continuous improvement efforts by providing the tools, assessments, and training to ensure the momentum from these workshops is sustained over time.

KFCC Sponsored Workshops SUNDAY, FEBRUARY 26 1:00 p.m. – 5:00 p.m. (Each of the following workshops will be presented three times.)

The Road to NumberOne in Taste We have set a solid foundation with our “Re-Colonelization” efforts, including well-trained team members, clear and concise standards and processes, improved Original Recipe, better guest service, and the Colonel Quality Taste Guarantee. As our Winter 2 016

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journey continues, learn what steps we are taking to sustain Re-Colonelization, as well as RGM simplification results and initiatives that your restaurants can adopt to help achieve our goal to be number-one. Offered from 1:00 p.m. – 2:15 p.m., and 2:30 p.m. – 3:45 p.m., and 4:00 p.m. – 5:15 p.m.

Building the Brand with American Showman Assets

Above: Boots at Bullock Texas State History Museum. Photo: Bullock Texas State History Museum

Growth is critical to achieving our Brand vision. Learn about how you can turn your interest in a trade area from an idea to reality, and how KFCC will support your efforts throughout the process. Also, get an updated look at our remodeling efforts and gain insight into the latest developments from the KFC American Showman Acceleration Program (ASAP). Offered from 1:00 p.m. – 2:15 p.m., and 2:30 p.m. – 3:45 p.m., and 4:00 p.m. – 5:15 p.m.

bottom-line and KFC’s reputation. Learn about the types of public crises that can occur, and what to do if it happens in your restaurant. You’ll all find out more about how KFCC is monitoring social media for the Brand with its revolutionary “Coop,” and our future plans for ensuring the protection of KFC’s reputation. Offered from 1:00 p.m. – 2:15 p.m., and 2:30 p.m. – 3:45 p.m., and 4:00 p.m. – 5:15 p.m.

Protecting Our KFC Brand in Today’s Social Media World

Unrivaled Talent: Empowering RGMS to Attract, Develop, and Engage

In today’s social media world, even the most prepared businesses can suffer from digital disasters and crises. Bad reviews, unfavorable news (or social media) coverage, and public embarrassments can be damaging to your

(This workshop will only be presented one time.) Need help recruiting and retaining top talent? Then don’t miss this workshop to learn about tools to attract, develop, and engage culture champions. We will demonstrate how to get the most out of hiring technologies and share our path to improved solutions. Through interactive discussions, we’ll review our capability training and career development tools. Finally, learn how to bring our People Promise to life and engage your teams with a winning restaurant culture where satisfied guest and profits follow! WEDNESDAY, MARCH 1 9:00 a.m. – 10:30 a.m. (This workshop will only be presented one time.)

How to Build Great Sales & Maximize Profitability Join this ARL-specific session to learn how to achieve Best on Block results in your trade area. See what’s available to help maximize your sales and profits, and manage food cost, labor, and semi-variables with new and improved tools. Left: JW Marriott Austin Capitol View Terrace. Photo: JW Marriott Austin

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IT’S MAKING

A SPLASH! BOTTLED WATER IS PROJECTED TO SURPASS SOFT DRINKS IN 2017

76%

OF THE KFC SYSTEM IS SERVING AQUAFINA®; AVERAGING 1 CASE PER WEEK

CONSUMERS PREFER BOTTLES VS. FOUNTAIN FOR OFF-PREMISE USE

RESTAURANTS THAT OFFER VARIETY DRIVE INCREMENTAL VOLUME BY SATISFYING MORE CONSUMER OCCASIONS TOTAL RESTAURANT SALES FOUNTAIN ONLY

RESTAURANT’S BEVERAGE PROFIT FNT + DOLE® + 1.5L + AQUAFINA®

RESTAURANT’S BEVERAGE PROFIT

ESTIMATED PROFIT DIFFERENTIAL

>$1.2MM

$800M-$1.2MM

<$800M

$147M

$90M

$63M

$168M

$105M

$76M

*+14%

*+17%

*+21%

$21,000

$15,000

$13,000

CONTACT YOUR PEPSI NASM FOR ADDITIONAL INFORMATION Winter 2 016 g A KFCF Q uar te rl y PEPSI, the Pepsi Globe, MTN DEW, the MTN DEW Logo, the Mtn Dew Landscape and AQUAFINA are registered trademarks of PepsiCo, Inc.

2017 CONVENTION PREVIEW

Legal Update

WORKSHOPS SPONSORED BY AKFCF MONDAY, FEBRUARY 27 2:30 p.m. – 5:30 p.m. (Each of the following workshops will be presented three times.)

Leadership Workshop With Justin Patton How do you need to disrupt your life today so you can achieve all that you are capable of tomorrow? Justin Patton is an international speaker and communication skills coach who will teach you the necessary skills and tools that force you out of your old patterns of thinking so you can lead and communicate with stronger impact and credibility. His high energy will keep you entertained and his personal stories of both struggle and failure will challenge you to think different about how you lead, work, and love. Offered from 2:30 p.m. – 3:30 p.m., and 3:30 p.m. – 4:30 p.m., and 4:30 p.m. – 5:30 p.m.

A lot has changed since last year’s Convention. Franchisees have been asked to sign construction agreements and finance agreements. Your Contracts and Facilities Committee has been reengaged by KFCC on a number of issues and initiatives. And whether you have realized it or not, KFCC is no longer your franchisor; your franchisor is a new company known as KFC US LLC. Come learn about all of these changes from AKFCF General Counsel, Ron Gardner, as he shares his wit and wisdom about what has happened—and what is happening—in the KFC world in which we all live. As Ron likes to say, “Come for the joke, stay for the information.” Offered from 2:30 p.m. – 3:30 p.m., and 3:30 p.m. – 4:30 p.m., and 4:30 p.m. – 5:30 p.m.

1-800 Program…NOT Just a New Partner Your guest recovery program has changed more than just vendors! Come learn how Market Force is enabling you to recover even more guests than ever before and what you can do to rebuild trust with our guests. Offered from 11:00 a.m. – 12:00 p.m., and 12:15 p.m. – 1:15 p.m.

Perfect Finish! ANY MEAL! FOR

Lemon & Double Chocolate Chip Mini Bundt & 16oz Bundt Available

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WEDNESDAY, MARCH 1 11:00 a.m. – 1:30 p.m. (The below workshops will be presented twice.)

Emerging Trends in QSR Asset Protection Learn how to better manage your liability from employee and guest claims, along with a special conversation about how to act on your loss prevention data. Offered from 11:00 a.m. – 12:00 p.m., and 12:15 p.m. – 1:15 p.m.

Establishing a Personal Board of Directors for Your Life Consciously or subconsciously, we all have a “Life’s Board of Directors”— people who help steer us through our most difficult moments. This workshop will help you identify your board members, define their scope of influence, and recognize their contributions. Offered from 2:30 p.m. – 3:30 p.m., and 3:30 p.m. – 4:30 p.m., and 4:30 p.m. – 5:30 p.m.

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Auspex Capital Industry Expert and Trusted Advisor Above: Austin Convention Center Photo: Thomas McConnell.

AKFCF VENDOR SHOWCASE

We specialize in the QSR industry and are one of the most active financial advisory and investment banking firms in the industry. We are very active in the KFC system having raised more than $500 million in financing, and advised on 20 M&A transactions involving more than 200 restaurants. We have unparalleled deal making expertise maximizing value for our clients by bringing to bear superior analytical abilities, creativity, experience, and attention to detail.

The AKFCF Annual Convention is host to what is considered the best and most widely attended trade-show for our KFC System. With more than 250 exhibits, you will be able to discover this year’s showcase of cutting-edge products and services. Take full advantage of everything the trade show has to offer by seeking out new vendors, catching up with current business partners, and viewing demonstrations of the latest creations. This year’s trade show will be held in the Austin Convention Center, which is just steps away from the host hotel, the JW Marriott. We kick off the Convention with our Welcome Reception on Sunday evening from 5:30 p.m. to 8:30 p.m. in the Trade Show. Enjoy an evening with our vendors among live music, local food truck fare, and ice-cold beverages.

How Our Services Can Help You: Franchisee of

36 Units Sell-Side M&A Advisory

Franchisee of

8 Units Buy-Side M&A Advisory, Debt Placement and Development Line

Franchisee of

Below: Pedicabs in Austin Photo: Geoff Duncan, Austin Convention & Visitors Bureau.

Sell-Side M&A Advisory We helped a client, who is a veteran Yum! Brands franchisee, sell 36 KFC, Taco Bell and KFC/Taco Bell co-branded restaurants to a buyer who operates one of the largest and most successful Yum! Brands franchises in the U.S.

