Yum says big refranchising deals hard to do

LOS ANGELES, April 23 (Reuters) - Yum Brands Inc (YUM.N), the operator of the KFC, Taco Bell and Pizza Hut fast-food chains, said on Wednesday that tight lending standards have made it difficult to sell large groups of company-owned restaurants to franchisees.

Yum Chief Financial Officer Richard Carucci said in the company's earnings call with analysts that lenders are requiring 35 percent equity or more on larger deals -- more than the 25-plus percent the company has traditionally required.

"The banks are requiring 35-plus equity to lend, and it's hard for the buyers in some cases to make that work," Carucci said.

"On the small deals we're able to still make that work, because people have equity in their existing business," he said.

Selling restaurants reduces company sales, but improves profit margins because the company collects more franchise fees without having to operate restaurants.

Yum, Chili's Grill & Bar owner Brinker International Inc (EAT.N) and Carl's Jr owner CKE Restaurants Inc (CKR.N) are among the operators that have been selling company-owned eateries to franchisees. (Reporting by Lisa Baertlein; Editing by Brian Moss)