One could easily notice the sprawling Fried Chicken restaurants, with (something +) FC suffix (sounding close to KFC) both before and after KFC started operation in Bangladesh. Should KFC sue them for close-sounding names, or for cloning their product lines? Two answers are there. So choose one of them.
From legal point of view, of course, KFC can sue other close sounding brand names with good probability to win the case, resulting in closure of / injunction on clone brands, or barring those brands from using such names. There is one positive point: KFC has greater chance to win due to the strength of their legal position. There are two downsides too: people buying cheaper clones would develop a negative image about KFC, as if KFC is flexing its legal muscle to dominate in the market (even though KFC is right from legal point). Second, being barred from using close-sounding names, those clone brands will go for distinct brand names that would be more perilous for KFC in the long run.
This is so because we are almost indifferent among other anyFCs assuming that all of them try to copy KFC, so anyFC would be bought when we are not consuming KFC. Thus, by perceptually grouping all anyFCs in one cluster, KFC is actually fighting one generic group of competitors who have weak identity. This weak identity will go away once legal injunction is imposed and all clone brands start using distinct names (remember: unique identity plus differentiation equals branding!).
So what should KFC do in this regard? Should they just leave them alone and make them perceptually a second grader to KFC since clone brands are perceptually positioned to be a follower, and not a leader? Have you ever imagined how these close-sounding names have actually promoted KFC itself, putting this in the minds of buyers that they are following the “leader” KFC?