24 Units

Buy-Side M&A Advisory / Debt Placement We advised a long-time client on the acquisition and ﬁnancing of eight restaurants. The assignment involved securing acquisition ﬁnancing and a recapitalization of his balance sheets, including a development line of credit to fund remodels and develop new stores.

Sell-Side M&A Advisory We helped a company, who is a long-time Yum! Brands franchisee, sell 24 KFC and KFC/Taco Bell co-branded restaurants, including the underlying real estate at 20 restaurants.

Sell-Side M&A Advisory

Contact us today for a free evaluation of your business. Christopher Kelleher Managing Partner (562) 424-2455 ckelleher@auspexcapital.com

www.auspexcapital.com

F I N A N C I A L A D V I S O RY

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AND

INVESTMENT BANKING

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NETWORKING EVENTS MONDAY, FEBRUARY 27 7:00 p.m. – 10:30 p.m.

Texas Shindig at Austin City Limits The AKFCF is proud to bring the 2016 CMA Vocal Group of the Year, Little Big Town, to our stage at Austin City Limits. Little Big Town was founded in 1998, and has since grown to become one of the most successful country music groups around. Their top hits include “Pontoon,” “Girl Crush,” “Boondocks,” “Bring It On Home,” “Little White Church,” “Tornado,” and “Day Drinking.”

At past Conventions, there always has been a formal Final Night gala with a sit-down dinner, presentations, and live entertainment held at the host hotel. Take note: times are changing! This year, we are taking you just two-blocks away from the hotel to historic Austin City Limits. Please make sure to sign up for the event when you register online because a ticket with your name printed on it will be provided to you onsite when you check-in. You will need to bring this ticket with you to Austin City Limits to enter. Once you enter Austin City Limits, you will notice that the setting is not laid out like previous functions you have attended at an AKFCF Final Night. It will have the feel of a concert setting. There are two levels, and seating will be made up of round banquet tables, hi-top bar tables, and theater seating. Bars will be located on both levels and servers will be ready to make your favorite cocktail! Food stations encompassing some of Austin’s local favorites

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

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will be located throughout the venue. We also will have servers circling the floors with some tasty hors d’oeuvres so you always will have a bite in hand. This year, the Convention Committee has selected Shriners Hospitals for Children as the organization to receive half of the proceeds from the AKFCF auction. Like last year, the GAC will again receive the other 50 percent. The auction will take place just before Little Big Town performs. Little Big Town and our keynote speaker, Mike Singletary, will be providing items for the live auction. And of course, the GAC will be collecting some great items for you to bid on. We will not be holding a hands-on community service event this year at Convention, so this year, we are asking all attendees to bring a children’s book, stuffed animal, or small travel-size activity/game that a child can enjoy while in the hospital. We will be donating these items to the two Shriners Hospitals for Children located in Texas. The children range in age from toddler to high school. The Hospitals ask that we donate only new items so we are not spreading germs to sick or hurt kids. Shriners Hospitals for Children is a 501(c)(3) nonprofit organization and relies on the generosity of donors. All donations are tax-deductible to the fullest extent permitted by law. Please open your hearts and remember to bring an item with you to Convention. We will collect them in the Registration Area when you arrive on-site. So don’t forget to sign up for this special private performance by Little Big Town at Austin City Limits. It will be a night to remember of pure fun, live music, good food and giving to a cause that is all close to our hearts.

Backed by the ACP, Inc. 24/7 ComServ Support Center 1-866-426-2621 www.acpsolutions.com

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WEDNESDAY, MARCH 1

Ray Zimmerer Memorial Golf Outing Omni Barton Creek—Crenshaw Cliffside Course 11:00 a.m. – 6:00 p.m. When Austin native Ben Crenshaw and fellow golf course architect, Bill Coore, designed this links-style course, they focused on the natural beauty of the Texas Hill Country. Especially evident is Ben’s design philosophy that, “The best architect is nature and the best players’ courses make good use of the natural terrain.” Cliffside offers generous fairways, but challenges golfers with their approach to large, wellcontoured greens. The balance makes Cliffside a golf course that is both forgiving for the beginner and challenging for the seasoned golfer. Play with your friends, colleagues, vendors, and leaders of your franchisee association and KFCC. The tournament is limited to 144 players. The registration deadline is January 26, 2017. Winter 2 016

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Closing Celebration at Speakeasy 7:00 p.m. – 10:00 p.m. (SOLD OUT – Waiting list available)

Above: Austin skyline Photo: Jean-Michel Dufaux.

The Clear Choice in Food Packaging.

This year, bring your AKFCF Annual Convention experience to a close at one of Austin’s prestigious and legendary music venues. Speakeasy is composed of three levels; the Music Lounge, the Bowling Mezzanine (which overlooks the Music Lounge stage), the Kabaret Room and the rooftop lounge, Terrace59. There is never a dull night at Speakeasy. If you are out to try and catch a glimpse of celebrities that are passing through town in Austin, you have a really good chance here! We invite you to join us at Speakeasy for a casual dinner and a private performance by two of Austin’s best: Jackie Venson and the Matt Wilson Band. Dance up front with the bands or relax in the back with a cold beer. Enjoy the last affair of Convention with your KFC family and friends and raise your glass to toast another successful year. Slip on your comfortable dancing shoes, come hungry, and make some lasting memories during your final night in Austin! Convention is a time to work hard and play hard. Engage in the business sessions, enjoy our vendor shows, absorb the vision and make your voice heard. Join us for the social activities and have fun in this incredible city. You’ve invested time and money to get there, now make this Convention your own. See y’all in Austin!

REGISTRATION For details on how to register and make your hotel reservations, please visit http://www.akfcf.com/convention.html.

UPCOMING DEADLINES: Regular Registration at $250 –January 26

Genpak

Hotel Reservation Deadline – January 31 Attire: Business casual for meetings and casual wear for events.

www.genpak.com 32

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Thank you to all of our sponsors that have generously partnered with us to date. * They include: DIAMOND Pepsi Platinum Dr Pepper LendLease Pilgrim’s GOLD Aryzta AT&T East Balt Bakeries Ecolab Manitowoc+A83 McLane Wells Fargo SILVER Barco Envysion

Georges inc. Koch Foods, Inc. Magnesol XL / Dallas Group O.K. Foods Peco Foods, Inc. Procter & Gamble Rational USA Restaurant Technologies, Inc. Tetley Harris Tyson Foods, Inc. Winston/Collectramatic BRONZE Accuserv Anchor Packaging Bama Companies, Inc Bunge Cafe Valley Bakery Capitol Light

Case Farms City National Bank Claxton Poultry Dart Container Corporation Delphi Display Domino FSV Payment Systems Genpak Global Cash Card Griffith Labs GTT Gycor International Henny Penny Hughes Huhtamaki Idaho Pacific InfoSync Services InterMetro International Paper

Kagome Kraft Mar Jac Poultry Marmon Foodservice Solutions McCormick & Co., Inc. PAR Parapet Studios Payless ShoeSource ServSafe Shamrock Farms Simmons Foods Smithfield Taylor The Hershey Company TransAct Technologies WestRock *Complete sponsors list as of 1/1/17.

Sustaining a green today. The Environmental Protection Agency (EPA) recently recognized Manitowoc Foodservice as a 2016 ENERGY STAR® Partner of the Year. Manitowoc Foodservice’s leadership role addresses climate change through our commitment to providing energy-efficient foodservice equipment to the industry.

Introducing the all new Coolscapes™ with GreenGenius.™ Delfield’s new line of R290 refrigeration based systems.

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VOLUNTEERISM

A Culture of

Giving Back BY LORI MURRAY

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â&#x20AC;&#x153;For me, money is not everything. I was more interested in doing good and helping people.â&#x20AC;? ~ Colonel Harland Sanders Photo Courtesy of 123rf.com | Wavebreak Media Ltd Winter Win ter 2 016

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VOLUNTEERISM

KFC

franchisees are familiar with the concept of

giving back .

T he C olonel

set the stage early on

by establishing a culture of helping people , doing good , and putting others first .

Y ears

later , that

philanthropic culture prevails , with franchisees all across the country working hard to help people and to make their communities a better place .

T his year , we ’ re featuring both a KFC franchisee and

an employee whose altruistic efforts and generosity are making a significant impact on the people and communities where they live .

