History and Origin of KFC Corporation

KFC Corporation is the largest fast-food chicken operator, developer, and franchiser in
the world. KFC, a wholly owned subsidiary of PepsiCo, Inc. until late 1997, operates over 5,000
units in the United States, approximately 60 percent of which are franchises. Internationally,
KFC has more than 3,700 units, of which two-thirds are also franchised. In addition to direct
franchising and wholly owned operations, the company participates in joint ventures, and
continues investigating alternative venues to gain market share in the increasingly competitive
fast-food market. In late 1997 the company expected to become a wholly owned subsidiary of
Tricon Global Restaurants, Inc., to be formed from the spin off of PepsiCo's restaurant holdings.

Kentucky Fried Chicken was founded by Harland Sanders in Corbin, Kentucky. Sanders was
born on a small farm in Henryville, Indiana, in 1890. Following the death of Sanders's father in
1896, Sanders's mother worked two jobs to support the family. The young Sanders learned to
cook for his younger brother and sister by age six. When Mrs. Sanders remarried, her new
husband didn't tolerate Harland. Sanders left home and school when he was 12 years old to work
as a farm hand for four dollars a month. At age 15 he left that job to work at a variety of jobs,
including painter, railroad fireman, plowman, streetcar conductor, ferryboat operator, insurance
salesman, justice of the peace, and service-station operator.

In 1929 Sanders opened a gas station in Corbin, Kentucky, and cooked for his family and an
occasional customer in the back room. Sanders enjoyed cooking the food his mother had taught
him to make: pan-fried chicken, country ham, fresh vegetables, and homemade biscuits. Demand
for Sanders's cooking rose; eventually he moved across the street to a facility with a 142-seat
restaurant, a motel, and a gas station.

During the 1930s an image that would become known throughout the world began to develop.
First, Sanders was named an honorary Kentucky Colonel by the state's governor; second, he
developed a unique, quick method of spicing and pressure-frying chicken. Due to his regional
popularity, the Harland Sanders Court and Cafe received an endorsement by Duncan
Hines's Adventures in Good Eating in 1939.

Sanders Court and Cafe was Kentucky's first motel, but the Colonel was forced to close it when
gas rationing during World War II cut tourism. Reopening the motel after the war, Sanders's hand
was once again forced: in the early 1950s, planned Interstate 75 would bypass Corbin entirely.
Though Sanders Cafe was valued at $165,000, the owner could only get $75,000 for it at auction,
just enough to pay his debts.

Sanders' First Franchise in 1952

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 However, in 1952 the Colonel signed on his first franchise to Pete Harman, who owned a
hamburger restaurant in Salt Lake City, Utah. Throughout the next four years, he convinced
several other restaurant owners to add his Kentucky Fried Chicken to their menus.

Therefore, rather than struggle to live on his savings and Social Security, in 1955 Sanders
incorporated and the following year took his chicken recipe to the road, doing demonstrations
on-site to sell his method. Clad in a white suit, white shirt, and black string tie, sporting a white
mustache and goatee, and carrying a cane, Sanders dressed in a way that expressed his energy
and enthusiasm. In 1956 Sanders moved the business to Shelbyville, Kentucky, 30 miles east of
Louisville, to more easily ship his spices, pressure cookers, carryout cartons, and advertising
material. And by 1963 Sanders's recipe was franchised to more than 600 outlets in the United
States and Canada. Sanders had 17 employees and travelled more than 200,000 miles in one year
promoting Kentucky Fried Chicken. He was clearing $300,000 before taxes, and the business
was getting too large for Sanders to handle.

New Management for Kentucky Fried Chicken

In 1964 Sanders sold Kentucky Fried Chicken for $2 million and a per-year salary of $40,000 for
public appearances; that salary later rose to $200,000. The offer came from an investor group
headed by John Y. Brown, Jr. a 29-year-old graduate of the University of Kentucky law school,
and Nashville financier John (Jack) Massey. A notable member of the investor group was Pete
Harman, who had been the first to purchase Sanders's recipe 12 years earlier.

Under the agreement, Brown and Massey owned national and international franchise rights,
excluding England, Florida, Utah, and Montana, which Sanders had already apportioned.
Sanders would also maintain ownership of the Canadian franchises. The company subsequently
acquired the rights to operations in England, Canada, and Florida. As chairman and CEO,
Massey trained Brown for the job; meanwhile, Harland Sanders enjoyed his less hectic role as
roving ambassador. In Business Week, Massey remarked: "He's the greatest PR man I have ever
known."

Within three years, Brown and Massey had transformed the "loosely knit, one-man show ... into
a smoothly run corporation with all the trappings of modern management," according
to Business Week. Retail outlets reached all 50 states, plus Puerto Rico, Mexico, Japan, Jamaica,
and the Bahamas. With 1,500 take-out stores and restaurants, Kentucky Fried Chicken ranked
sixth in volume among food-service companies; it trailed such giants as Howard Johnson, but
was ahead of McDonald's Corporation and International Dairy Queen.

In 1967, franchising remained the foundation of the business. For an initial $3,000 fee, a
franchisee went to "KFC University" to learn all the basics. While typical costs for a complete
Kentucky Fried Chicken start-up ran close to $65,000, some franchisees had already become

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 millionaires. Tying together a national image, the company began developing pre-fabricated red-
and-white striped buildings to appeal to tourists and residents in the United States.

The revolutionary choice Massey and Brown made was to change the Colonel's concept of a sit-
down Kentucky Fried Chicken dinner to a stand-up, take-out store emphasizing fast service and
low labor costs. This idea created, by 1970, 130 millionaires, all from selling the Colonel's
famous pressure-cooked chicken. But such unprecedented growth came with its cost, as Brown
remarked in Business Week: "At one time, I had 21 millionaires reporting to me at eight o'clock
every morning. It could drive you crazy." Despite the number of vocal franchisees, the
corporation lacked management depth. Brown tried to use successful franchisees as managers,
but their commitment rarely lasted more than a year or two. There was too much money to be
made as entrepreneurs.

