KFC® in the News

Contacts:
Laura Melillo, KFC Corporation (502) 456-8042
Bob Peck, R. P. Peck Enterprises, Inc. (405) 691-2728
John R. Neal, JRN, Inc. (615) 381-3000

KFC AND FRANCHISEES SETTLE LONG-STANDING CONTRACT DISPUTE; EMBARK ON "TEAM 5000"

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SPIRIT OF COOPERATION MARKS END
OF SEVEN-YEAR LAWSUIT

LOUISVILLE, KY. (February 7, 1996) -Kentucky Fried Chicken (KFC) Corporation and the Association of Kentucky Fried Chicken Franchisees, Inc. jointly announced today the successful conclusion of a long-standing franchise contract dispute. The agreement marks the end of the dispute which began in 1989, and signals the beginning of a unified commitment to the future of KFC.

"This agreement represents a 'win-win-win' outcome: a win for KFC franchisees, a win for KFC Corporation and a win for our entire system," said Bob Peck, a franchisee from Oklahoma City, Okla., and a representative of the franchisee system throughout the entire seven years of negotiations.

While both parties have agreed to keep the details of the settlement confidential for now, the crux of the agreement revolves around KFC franchisees receiving permanent territorial protection. In turn, KFC Corporation will have more direct influence over certain national advertising and public relations activities.

"In the past year, KFC franchisees have played a lead role in helping to turn around KFC sales and profits," said David Novak, KFC president and CEO. "Putting the contract issue behind us will give us a unity of purpose, taking our business to even higher levels. We'll be 'Team 5000' as we grow our 5,000 U.S. restaurants together."

KFC recently highlighted the "Team 5000" theme at the franchisee convention last month. The concept focuses on the joint efforts of the KFC system, company and franchisees together, growing the business through areas such as: new product development, operations simplification and new programs such as "Promise Pride"- which focus on creating the best customer experience in the industry.

Another example of the "Team 5000" partnership is demonstrated by KFC's "Chefs' Council," a group of company and franchisee members sharing ideas and working together to develop new products and concepts. This unique team is credited with the development and launch of KFC's two newest products, "Colonel's Crispy Strips" and "Chunky Chicken Pot Pie."

" 'Team 5000' represents the unified spirit of the system. It is our foundation for growth built on teamwork and commitment to customer satisfaction," continued David Novak. "It's the future of the company as we grow sales and unit penetration."

KFC Corporation and its franchisees operate more than 5,000 outlets domestically, consisting of 2,000 company and 3,000-plus franchise units. KFC is the world's most popular chicken restaurant chain specializing in both fried and rotisserie chicken and homestyle sides. Since its beginning under Colonel Harland Sanders, KFC has been "America's Leading Kitchen for Convenient Meals," serving customers delicious, already-prepared meals at affordable prices. KFC Corporation is a subsidiary of PepsiCo, Inc., Purchase, N.Y. (PEP). The Association of Kentucky Fried Chicken Franchisees, Inc. is the independent association of KFC franchisees throughout the Western Hemisphere.

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