B oth H eath H arrison T eresa K elly demonstrate what it means to live a kindhearted , unselfish life that is characterized by giving back to those who are less fortunate . W e hope their stories will inspire you . and

Heath Harrison, JRN Heath Harrison is a family man, a dedicated KFC employee and an individual with a heart for helping others. In 1990, just three days after graduating from high school, he started working for JRN, a Tennessee-based Above: Heath Harrison KFC franchisee organization. During the next 27 years, he worked his way up through the ranks to his current position as executive merit administrator, director of Loss Prevention, and ServSafe instructor. Today, despite the frequent travel that comes with working for an organization with 154 restaurants in 11 states, Harrison still finds time to give back to the community where he and his family live.

Helping students and families Harrison is committed to a diverse lineup of philanthropic efforts. For starters, he is about to begin his sixth year as a member of the Buchanan County School Board. Not surprisingly, he is quick to point out that it’s a challenging job, particularly because it’s hard—if not impossible—to please everyone in the community. Various hotbed issues, such as the current conversation surrounding possible consolidation, can make it seem like a thankless job at times. 36

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Despite the challenges, Harrison stays focused on what’s best for the students, and he never stops looking for additional ways to help them. In fact, he spearheads an annual golf tournament to raise scholarship funds, making it possible for each recipient to receive a $500 scholarship to his or her choice of a community college or four-year institution. During the past five years, Harrison’s golf tournament has successfully raised $13,000 in scholarship funds for students. The scholarships are given in honor of Jeremy Evans, a young boy in the community who was diagnosed with cancer and passed away before his senior year of high school. Harrison also recently donated school supplies to Riverview Elementary/Middle School students, an act that made it possible for all students to begin an educationally stimulating school year. Here’s what Principal Deborah Lester said this about Harrison’s donation: “Many parents struggle financially to purchase the supplies needed by their children to begin each school year. As principal of Riverview Elementary/Middle School, I understand this burden, and the faculty and I strive to request students purchase only the essential supplies needed for everyday activities. This school year, we have been blessed with a very generous donation from Heath Harrison.” Harrison also served as chairman of the Buchanan County Relay for Life Committee in 2004 and 2005. Relay for Life is the signature fundraiser for the American Cancer Society, and it is staffed and coordinated by volunteers in more than 5,200 communities and 20 countries. Volunteers like Harrison selflessly give their time and effort because they believe it’s time to take action against cancer. It should be noted that while Harrison was serving in this role, he also was attending college and working full-time at KFC. Nevertheless, sleepless nights did not stop him from helping others.

Loving wildlife and the outdoors Harrison is an avid hunter and lover of the outdoors. “I played sports when I was younger, so I didn’t have much time to hunt. But I saw my brother and dad go hunting, and I wanted to join them,” he recalled. “Today, it’s probably the only time I can set the phone aside, and it’s just me and the outdoors.” Harrison has been hunting for the past 26 years, and he likes to share the pastime with his own children and other youngsters in the community. “I got to take my daughter this year,” he said. “She killed a white-tailed deer, and it was bigger than anything I’ve ever shot.” To those who know him best, it is no surprise that Harrison is committed to helping wildlife conservation. As a member of the National Wild Turkey Federation (NWTF), he has been instrumental in raising funds to protect the wild turkeys in his area. Harrison loves to hunt, and the NWTF is dedicated to the conservation of the wild turkey and the preservation of our hunting heritage. When the w ww. akf c f . c o m

Above: Harrison’s school supply giveaway.

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Above: Heath hunting with his daughter, Molly Grace.

organization was founded in 1973, there were only about 1.5 million wild turkeys in North America. Decades later, thanks to the work of many dedicated individuals, that number has jumped to nearly 7 million turkeys. Going forward, the organization and its staff and volunteers will focus their efforts on further enhancing wild turkey populations.

Similarly, Harrison also volunteers with the Rocky Mountain Elk Foundation (RMEF), an organization that helps to ensure the future of elk and other wildlife, their habitat, and our hunting heritage. Thanks to the work of the foundation, an elk herd was recently reintroduced to Virginia. No one had seen an elk in the state for about 60 or 70 years. To accomplish this, they successfully transferred part of a booming herd from Kentucky, and four years later the elk are thriving in their new home. As part of his commitment to both of these wildlife organizations, Harrison also volunteers to cook for their annual banquets. Harrison’s giving-back attitude is visible in his family life as well. He and his wife, Pamela, adopted two infant daughters, Molly Grace and Chloe Alise, who are now 10 and 9 years old. Not only are the girls biological sisters, but their three cousins who live next door also are adopted—and are their biological sisters as well. “Growing up, I had two loving parents who did everything they could for me,” Harrison said. “My wife and I could not have our own kids, so we decided to adopt. There are so many kids who need a good family and a good home. It breaks my heart to see other kids who don’t have the love of a family.” This is also why Harrison is so passionate about donating his time to kids in the community. “If I can help just one kid better his or her life through the scholarships, it’s worth it,” he added.

Below: Harrison and crew presenting a post-golf tournament check.

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Teresa Kelly, KFC of Waverly, Ohio The concept of giving back and helping others was a big part of Teresa Kelly’s upbringing. “We’re in Appalachia where there are a lot of low-income and unfortunate people, so my parents have always been givers,” she said about her experience growing up in a small southern Ohio town. In 1974, her parents, Ralph and Maggie Fordyce, opened the KFC that she and her husband, Bill, purchased in 2000. Today, volunteering is clearly part of their culture, and employees are asked—but not required—to give their time as well.

Free meals and backpacks This year marked the seventh consecutive year that KFC of Waverly has served free Thanksgiving meals to people in need. “My entire crew volunteers their time from 9 to noon—no questions asked,” Kelly said. “It’s great to see 16-year-old kids getting involved.” Kelly feels blessed that her family has never needed to use these resources, but she is increasingly aware of the need throughout the Above: A photo collage from the backpack/school supply community. “It got me giveaway. to look outside of my box,” she said. “We are empty-nesters now, and it’s been an eye-opener, even though I knew we lived in an area with a lot of low-income individuals.” This year they served 200 meals. Members of the community expressed their gratitude, including one woman who wrote this note: “God bless you so much. I’ve been so worried that I couldn’t give my family a nice dinner this year because I have blood clots and had to stop working last month, and I’m waiting to see what I can do money- and health-wise. God bless you. This is making my whole life turn around. Thank you again!” In addition to serving free holiday meals, in August of each year right before school starts, KFC of Waverly gives away backpacks filled with school supplies to children in the community. The backpacks are free to anyone who asks; there are no income requirements. Each backpack is filled with everything from scissors and glue sticks to pencils, pens, crayons, and notebooks. This year, they gave away 125 supply-filled backpacks!

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We Care Wednesdays Although both of these giving-back efforts take place on an annual basis, it wasn’t enough for Kelly. This year, she wanted to step things up a bit. That’s why she initiated “We Care Wednesdays” (WCW), making it possible for 3 percent of the restaurant’s gross sales on Wednesdays to go back into the community. Kelly chooses various organizations to be recipients throughout the year. To get the ball rolling, she turned to the art students at Waverly High School. She asked them to create a We Care Wednesdays logo, encouraged customers to vote for their favorite one, and then presented the winner with $100. During the first quarter of 2016, proceeds went to Elizabeth’s Hope Pregnancy Resources, an organization that provides services and much-needed baby items for pregnant mothers in the community. This includes everything from one-on-one mentoring services and free self-administered pregnancy tests to free ultrasound referrals, emergency assistance for maternity and baby supplies, parenting classes, community referrals, fertility and sexual education and more. Pregnant teens can visit Elizabeth’s Hope where they earn Right: The We Care Wednesdays logo.

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“points” by watching parenting videos. The points can then be redeemed for baby clothes and supplies. Kelly and some of the employees also made gift baskets with diapers and other supplies to donate to the soon-to-be mothers. Proceeds from KFC of Waverly’s second-quarter sales went to the Pike County Partnership Against Domestic Violence. The Partnership’s mission is to work in the community to create an environment that is safe, responsive, and supportive of domestic abuse victims and their children and to foster individual dignity, respect, hope, and self-esteem. In 2015, the Partnership assisted 332 survivors with direct services and advocacy, and women and children were sheltered for 204 nights. Partnership advocates accompanied survivors to court 136 times for civil cases and 120 times for criminal cases. To help them get ready for spring, Kelly and members of her KFC team planted flowers outside the building where the victims are housed. When the third quarter arrived, Kelly decided to donate the proceeds to all five Pike County Schools (four public and one private). The money was divided evenly among the schools, and each school could decide how they wanted to use the funds. “We don’t care how they use it as long as it fills a need,” Kelly said. In October, the funds were earmarked for the Pike County Outreach–Food Pantry, and November proceeds helped pay for the Thanksgiving meals. In December, KFC of Waverly donated to the Pike County Christmas Fund, which is part of the Community Action Committee of Pike County. This organization creates opportunities for individuals and families to reach their highest level of independence and self-sufficiency. In addition to donating 3 percent of Wednesday sales for the month of December, Kelly invited customers to bring in an unwrapped toy or article of clothing for a child. As a thank you for their donation, they were awarded a $5 lunch coupon. Not only did most of the employees donate gifts, but also Kelly and several members of her KFC team volunteered for two nights to help some of the recipients shop for their families. Plans to continue the We Care Wednesdays campaign already are underway for 2017. KFC of Waverly kicked off the second year with first-quarter donations going to Meals on Wheels, a community program that delivers meals to seniors. This year will feature all new recipients of the WCW program. “The Lord just always gives me a moment where he opens my eyes,” Kelly said about selecting the organizations. As for volunteering and giving back in general, you might say it’s part of Kelly’s DNA. “I’m not sure which is more rewarding—helping others or the gratification I see on my employees’ faces as they participate,” she said. But then again, maybe it’s both. 42

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Above: Franchisee Teresa Kelly with Marissa Palmer and Jessica Dunn.

