The owners of the KFC brand have handed the reins for over 200 of the fried chicken chain’s 700-plus Canadian restaurants to a new franchise partner.
Soul Restaurants Canada, an arm of U.K.-based Soul Foods Group, has taken over management of 204 KFC restaurants — mostly in British Columbia and Ontario, with four in Quebec — effective Wednesday.
Priszm Income Fund, the restaurants’ previous owner, closed the sale of the outlets to Soul Canada on Wednesday for an aggregate purchase price of $42.8 million.
Toronto-based Priszm, which until Wednesday operated over 400 KFC, Taco Bell, Pizza Hut and co-branded outlets in seven provinces, said it’s “continuing its review” of offers received last week for the rest of its portfolio and expects to make more announcements “in due course.”
Priszm in March reported “disappointing” financial performance for fiscal 2010 due to “continued same-store sales declines” in the KFC and Taco Bell brands.
It began a refinancing process in its second quarter last year, but couldn’t get replacement financing for its senior debt facility, after which its lender called in its term loans.
Then Priszm’s franchise agreements with Kentucky-based Yum! Restaurants, owners of the KFC brand, expired in November on 84 outlets.
To renew those agreements, Priszm said, it would have had to spend $15 million to $16.5 million on facility upgrades and pay its franchise renewal fees.
“Due to the continued decline in same-store sales during 2010 in both the KFC and Taco Bell brands and the cost and timing associated with the franchisor’s upgrade requirements, the company was unable to complete the required investments in facility upgrades,” Priszm said in March.
“The KFC Canada team is excited to welcome on-board like-minded partners who appreciate the appeal of the brand — and who, together with our existing franchise partners, understand the benefits of investment and innovation,” Sabir Sami, president of Yum! Restaurants’ Canadian operations, said in a release Wednesday announcing the agreement with Soul Canada.
“Canadian KFC fans can expect to see an aggressive renovation initiative, customer service upgrades and exciting, innovative new products,” he said.
“Our team is committed to capital investment and a renewed focus on innovation to ensure that KFC reaches its full potential in Canada,” Aly Janmohamed, president of Soul Foods Group, said in the same release.
Soul Foods Group operates more than 45 KFC restaurants in the U.K. Yum! on Wednesday noted Soul Foods was its U.K. franchisee of the year in 2010.