The family of Monika Samaan sought $10 million compensation from KFC in the New South Wales Supreme Court, the Australian Associated Press reported.
They claimed the then 7-year-old became ill after eating the wrap in western Sydney in 2005.
Monika, who was in a coma for six months, is effectively now a quadriplegic and is severely brain damaged, according to Australia's ABC News.
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During the 2010 trial, Monika's father told the court that he, his wife and their son were also sick with vomiting and diarrhea after sharing Monika's Twister.
KFC has denied the claim since it was launched, but on Friday judge Stephen Rothman found in favor of the family.
KFC has vowed to appeal the ruling, saying it was "deeply disappointed and surprised."
"We believe the evidence showed KFC did not cause this tragedy and, after reviewing the judgment and seeking further advice from our lawyers, we have decided to appeal Justice Rothman's decision," the Herald Sun quoted KFC Australia's chief corporate affairs officer Sally Glover as saying.
"We feel deeply for Monika and the Samaan family, however, we also have a responsibility to defend KFC's reputation as a provider of safe, high-quality food."
During the trial, KFC lawyer Ian Barker argued there ‘‘never was a shared Twister’’ because there was no sales data to prove the family had purchased it.
The family's lawyer George Vlahakis, meantime, said in a statement on Saturday that: "KFC chose to put Monika and her family through a court hearing over several weeks which they adjourned twice so that the process so far has taken seven years since she sustained her injuries.
"KFC of course got a completely fair hearing and were represented by a large team of lawyers from a multi-national firm and their own in-house legal team.
"Monika is represented by a sole practitioner law firm and the family has virtually no resources other than their love for one another, their courage and their belief in themselves and their case."
Vlahakis said KFC should just accept the court’s decision.
"They represent themselves as great sponsors of cricket in Australia. It is a real pity that they will not abide by the umpire’s decision. Instead they appear intent upon continuing to use their vast resources to defeat Monika rather than face up to their responsibilities which the court has found against them."