Below: From left to right: Devin Kelly (Teresa’s son), Teresa Kelly, Becky Yocum (store manager), and Alex Yocum (Becky’s son).

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entucky Fried Chicken has roots that are deep and strong. Since its inception as a concept by Colonel Harland Sanders, the KFC Brand has stood for family. Today, KFC franchisees are like family to each other and many have similar feelings toward the Brand. Their fierce loyalty to KFC and its core products is what carries them forward and, in many cases, passing the business down to second and third generations is all part of a long-term strategy to keep it all in the family. For many, the memories of franchiseesâ&#x20AC;&#x2122; children growing up around KFC restaurants evokes strong emotions. Continuing in the family business is something

that just comes naturally. For others, they may try their hand at other jobs, but many eventually find their way back to the family business. Finally, as the business grows, team members and customers all become part of an extended family. As the restaurant business in general reaches out to appeal to younger generations, franchisee families find themselves handing down the traditions to their children and grandchildren. As the families grow, so too does the business. The lineage of family values continues from Colonel Sanders to the present day and, hopefully, into the future.

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THE STUVER FAMILY Herbert “Herb” Stuver and his wife, Sarah, were pioneers in the restaurant business in central Pennsylvania. They were the first to introduce the area to many new and exciting restaurant concepts. Today, the Stuver family is building on their success and preparing its third generation as KFC franchisees. The Stuvers had four children: Rodney, Ricky, Kathleen, and Susan when they relocated from Somerset, Pa., to Altoona, Pa., in 1959. It was there that Herb seized a business opportunity and opened the first QSR restaurant in Blair County, Pa., as Herb’s Quick System, a take-out restaurant that served burgers, fries, and milkshakes. Herb was always looking for something new and different to offer his customers. He first tasted Kentucky Fried Chicken when he stopped on the way home from a trade show in Chicago and sampled the chicken at a roadside restaurant. He was so impressed that he inquired about the source of the product and learned that Colonel Sanders was looking for additional franchisees for the business. It was a perfect addition to the menu at Herb’s existing restaurant.

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Above: 1960 location of Herb’s Quick System that sold KFC chicken.

In May 1960, Herb became a franchisee for Kentucky Fried Chicken and paid a monthly service charge of five cents per head of chicken. Locals knew the popular restaurant as Herb’s Kentucky Fried Chicken “on the hill,” because it was situated above the bowling alley and a drive-in movie theater. “To this day, countless fond memories of folks visiting Herb’s are passed on to our family,” daughter Susan, the youngest of the Stuver children, says. “It was their first job, their first date, the family’s meal after Sunday church, or buckets of KFC chicken for picnics at the lake in the summer or to the local ski slope in the winter. You could feed a family for $5 and get change back.” In those days, it was risky to start a new business, according to Herb in a 2008 radio interview. “You have to be a little bit crazy. I put everything I had into it. After I had it built and ready to go, I cashed in my insurance policy to buy my inventory, so that’s how close I was,” he says. Herb and Sarah’s hard work and persistence paid off and the restaurant became a quick success. “If you think you can be successful, you do what it takes,” he said. “Ten or sixteen hours a day, that’s what you do. I did everything. I knew we were going to be a success from the first day,” Herb continued. Over the years, the Stuver’s tried their hand at a variety of different restaurants and other businesses, and w ww. akf c f . c o m

their entrepreneurial skills served them well. Herb opened two additional KFC restaurants in Altoona, but eventually sold those restaurants. In 1973, Herb and Sarah received an award from Colonel Sanders for serving 600,000 meals. In the late 1970’s, Interstate 99 came through, so Herb and Sarah relocated their restaurant to a busy corner in Blair County on a one-acre site. In 1992, Herb retired and the second and third generations of the Stuver family began to move the business forward. In his retirement, Herb especially enjoyed golf, wind surfing, skiing, and traveling. Sadly, Herb passed away in 2012 at the age of 88, but enjoyed an active and fruitful life. He left behind a great legacy and a successful family business. “As a child, my fondest memories almost always involved some aspect of Kentucky Fried Chicken,” Susan says. “I remember going to the restaurant with Dad, talking with team members, and watching the preparation of the chicken, or the hand-cut french fries and the homemade coleslaw.” Susan was anxious to get into the family business, and at 16 began helping at the restaurant. “Although I enjoyed greeting and serving the guests, there was a constant desire to prove myself to other team members. I didn’t want them

Above: Herb Stuver (right), pictured with David Novak, receiving his 35-year Service Award.

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to think I got special treatment, so I always felt the need to do more work than them.” Susan had a desire to explore outside of her hometown and served in the U.S. Woman’s Army Corp. She then attended the University of Northern Colorado and received two bachelor degrees. Susan returned to Blair County in 1987 and worked alongside her father to learn all aspects of the business thoroughly. This included restaurant visits, manager meetings, and meeting with vendors, advertisers, accountants, and attorneys. Additionally, attending trade shows, local, regional, and national KFC meetings further prepared her to take over when Herb would retire at the age of 70. Susan has three children, daughter Sara Jo, and sons Kele, and Kyle (also known as “Paco”). Kele, Paco, and his wife, Sheena, all work in the family business. In fact, Paco and Sheena met while working at KFC. Frederick O’Rourke became RGM and started working for the family when Susan was in the 6th grade. He retired after 44 years of service with the Stuver family, acquiring numerous awards from KFCC along the way. In 1998, Susan scraped the existing restaurant and rebuilt a “KFC of the Future” design on the property. She is celebrating 25 years as a KFC franchisee in 2017, and the third generation of the Stuver family is poised to continue the business. “We have a long history here and plan to continue it,” she says. Colckwise from the top: Herb Stuver with Colonel Sanders. Susan Stuver and Frederick O’Rourke at the ‘97 Best of the Best. Susan Stuver, 2nd gen. franchisee. KFC Altoona store, 1998 KFC of the future. 1961 menu.

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THE WEST FAMILY The West family operates West Quality Foods, based in Laurel, Miss. V.C. “Vic” West and his wife, Louise, started the company in November 1967, when they opened their first Kentucky Fried Chicken restaurant on 16th Avenue in Laurel. This year, the family will celebrate 50 years in the KFC business. After serving in World War II in both Europe and the Pacific, Vic returned home to cultivate his inherent entrepreneurial spirit. He sought a business that could include potential for the entire family. KFC fit the bill. In 1969, the company opened its second restaurant in Laurel and opened another restaurant in McComb, Miss. In January 1970, these restaurants were incorporated and West Quality Foods was established as a privately held company. By the time Vic purchased his first franchise, Colonel Sanders already had sold KFC to John Y. Brown and Jack Massey in 1964. The franchise for Laurel, Miss., was part of a master contract the Colonel had earlier sold to Jim Marks of Pensacola, Fla. Vic was able to secure it through a sub-franchise agreement with Marks. As you likely are aware, Colonel Sanders remained involved with KFC as a goodwill ambassador to the Brand. The Colonel and members of the West family met on several occasions during this time. This family business was operated primarily by Vic and his sons Dick, Bill, Steve and Tim, who through hard work and dedication have grown to become the executive leadership team. With the help of its team members and the three founding principles: quality food, service excellence and restaurant cleanliness, West Quality Foods now operates 56 restaurants in Alabama, Louisiana, Mississippi and Tennessee, with five restaurant concepts, and ownership of several affiliate companies. Dick continues to run the business, along with younger brothers Tim, Bill, and Steve, and each remain intensely involved. “We talk with each other every day, going over numbers and other aspects of the business,” Dick says.

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Left: West family members Steve, Bill, Vic, Tim and Dick. Below: Vic and Louise West with Colonel Sanders.

