Do you want to open an ice cream shop business by buying Dippin Dots franchise? If YES, here is how much it cost to open a Dippin Dots franchise successfully. Dippin’ Dots Franchising, L.L.C. started operation in 1988 and they began selling franchise in 1999. They have their corporate headquarters at Paducah, Kentucky and presently they have an estimated 240 franchise units in operation.

Dippin’ Dots Franchising, L.L.C. is the franchisor. Dippin’ Dots franchises sell Dippin’ Dots branded novelty frozen ice cream, yogurt, sherbet and ice products. The franchisor offers the opportunity to operate a Dippin’ Dots franchised business, which includes:

  • (1) the right to operate a fixed location Dippin’ Dots retail ice cream store or kiosk
  • (2) the right to sell Dippin’ Dots products at one or more events such as fairs, festivals, and similar-type events in a territory, and
  • (3) the right to sell Dippin’ Dots products in vending machines or freezers placed in retail locations in a territory.

Here are the basic costs required by Dippin’ Dots franchise LLC if you are interested in owning their franchise, and please note that the information given below has been compiled from the FDD of Dippin’ Dots. Year of FDD: 2021

The Estimated Initial Financial Investment Are;

  • Initial Franchise Fee – $7,500 – $15,000
  • Grand Opening Advertising Materials Expenditure – $500 – $2,500
  • Credit Card and Gift Card Processing – 5 – 0
  • Office and Retail Supplies – $100 – $500
  • Opening Inventory – $2,500 – $5,250
  • Insurance – $1,500 – $2,500
  • Printing and Signage – $499 – $5,000
  • Equipment (freezers, etc.) – $65,700 – $84,900
  • Leased Warehouse and Cold Storage – $5,000 – $20,000
  • 20 Ft. Box Truck Monthly Payments to Lease or Own – $1,000 – $2,000
  • Travel, Lodging, Meals, Etc. for Initial Training – $1,500 – $2,500
  • Real Estate and Improvements – $2,400 – $120,000
  • Security Deposit and Prepaid Rent – $500 – $10,000
  • Miscellaneous Start-Up Costs – $12,500 – $32,500
  • Additional Funds (6 months) – $10,250 – $63,500

ESTIMATED TOTAL – $112,204 – $366,950

Here are Other Fees Associated with Opening Dippin’ Dots Franchise

  • Royalty – $2.16 per gallon for bulk ice cream products. $0.09 per unit for prepack units and Up to 6% on ancillary items (non-Dippin’ Dots manufactured retail food, drink and/or nonfood approved items).
  • Advertising Fund Contributions – $0.24 per gallon for bulk ice cream products. $0.01 per unit for prepack units and Up to 2% on ancillary items (non-Dippin’ Dots manufactured retail food, drink and/or non-food approved items).
  • Regional Advertising Fund Contributions – Up to 50% of the contributions made to advertising fund.
  • Additional Training Fees – $75 per day per person.
  • Relocation Fee for Relocation of Franchised Business – $1,000
  • Evaluation and Testing of New Approved Supplier – Reasonable cost of the evaluation and testing.
  • Reimbursement of Amounts Paid to Correct Any Deficiencies – Actual cost to franchisor.
  • Replacement Fee for Lost Manuals – At least $200.
  • P.O.S. System Transaction Fee – $100 – $150 per month.
  • Late Fee for Sales Reports – $5 per day.
  • Late Fee for Profit and Loss Statement – $5 per day.
  • Interest on Understated Amounts Payable – 18% per annum or the maximum rate permitted by law, whichever is less.
  • Reimbursement of Audit Costs – Actual cost to franchisor.
  • Insurance Coverage – Actual cost to franchisor.
  • Late Fee for Certificates of Insurance             – $5 per day.

Transfer Fee – The lesser of $7,500 or 10% of the sales consideration plus any attorney fees incurred by the franchisor in connection with its review of and processing of the transfer.

For existing Dippin’ Dots franchisees transferring their interests to an existing Dippin’ Dots franchisee – The lesser of $1,000 or 10% of the sales consideration per franchise sold plus any attorney fees incurred by the franchisor in connection with its review of and processing of the transfer.

  • Fee to Add Minority Equity Owner – $1,000 Damages, Costs and Expenses Upon Default            Actual damages, costs and expenses, including reasonable attorneys’ fees, incurred by the franchisor as a result of the default.
  • Indemnification – Actual cost to franchisor.
  • Fee for Infringement of Rights of Other Franchisee or customer of DDL – $250 for freezer placements (FDMC channel, food, drug, mass convenience/club).
  • Fairs, festivals, events – $1,000 for first breach. $2,500 for subsequent breaches.
  • Franchisee Council Membership Dues – $100 per year.

In Summary

Dippin’ Dots has a franchise fee of up to $15,000, with total initial investment range of $112,204 – $366,950.

  • Initial Investment – $112,204 – $366,950
  • Net-worth Requirement – $250,000
  • Liquid Cash Requirement – $80,000

ONGOING FEES

  • Initial Franchise Fee – $15,000
  • Ongoing Royalty Fee – Varies
  • Ad Royalty Fee – Varies

Please note that the overall cost of opening Dippin’ Dots franchise covers the following;

What You Get After Buying Dippin Dots Franchise

i. Training

The franchisor will provide basic management training for up to two trainees during a four-day training period (minimum of seven hours per day) at its offices or a designated Dippin’ Dots business. Unless otherwise agreed in writing, franchisees (or, if the franchised business is not owned by an individual, the principal owner) must be one of the trainees.

All trainees must satisfactorily pass the basic management training test to the franchisor’s satisfaction. The franchisor will provide franchisees with opening support, if it deems necessary, for up to two days to assist in the opening of the Dippin’ Dots franchise.

The franchisor may provide refresher or additional training programs, seminars or advanced management training for franchisees and their employees at its principal training facility (or any other location it designates provided the other location is closer to the franchised business).

ii. Territory Granted

Franchisees will not receive an exclusive territory. The franchise granted to franchisees will permit them to sell Dippin’ Dots products within a specified territory. Except for the possible operation of Doc Popcorn franchises (wholly owned subsidiary of the franchisor’s), neither the franchisor nor any of its affiliates operate or plan to operate or franchise businesses under a different trademark that will sell similar goods or services to those franchisees are selling.

The size of each franchisee’s territory is not uniform and will depend on many factors such as location, population density, consumer median income in the territory, the franchisee’s financial resources, and the franchisee’s proximity to other franchisees or other sales avenues.

The minimum territory that any Dippin’ Dots franchisee would be granted by the franchisor would be a territory consisting of the shopping mall or general shopping center in which the fixed-location retail store is located. In connection with establishing a territory, the franchisor and the franchisee will mutually agree on a performance plan. In the event franchisees do not meet the performance requirements in the performance plan, then

  • (i) the franchisor may, and may permit others to, solicit and make sales in the territory, or
  • (ii) reduce the size of the territory, in its sole discretion, to a size that it determines to be appropriate based on the franchisee’s level of performance.
Solomon. O'Chucks