Stock Plummets in 1970

Several observations about franchise arrangements noted by stock market analysts and
accountants in the late 1960s became widespread news by 1970. First, Wall Street noticed that
profits for many successful franchisers came from company-owned stores, not from the
independent shops--though this was not the case with Kentucky Fried Chicken. This fact tied in
with a memorandum circulated at Peat, Marwick, Mitchell & Company, and an article published
by Archibald MacKay in the Journal of Accountancy stating that income labeled "initial
franchise fees" was added when a franchise agreement was signed, regardless of whether the
store ever opened or fees were collected. Such loose accounting practices caused a Wall Street
reaction: franchisers, enjoying the reputation as "glamour stocks" through the 1960s, were no
longer so highly regarded. Kentucky Fried Chicken stock hit a high of $55.50 in 1969, then fell
to as low as $10 per share within a year.

In early 1970, following a number of disagreements with Brown, Massey resigned. When several
other key leaders departed the company, Brown found the housecleaning he planned already in
progress. A number of food and finance specialists joined Kentucky Fried Chicken, including R.
C. Beeson as chief operational officer and Joseph Kesselman as chief financial officer.
Kesselman brought in new marketing, controlling, and computer experts; he also obtained the
company's first large-scale loan package ($30 million plus a $20 million credit line). By August
1970 the shake-up was clear: Colonel Harland Sanders, his grandson Harland Adams, and
George Baker, who had run company operations, resigned from the board of directors. Colonel
Sanders, at 80, knew his limits. In a 1970 New York Times article, Sanders stated, "[I] realized
that I was someplace I had no place being.... Everything that a board of a big corporation does is
over my head and I'm confused by the talk and high finance discussed at these meetings."

CEO Brown spent the rough year of 1970 shoring up his company's base of operations. By
September, Kentucky Fried Chicken operated a total of 3,400 fast-food outlets; the company

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 owned 823 of these units. The company, once too large for the Colonel to handle, grew too
mammoth for John Y. Brown as well. In July 1971 Kentucky Fried Chicken merged with
Connecticut-based Heublein Inc., a specialty food and alcoholic beverage corporation. Sales for
Kentucky Fried Chicken had reached $700 million, and Brown, at age 37, left the company with
a personal net worth of $35 million. Interviewed for the Wall Street Journal regarding the
company's 1970 financial overhaul, Brown commented, "You never saw a more negative
bunch.... If I'd have listened to them in the first place, we'd never have started Kentucky Fried
Chicken." Article author Frederick C. Klein included closing parenthetical remarks in which
observers close to the company noted that "in engineering Kentucky Fried Chicken's explosive
growth, Mr. Brown neglected to install needed financial controls and food-research facilities, and
had let relations with some franchise holders go sour."

Heublein Makes Changes in 1970s

Heublein planned to increase Kentucky Fried Chicken's volume with its marketing know-how.
Through the 1970s the company introduced some new products to compete with other fast-food
markets. The popularity of barbecued spare ribs, introduced in 1975, kept the numbers for
Kentucky Fried Chicken looking better than they really were. As management concentrated on
overall store sales, they failed to notice that the basic chicken business was slacking off.
Competitors' sales increased as Kentucky Fried Chicken's dropped.

Major country-leaders of this institution of KFC

 TONY LOWINGS- Outgoing KFC Global Chief Executive Officer KFC Global

 SABIR SAMI- Incoming KFC Global Chief Executive Officer KFC Global

 DYKE SHIPP- President of KFC Global KFC Global

 CATHERINE TAN-GILLESPIE- Chief Marketing Officer KFC Global

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  VINOD MAHBOOBANI- Chief Legal Officer

 NITIN CHATURVEDI- Chief Digital Transformation Officer

 SHANNON HENNESSY- Chief Financial Officer

Locate the Philippines in this map of interconnections.

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How does this institution influence global economic activity? How does it affect
economics in the Philippines?
KFC is one of the biggest fast food companies in the world. With 18,000 outlets in over 115 countries,
they naturally sell many products daily. As a profit-driven corporation and part of the private sector, there are
many parts of this company that create social, economic, and environmental problems in our society. In order
to live in a truly sustainable world, we must realize the issues, and contribute by each doing a small act. It is
our responsibility as global citizens to make sure the rights of fellow humans and animals are not violated.

Since 2009, KFC Philippines has been a partner of the United Nation’s World Food Programme
(WFP). The partnership over the years has fed millions of individuals in conflict affected areas in Mindanao.
From November 2012 to January 2013, in time for the season of giving, KFC will be spreading the joy once
again to children beneficiaries of the WHRP in Mindanao with the introduction of the Fully Loved Meal. For
only Php 99, KFC’s Fully Loved Meal is composed of the brand’s much loved 1 piece chicken with rice along
with mashed potato and soft drink. More importantly, with a single purchase of the meal, Php 5 will be
automatically donated to the WHRP. “KFC Philippines is a company that values. Sharing, more importantly,
where it is most needed,” said Cess Cuartero, KFC Philippines, Category Manager, “In line with the spirit of
giving which is most evident this season, we are proud to introduce our Fully Loved Meal. Not only do
customers enjoy our signature dishes but through it, they share so good food to children who are benefiting
from the World Hunger Relief Program,” added Cuartero. The Fully Loved Meal is only available for dine-in
and take-out customers. Those who will not be purchasing the Fully Loved Meal can also share their blessings
to the less fortunate through the campaign’s canister initiative, encouraging people to share their Php 10 to
feed a child.
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