Dick has been instrumental in improving business for the entire KFC system. He and his team developed the $5 Fill Up and presented it to KFCC as an opportunity to attack the value perception of consumers. KFC adopted the program and it has proved quite successful in growing sales and transactions. Dick and his team then followed that concept with the $20 Family Fill Up. Dick’s son, Mike, is a third-generation family member involved in the business, overseeing Tyson_AKCFC_Ad_Square.pdf 2 12/18/14 11:45 AMconstruction

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and remodeling of restaurants. Dick says he learned three main concepts over the 50 years running the business and he has remained true to those principles. First, he says, “You can’t do it all yourself. You must build a team to work together and keep people motivated.” Second, as he puts it, “You cannot push a rope. You must lead people instead of driving them.” Finally, Dick says to think along the concept that “something is always broken.” Don’t assume that if things are running smoothly everything can be left alone. Instead, constantly look for ways to improve things and tweak the system to make it better. For example, even though chicken on the bone is the primary offering of KFC, other chicken items, such as sandwiches, wraps, and boneless items can be useful additions to the menu. “Trends change quickly and you must be flexible,” Dick says. The intensity of the competition has increased over the years, says Dick, and change is necessary to remain relevant and to attract younger consumers. w ww. akf c f . c o m

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KFC, Taco Bell, and Long John Silver units, bringing their total to 29 restaurants in four states and approximately 600 employees. The company now has a Jerry and Debbie Zakaras began in the restaurant significant presence in Iowa, Illinois, Wisconsin, and business with KFC and Yum! Brands in 2000 when Nebraska. they established ZAK Family Foods. Growing their “Every guest leaves happy,” continues to be the vioperations organically, by 2009 they owned five ression for ZAK Family Foods, and their mission is to taurants and in 2014 built several Taco Bell units. position their restaurant family for a win every day. ZAK Family Foods is so named because they conJerry Zakaras began in the restaurant business as a sider their employees and even their customers as all young man in 1975 and enjoyed both the environment part of an extended family. Currently, the big news for and the people. He began as RGM of the Plattsmouth, ZAK Family Foods is the acquisition of 23 additional Neb., Pizza Hut, then in 1983 grew into an area coach role. From there, Jerry knew that the restaurant business, and particularly Yum! Brands, was going to be his lifelong career. Debbie grew up in her family’s restaurant business and was excited to work alongside Jerry in his goal to become a franchisee. “I jumped in with everything I had,” he says. “The challenge is exciting, but you need to do it right and surround yourself with good people. Jason [our son], Debbie and I feel very blessed to have great people in every community.” ZAK Family Foods is successful because of their commitment to people development and a relentless desire to improve. These elements have evolved progressively from the brand’s very beginnings. The Zakaras family found that Your National Lighting Source business means more than just sophisticated tools and systems, and it’s In business since 1926, we are here for more than just pay and promotions. Success in business requires faith all of your commercial lighting needs! in other people and commitment to individual development; it is these traits of ZAK Family Foods that have developed the company into what it CONTACT US TODAY is today. Tim at 860.670.3270 Tim.Kossbiel@CapitolLight.com “We put people first,” Jerry says. Kevin at 860.670.4595 Kevin.Polley@CapitolLight.com “Many of our restaurants are located in smaller communities and we create a family environment where our team members can feel that they are part LIGHTING DESIGN SUPPLY LAMP REPLACEMENT of our family and also have a career.” LIGHTING & ELECTRICAL MAINTENANCE With every opportunity, there are challenges and ZAK Family Foods UTILITY REBATE SERVICES more than holds its own against the COMPLETE LIGHTING TURNKEY SOLUTION competition. “We have all the major players in our communities, but our www.capitollight.com customers still embrace us,” Jerry says. “We have Best on Block product and serve it in a clean restaurant.”

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The second generation of the Zakaras family is helping carry the business forward. Jason has taken the roots of the family company started by his parents and given it wings to soar to unparalleled levels with the simple mindset of family. “It was a neat experience growing up in a family operation,” Jason says. “Work is a visceral experience for me.” Jason and his wife, Jayci, who is a registered nurse, are proud parents of their two daughters, Lily and Emma, and newborn twin boys, Ford and Duke. When Jason and Jayci were first married, Jayci was working as a NICU nurse, but in 2008 she joined the ZAK family business and worked as HR director until 2016 when the twins were born. She is now focusing on her

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Above: Jason Zakaras & family.

family, but still remains very close to her ZAK family as well. For more than 10 years, Jason Zakaras’ passion for creating a work environment that feels less like work and more like family has created a culture of mutual trust and respect at ZAK Family Foods. Through his leadership, the company has realized exceptional growth and ensured that all employees have a clear growth path to becoming leaders in their communities. “It’s the people side of the business that drive me,” he says. “I like to watch our employees blossom. It’s great to be impactful in people’s lives who have the right attitude and mindset.” For their employees, this philosophy flips the traditional employer/employee relationship on its head, according to Jason. “We will work hard for our employees and consider them an investment,” he says. Jason’s vision for growth has catapulted the company from $1.3 million to over $30 million in annual sales. Since 2008, ZAK Family Foods has multiplied nearly 15 times in size, growing from the two 54

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restaurants in Iowa to the current 29 restaurants in four states. Jason serves on the AKFCF Upper Midwest Board of Directors and has been a regional voice as an for KFC. ZAK Family Foods is proud of remaining active in the local communities in which they serve, according to Jason. “Every day we strive to maintain a valuable position in the community,” he says. ZAK is heavily involved at the local level. The company feeds people in need through the Yum! Harvest Program, pays for children to be educated, and supports creative growth of the community’s youth through local charities. Looking forward, perhaps thinking of the next generation, the Zakaras family sees its recent expansion as the next step in their growth with unlimited potential. “KFC has an amazing product that holds the tradition of a solid family meal,” Jason says. “As a legacy brand, it’s a sleeping giant and is a fraction of what it can be. It’s exciting for generations of the future.” w ww. akf c f . c o m

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CARIBLA supports the LA&C World Hunger Relief efforts 6

By Zaira Guevara

The CARIBLA Franchisee Association was a proud GOLD sponsor of the Yum! Brands LA&C 2016 World Hunger Relief Golf Tournament held on Monday, Nov. 14, 2016 at Crandon Golf at Key Biscayne in Florida. The initiative, lead by the Yum! LA&C office in Fort Lauderdale, Fla., brought together suppliers from around the world, franchisee partners from Latin America and the Caribbean, and the senior leadership from Yum! Global RSCs and the Yum! LA&C region. The CARIBLA Franchisee Association’s GOLD Sponsorship will contribute to raise funds for the World Hunger Relief cause, specifically the “Add Hope” initiative for KFCC and the “Deliver Hope” program for Pizza Hut. “It was a great day that allowed us to interact with our suppliers, Yum! executives, and fellow franchisees in a fun atmosphere and for a worthy cause,” said Jose Ribas, CARIBLA 1st VP and participant at the golf tournament. Yum! Brands has been a sponsor of the World Food Program of the United Nations since 2007 and specifically developed the “Add Hope” program for the KFC Brand and the “Deliver Hope” program for Pizza Hut. Other KFCC “Add Hope” initiatives in the Latin America & the Caribbean region include the efforts at market level with in-restaurant funding (targeting $1k per restaurant), and franchisees’ various RSCS fundraising activities. 56

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CARIBLA representatives, Jose Ribas, CARIBLA 1st vice president (left); and Kirran Panjabi, past president at the World Hunger Relief Golf Tournament. w ww. akf c f . c o m

Coca-Cola is a Proud Sponsor of CARIBLA

great taste runs in the family ®

more choice equals more opportunity at CokeSolutions.com

A KFCF Q uar te rl y

K F C / N P C

Re p o rt

Concept Update 6

Dale Black

The RSCS Concept Team had several major successes in 2016. The following is just a sample of some of their accomplishments: • The system saw more than $30 million of restaurant margin improvement (RMI). RMI drove deflation from 0.3 percent to 2.7 percent for 2016. • Uneventful Mother’s Day. There were a total of three calls during Mother’s Day week regarding frozen shipments. Mother’s Day ended at the normal frozen target, resulting in no need to bleed frozen over subsequent weeks. In 2015, the system ended with 60 truckloads over capacity that required extra shipments to restaurants. Reduced frozen auto-shipments from one case/shipment to one case/week. Improved frozen COB quality with the Food Innovation Team (FIT) prior to Mother’s Day. • Nashville Hot planned rollout for above forecast per agreement with KFCC Marketing and NCAC created some obsolescence, which was mitigated by working with the marketing team on a walk-down plan and with FIT on shelf life extension on paprika. • New strip specification rolled out on time despite tight strip supply. No outages; suppliers transitioned sequentially to avoid shortages. New suppliers brought on line with 58

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The system saw more than $30 million of restaurant margin im-

provement (RMI). RMI drove deflation from 0.3 percent to 2.7 percent for 2016.

new spec before old suppliers transitioned with close coordination between RSCS and FIT on transition plans for each plant. • Food quality complaints on Tenders and Mac & Cheese and in both cases, franchisees alerted FIT of a concern through the QA Hotline. RSCS, FIT, and the suppliers met to discuss the issue, and FIT and the suppliers investigated, leading to corrective actions. Opportunity: how to encourage use of the QA Hotline? • Distribution—McLane contract negotiation is now complete with 46.5 percent of KFC franchisees (58.8 percent of restaurants) with

signed agreements. If you are a McLane customer and have not executed the new agreement, please carefully consider the enhancement of the new agreement. • Cost of Goods Sold (COGS) finished 2016 at projected deflation of 2.7 percent, which is 0.7 percent better than plan, driven by COB, lower Mac & Cheese egg white RMI project, and a faster-thanexpected transition to Classic OR seasoning. • 2017 COGS can be accessed by logging on to your RSCS.com account. • 2017 will see a new gates/thresholds protocol for RMI to accelerate approval process within KFCC. We developed an RMI Franchise Focus Group to identify new ideas with potential to have follow-up meetings through 2017. We’re working with the Restaurant Economics Committee on opportunities to expand RMI’s reach and concentrate resources on opportunities most impactful to the restaurant bottom line. • Sourcing fees, which are used to run the co-op, remained the same; a further processed chicken item was reduced. Please recognize with me that the board could not have approved the reduction or no change without recognizing the effective, efficient, and focused group of professionals operating our KFC Purchasing Co-op! w ww. akf c f . c o m

What Matters To You?

RELIABILITY MATTERS I’ve funded several deals now totaling

Reliable lenders do what they say they will do. Our access to capital is substantial, and the terms don’t change at the closing table.

about $7 million with PPFC. The industry knowledge and smooth process from loan origination through funding has made me a repeat client. — 28-Unit Franchisee in the Northeast

www.ppbifranchise.com ∙ 402.562.1800 Winter 2 016

A KFCF Q uar te rl y

R S C S

M e m b e r

P ro g ra m s

RSCS Member Programs – Helping Operators Grow Your Savings! 6

By Lindsay Krebs

“Filling out the PAPERWORK, filing, and tracking the ENERGY

Your RSCS Member Programs team is focused on providing national operator programs and employee programs for the entire Yum! Brands system, which offer unique value through negotiated pricing as well as favorable terms and conditions. Our operators are leveraging excellent savings on such programs as waste, parcel, CO2, oil management, floor/ floor mat cleaning, linens, pest, payroll, and in-store music. Members can view the operator programs via our secure digital directory: www.rscs.com/ memberprograms. And to assist our operators in building employee loyalty, we also provide unprecedented cell phone discounts for all employees, as well as great savings for safety shoes, childcare, movie tickets, retail outlets, and more. Employees can access the discounts conveniently through our mobile app or website: http://tb.hrdiscounts.com/perks/ (use code SAVENOW). In this article, we would like to highlight two operator programs: Energy Rebates and Office Supplies.

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REBATES that are available for almost 300 RESTAURANT locations in four states can be TEDIOUS and TIME-CONSUMING. The Energy Rebate Program takes the WORRY out of missing a DEADLINE and allows me to focus my time on other more IMPORTANT RESPONSIBILITIES. The process is EASY and the rebates are a great way to OFFSET some of the COSTS of new equipment. I would HIGHLY RECOMMEND this program.” – Candice Lyle, Harman Management Corp.

Energy Rebates $49,524 in energy rebates already paid to operators the first 6 months of 2016. The RSCS Energy Rebate Program can be a great way to help offset the cost of purchasing new equipment. Thousands of RSCS member locations already are signed up to take advantage of the Energy Rebate Program.

In just the first six months of 2016, the program put $49,524 in rebates from 88 equipment purchases back in the hands of operators! And there are another $42,908 in rebates pending related to 73 additional operator purchases. Managing energy rebates can be a difficult and time-consuming process. RSCS has partnered with both Schneider Electric and Capitol Light to help you navigate all of the available rebate opportunities in your area when you purchase new energy-efficient items. While RSCS added energy rebates to our partnership with Schneider Electric more than one year ago, we

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recently added Capitol Light to our program due to their extensive work on the American Showman Project. Capitol Light will focus on obtaining rebates for your American Showman lighting purchases once you are enrolled in the RSCS Energy Rebate Program. And Schneider Electric will continue to focus on energy rebates available for all other equipment purchases. Haven’t Enrolled Yet? It’s Easy! 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 suppliers search for all available rebate opportunities in your area, including for every equipment 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 already have received through the program. In addition to Energy Rebates, RSCS also offers programs for Energy Procurement, Utility Bill Management (UBM), and Energy Tracking. To learn more about these programs, visit the RSCS Digital Directory at www.rscs. com/memberprograms, or contact Lindsay Krebs with RSCS Member Programs at lindsay.krebs@rscs.com.

Office Supplies In 2015, Staples saved operators $435,160. The RSCS Office Supplies Program brings great value to our operators. Last year, operators saved more than $435,000 through Staples alone! RSCS has partnered closely with Staples to

negotiate an average savings of more than 50 percent on the items you and your restaurants use most. In addition to offering exclusive negotiated pricing on core items, Staples also offers 10 percent off Staples.com retail pricing and free next-day shipping on orders of $35 or more. The typical items that come to mind when you think of office products are probably pens, paper, Post-it notes, and highlighters. In addition to these essentials, Staples also has a wide variety of electronics, breakroom supplies, and so much more! For example, Staples provides discounts of up to 78 percent on the printer ink and toners you use most at your office. You can access the Staples program benefits by signing up for an account online or by registering your credit card for in-store purchases. For more details about program and how to sign up, visit the RSCS Digital Directory at www.rscs.com/memberprograms.

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.

Winter 2 016

A KFCF Q uar te rl y

Beverages Report

Beverage Contract Extensions 6

By Jody Luihn, NCAC Beverage Subcommittee Chair

The Yum! and KFC Beverage Committees want to update you on the status of the Pepsi and Dr Pepper beverage contract extensions. The attorneys are working on finalizing the legal documents, which should be completed by the time you read this. You should have received an email from me with the details of the financial considerations that have been agreed to, including the following: • Side-by-side comparison of the Dr Pepper and Pepsi financial terms; • Recap of the Pepsi terms together with Pepsi contact information for your area representative; • Recap of the Dr Pepper terms (which includes an upfront component) together with Dr Pepper contact information; and • Comparison of potential rebate with Pepsi exclusivity vs. carrying Pepsi & Dr Pepper. Please note that the financial comparison is based on dollars received and does not include the impact of the time value of the Dr Pepper upfront payment. Further, the price protection for Pepsi is 1.9 percent per year compared to 2.4 percent per year for Dr Pepper. That is a component that is included in the side-by-side comparison worksheet. One other point of difference is the definition of exclusivity; Pepsi’s 62

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The NCAC believes that both Pepsi and Dr Pepper are important and

valuable partners for our system.

exclusivity is based on individual outlets (store) while Dr Pepper’s is determined on an entity basis (not store-by-store). Part of your decision to go exclusive will be based on the potential drinks per transaction impact of having one brand or the other. Please look at your individual restaurants to determine the impact, if any. Both Dr Pepper and Pepsi have opinions on this subject, and we encourage you to listen and analyze the information carefully. You should make the best decision for your respective business and customer needs. The KFC Beverage Committee and NCAC feel strongly that if you are currently selling Dr Pepper, you should continue to do so. Depending on your volume and mix, there may be a slight disadvantage in your total potential rebate amount. However, we believe Dr Pepper is an important

component to serving our guests the right brands to maximize our overall sales and profits. Key reasons include the following: • All major QSR brands sell Dr Pepper, regardless of whether they also pour Coke or Pepsi; • Dr Pepper is the fourth bestselling soft drink across all channels (Coke, Pepsi, Diet Coke, Dr Pepper), and in the top three best-selling brands on fountain at KFC; • National studies indicate that 35 percent of QSR users will not buy a soft drink if their preferred brand is not available. Finally, the NCAC believes that both Pepsi and Dr Pepper are important and valuable partners for our system. With 85 percent of the system carrying Dr Pepper, we will continue to be able to execute national marketing programs with additional funding contributed to the NCAC, as well as receive insight and support from two powerful, national brands. Pepsi and Dr Pepper representatives will be reaching out to you with information more specific to your business. The final legal documents will be sent out for electronic signature and will need to be executed shortly after you receive them. If you have any questions, please don’t hesitate to reach out to me via email at jody.luihn@luihnfood.com. w ww. akf c f . c o m

Leadership Development

Leadership Development Update 6

The AKFCF Leadership Development Committee consists of two separate groups. I am working with future leaders for our national bench and my vice-chair, Noah Hummerding, is working to build a strong bench in each of our regions. Running restaurants is an important job and takes much of our time. Stepping up to lead is a commitment and I am especially grateful this year to be working with seven highly qualified franchisees. Each person will be working toward the opportunity to fill a variety of national roles. These candidates include Alessio DiFranco, Brandon Robertson, Jeanine Bagshaw, Bryan Robinson, Eric Overcash, Jim McKenzie, and Justin Stewart. During the past few months, we have worked on increasing their knowledge of how our AKFCF/KFCC committees work, building insight on Beverages, Communication, NCAC, and Contracts & Facility committees just to name a few. This group of franchisees also will be getting some hands-on coaching for personal and professional development. In January, Chip Booth with Booth Productions will be leading a two-day seminar on expanding individual communication skills. This is just one of the group sessions we plan to have over the next year as we continue the development process. While serving your fellow franchisees is a commitment, it also is very rewarding. I want to thank each of these individuals for taking the time to serve our franchise family. One of the most rewarding aspects of serving as an AKFCF president was the personal growth that I experienced. If you have ever considered serving your region

By Joan Bowling and Noah Hommerding

or in any other capacity for the AKFCF, please reach out to me or Noah to get further information on how to get involved. We would love to have you! Joan Bowling AKFCF National Leadership Development Good day to you, the AKFCF Family! I’m pleased to have been asked by AKFCF President, Greg Atwell, to serve as the vice-chair of the Leadership Development Committee. It is a privilege to work with each region’s leadership team in our efforts to recruit and develop talented leaders at the regional level. The Regional Leadership Team has met several times via phone, and assisted in preparing local leadership in identifying and planning their discussions for the 2016 fall board meeting agendas I was impressed by the sharing of best-demonstrated practices, mentor/mentee programs, bench planning, and leadership development. I’d like to outline some of the tasks we are working on as a group, to better the AKFCF. They are as follows: • Ensuring each region has a full bench plan of qualified and influential leaders, and a process for selecting and developing future leaders. • Ensuring the sharing of best practices used around the Association, for the betterment of all regions. • Identifying and implementing a structured process for recruiting new members, and harnessing the talents of individuals. This includes inviting active and less active members to learn more about their regional and national association, and

to provide a mentoring process for those wishing to learn more. • Identifying talented individuals who are not franchisees of record, and inviting them to learn more and participate in the regional associations. I feel we have started the process of identifying next steps for each region, including their strengths, opportunities, and weaknesses. Each region is at a different stage in the process, and I’m especially excited to know that we can rely on each other’s knowledge in solving issues that we all face. We’ve asked each region to keep these important points in mind for their annual fall meetings. Specifically: • Each region should allow adequate time on every meeting agenda for Leadership Development and bench planning. • Each region has been encouraged to reach out to non-franchisee leaders, in an effort to attract top candidates in both large- and medium-sized franchise teams. • Reinforce the importance of bench planning. Set clear goals for 2017, including establishing or nurturing the mentor/mentee process. Collectively, we are strong. Though we have opportunities from region to region, we are one family with a similar mission. We strive to learn from each other and to make your AKFCF as knowledgeable, passionate and insightful as possible in our effort to serve you and your business. See you in Austin! Noah Winter 2 016

A KFCF Q uar te rl y

Partnership Survey Committee

Where Are We Going? 6

By Alessio DiFranco

To know a bit about where we are going, we have to know where we have been. Our current representatives for the Partnership Survey Committee include: Tony Cameron, David Sparks, Eric Overcash, Bob Prendville, Dana Sanders, and myself. Our KFCC partners include: Nikki Francis, Christina Foster, Kathy Gosser, and John Kurnick, among other contributors. I would like to preface this article by saying that it has been a pleasure to work with each and every one of the above mentioned and I look forward to more of the same! The survey was originally intended to improve the relationship between KFCC and its franchisees a few years back. As we all know, several years ago the system felt under attack from various pressure points. Since the development of the survey, we have seen some former principles come back to life in practice, such as “How We Win Together” and “1+1=3.” The easiest take-away from “How We Win Together” is the belief in all people. We can trust each other and believe everyone can be their best self. Our generous nature shines through in everything we do. The survey, culture coming back to life, and a mindset change by all parties has led us into a positive trajectory. Now we can fast-forward to the present and see where we are heading. Our survey objectives can be simplified into three steps. The first being, “Understand franchisee opinions, attitudes, and concerns regarding the business.” 64

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The second, “Partner with the AKFCF, NCAC, OEC, and the entire franchise community to turn feedback into action and strengthen our commitment to work together efficiently and effectively.” Finally, “Evaluate how the overall franchisor/franchisee relationship has grown over the past year.”

that an annual survey was best for consistency and a message for all that your voice can be heard. More importantly, KFCC was very open to the mentality of working with the franchisees to continue the work of the past. We all wanted to continue the momentum.

Survey Participation All in all, I feel that the

committee and KFCC have done a remarkable job working together to move the Brand

forward.

The Annual Survey As a committee, we initially were tasked with three main objectives. The first was to ensure we had an annual survey. The second was to increase survey participation. And our final objective was to adjust the survey to get actionable data. Our initial call with KFCC yielded some great feedback. We all decided

Our second goal was to increase survey participation. This one is a bit tricky; we cannot force anyone to do anything they do not want to. Our goal is to get 100-percent participation across the system, using various forms of communication. It is apparent that we will not hit our goal; however, looking at some of the reasons why may be a bit surprising. Just using our past experience and the experience of our guests, most will not engage in a survey or call if they have had a good experience. Most will send in a complaint or take a survey if they have had a bad experience. We can use this theory to judge why our franchise community has not fully engaged in participation. Now maybe some did not have the technological capability, or could not make the time, but most likely they feel the Brand is projecting into a positive light, so they don’t feel the need to complete the survey. At least that is my hope. However, we always will need feedback and will be working on our techniques in the future to garner more responses. w ww. akf c f . c o m

Photo Courtesy of 123rf.com | elosa

(With a total franchisee population of 528, including licensees, we received 206 responses. This sample size gives adequate validity with a 95 percent confidence level and a 5.33 percent margin of error.)

Actionable Data Our final objective is to adjust the survey to get actionable data. We have made some enhancements that include the following: We added an educational portion toward questions that may be too broad to answer. You probably noticed that along with the survey

communication, you also received information on the KFC Leadership Team, the AKFCF, NCAC, OEC and OSC, highlighting their objectives. This additional information was to give survey takers a bit of knowledge before answering questions about each part of the team. As usual, some questions were added and deleted based on their relevance to the year. A bigger adjustment was the addition of open-ended questions to each category as to gain insight and solutions to issues for each section of the survey. Our biggest win was the adjustment of the survey so

WINNER. WINNER.

that technology will allow us to use “regression analysis.” Basically, we will be able to see what parts of the survey mean the most to the franchisees and be able to take action on those few items, rather than only seeing the biggest disparities like we have in the past. All in all, I feel that the committee and KFCC have done a remarkable job working together to move the Brand forward. I look forward to not only seeing the results, but being able to work with the committee and KFCC to come up with a game plan to fix some of the issues.

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Winter 2 016

A KFCF Q uar te rl y

Regional Short

Great Lakes: Seymour, Ind. KFC Raises Funds For Local School 6

By Mary Beth Hamilton

On Wednesday, Oct. 26, 2016, the KFC in Seymour, Ind., helped a local elementary school raise funds for their PTO. The teachers, staff and kids really got involved to make this

event a success for their school and KFC. KFC was very pleased to be able to help them with this project. Here is a thank you note and some photos that we received from the school.

Dear Mary Beth Hamilton and KFC Staff, Thank you so much for hosting our first Jackson Wildcat Spirit Night for PTO. The students were extremely excited to go eat some chicken, which was our slogan for this event. Our staff is ver y thankful for your kind donation to help our students strive for excellence. Jackson Schoolâ&#x20AC;&#x2122;s Wildcat Pride Club helped promote this event by creating their first news broadcast. The students had a blast being reporters and participating in skits to promote the #goeatsomechicken hashtag on social media for Spirit Night. Our families were able to raise $300 due to your generous donation to our school. Your staff was so kind and helpful and many commented on the terrific service. Your donation will help fund our student activities such as Bucket Filler Rewards with the Principal, Fall Carnival, Per fect Attendance Awards, etc. Our students are truly blessed to have a community leader to support our mission to grow every student at Jackson Elementar y. Thank you again, Jackson PTO Jackson Staff Jackson Students Jackson Wildcat Pride Club

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Winter 2 016

A KFCF Q uar te rl y

Executive Director Update

The New AKFCF Year-Round Mobile App 6

By Kelly Rodenberg

In the fall of 2016, the new AKFCF Year-Round Mobile App was launched. We were very excited to offer this benefit to all AKFCF franchisees and suppliers. Effective mobile apps are born from a collaborative process. We can’t expect a great non-profit app to come solely from one source. How we all work together to create the app determines its overall success or failure. A collaborative process dictates whether our app delivers relevant information, discussion, and engagement. The AKFCF invested a good chunk of money to create this app and we don’t

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want it to be underutilized, misunderstood, or even forgotten. The end of 2016 was about building the basic structure of the app, marketing it to the members, and getting it up on its feet. We asked the regional secretaries to begin exploring, learning, and using the basic template so they could promote their regional fall meetings. Now we will be developing a process that includes collecting engagement data and implementing strategies that take advantage of the app’s technology, while not forgetting the user experience. I read a study that said the process for a successful app can take two to three years of development. Our plan for 2017 will be to get more of the AKFCF Leadership, Regional Leadership, Committee Chairs, and Partners involved in providing content and promotion of the app on a regular basis. This will help us to ensure consistent and timely messaging to you and our suppliers. All of us have to be involved with the app to achieve great success. Good communication between the groups is essential. The idea of incremental improvements from year to year is essential to refining the process and the product. Employing these best practices and collaborating with our app vendor, TripBuilder, will result in an app with awesome member engagement. So, I hope you will rediscover the power of the AKFCF’s 365 Mobile App, a one-app solution for all our organization’s needs, 365 days a year. This

The AKFCF INVESTED a good chunk of MONEY to create this APP and we don’t want it to be

UNDERUTILIZED, MISUNDERSTOOD, or even FORGOTTEN.

app includes ALL of our events, member networking, committees, targeted messaging, publications, and more. It’s a year-round solution for the AKFCF to communicate with and engage our membership, while allowing members to interact with each other and to have meaningful conversations. To access the app, please enter the following URL in your mobile device’s browser: http://www.tripbuildermedia. com/apps/akfcf. This URL will take you to the appropriate market to download the iOS or Android version of the app, based on your mobile device type. If you don’t have an iOS or Android device, you will be taken to the HTML5 version of the app. To log into the app, please enter your Username and Password information on the app’s login screen. If you need this information, please contact Debbie Newton at debnewton@akfcf.com. 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 Direct: 678.293.5201 aileen@lionhrtpub.com

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

2017 RESOUR

CE GUID

A COMP

REH

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

Winter 2 016

A KFCF Q uar te rl y

Legal Update

Changes To The 2008 Agreement: Another Big Deal 6

By Ron Gardner

Recently, the AKFCF, the NCAC, and KFCC agreed to make some changes to one of the foundational documents of the KFC franchiseesâ&#x20AC;&#x2122; relationship with its franchisorâ&#x20AC;&#x201D;the 2008 Agreement. Because I believe this document is foundational (with other key documents, including the 76[5p] Franchise Agreement, the 1997 Settlement Agreement, and the Acceleration Agreement, to name a few), it is important you understand these changes and how they apply to our relationship with KFCC. Before I explain these changes, some background is necessary about what the 2008 Agreement originally did; only then can you know how these changes affect that Agreement. The genesis of the 2008 Agreement stems from a dispute arising between KFCC and the NCAC/AKFCF about the meaning of the 1997 Settlement Agreement. In short, the Company wanted to sell some or all of the 1,000 restaurants that it was operating in 2007 under a form of agreement different from the 76(5p). KFCC took the position that it was free to offer these restaurants on any form it deemed fit, while the franchisees took the position that it could only offer these restaurants on a form agreed to by the AKFCF and the NCAC, pursuant to the 1997 Settlement Agreement. Avoiding full-fledged war, the parties resolved the issue in the 2008 Agreement. In this Agreement, the franchisees agreed to allow KFCC to refranchise 800 of its 1,000 restaurants 70

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Both the AKFCF and the

NCAC BOARDS accepted this AMENDMENT unanimously, as we all believe it is a very GOOD agreement for YOU, the franchisees.

on an agreement we now call the 5/15 Agreement. The 5/15 Agreement is substantially the same as the 76(5p) Agreement, with a few material exceptions, including: (1) a royalty rate of 5 percent; (2) no renewal rights after the end of the 20-year term; and (3) in addition to the 10-year remodel obligation that everyone has, 5/15 stores also have to refresh at years five and 15. In exchange for this deal, the Company agreed to: (a) continue to own and operate at least 200 restaurants through June 2022; and (b) not attempt to offer any other forms of agreement besides the 5/15 to non-Legacy franchisees until at least June 1, 2017. (As an aside, the distinction about who is a Legacy franchisee also grew out of the 2008 Agreement; franchisees who were in the system as

of August 1, 2008 were deemed Legacy franchisees, and those who came afterwards are non-Legacy franchisees.) Earlier last year, KFCC approached franchisee leadership and inquired whether we would agree to allow KFCC to sell some or all of its 200 remaining restaurants earlier than the previously agreed date in June 2022. After it was determined that we would be willing to allow the early sale of some of these restaurants under certain circumstances, extensive negotiations took place, ultimately resulting in the 2016 changes to the 2008 Agreement that I want to bring to your attention. In summary, these are the changes: First, franchisee leadership felt it was important that KFCC maintain some ownership of restaurants. It was a unanimous feeling on our side of the table that KFCC needed to understand the operational difficulties that might arise from any particular initiative, the cost and expenses associated with implementing certain programs and/ or promotions, and that the Company continue to have adequate facilities to test the products and services it might look at in the future. Therefore, while we could agree that the Company could sell some of its restaurants, we could not agree to allow them to sell all of them. The Company understood our position, and, ultimately, it was agreed that the Company could sell up to 150 of its 200 stores, but would be required to continue to operate at least 50 Company-owned restaurants through at w ww. akf c f . c o m

least December 31, 2040. Therefore, while the number of restaurants the Company has to own is reduced, the number of years that KFCC will continue to have “skin in the game” has been extended from 2022 to 2040. That is a big win. Second, the dispute that has lingered for 10 years (whether KFCC can issue anything other than the 76[5p] or the 5/15 after June 1, 2017) was also resolved. In sum, KFCC and its affiliate KFC US, LLC (see last Quarterly’s explanation of your new franchisor) have agreed that, absent special circumstances, the only Agreement they will issue to non-Legacy franchisees between now and December 31, 2040 is the 5/15 Agreement. (Legacy franchisees, as a result of KFCC’s concessions in the Acceleration Agreement, get the 76[5p] Agreement through at least 2050.) Having two Agreements in the system for another generation is extremely important, as it allows the Company and the franchisees to negotiate for collective action on certain things, rather than having to worry about how some actions might affect a few franchisees and not others because they have different forms of Agreement. Having two Agreements, with the vast majority of their provisions being identical, like the 76(5p) and the 5/15, is extremely beneficial as we problem-solve with your franchisor partner. Finally, as an added benefit, the Company also has agreed to allow those franchisees with 5/15s, and those who will buy them in the future, to receive a 10-year renewal term beyond the initial 20-year term, if they meet the renewal qualifications at the time. While this provision was not part of our original negotiations, it became clear that if KFCC were to start selling restaurants before 2020 (which we all thought was likely), getting a non-renewable 20-year 5/15 would not get people to 2040. Granting a 10-year renewal provision would get people past that deadline and not inadvertently leave a gap. In exchange for allowing KFCC to sell 150 restaurants five years earlier than they would have been able to sell otherwise, the franchisees now have KFCC with skin in the game at a level of at least 50 restaurants through 2040; have assurances that there will basically only be two forms of Agreement offered between now and 2040; and 5/15 holders get some of the benefit that the 76(5p) holders got through the Acceleration Agreement—i.e., the right to get an extended term on the same form of Agreement that they have now for at least one renewal period. Both the AKFCF and the NCAC Boards accepted this amendment unanimously, as we all believe it is a very good agreement for you, the franchisees, as well as an agreement that will help the Company to become more nimble and responsive to you moving forward in the next several years. As always, I am available to you at rkgardner@dadygardner.com. 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.

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