Do you want to start a Dunkin Donuts franchise and want to know the fees, agreement, details? If YES, here’s how much it cost to buy a Dunkin Donuts franchise. Dunkin Donuts is an American global doughnut company and coffeehouse that took its roots from Canton, Massachusetts.
It was founded in 1950 by William Rosenberg in Quincy, Massachusetts and it turned out to be one of the largest coffee and baked goods chains in the world, boasting of more than 12,000 restaurants in 36 countries. The chain retails snack offerings like doughnuts, bagels, other baked goods, and a variety of hot and iced beverages, chief among them is coffee.
Buying a Dunkin Donuts Franchise and How Much It Cost
Details to Note When Intending to Acquire a Dunkin’ Donuts Franchise
- Franchise Description
Dunkin’ Donuts isn’t just the number one retailer of coffee and donuts; they are also one of the largest coffee and baked good chains in the world. With more than 12,300 locations in over 45 countries, they are still keeping their franchise offerings open in the hopes of reaching the whole world.
- Product Offerings
Dunkin’ Donuts retails coffee, donuts, bagels, muffins, compatible bakery products, sandwiches, as well as other food items and beverages compatible with the franchisor’s concept.
Types of Restaurants
Dunkin Donuts run the following types of restaurants;
- Freestanding: this is a restaurant that is either newly constructed or an existing structure (to be retrofit), that does not share any common walls with any third party.
- Shopping Center/Storefront: this is a restaurant that shares a common wall (or walls) with third parties. The Restaurant could be an anchor (endcap) or inline tenant space in a strip center, or it could be a location in a high density, multiple level construction (typically urban/downtown office building setting), that shares common wall and ceiling/floor construction with any third party.
- Gas/Convenience Restaurants: this is a restaurant that is a sub-or shared tenancy within a Gas/Convenience host environment.
- Alternative Points of Distribution (APOD): These Restaurants and any cart or kiosk locations are sometimes referred to as special distribution opportunities or non-traditional outlets, and may be located within another host establishment, such as a stadium or another retail facility.
Dunkin’ Donuts Franchisee Training
The Dunkin’ Donuts team, in order to ensure that their franchise outlets are run according to specification, made provisions for extensive franchisee training programs that cover branding, business management and more. Franchisees are supported by an experienced team that provides marketing, development, and operations support.
The Dunkin’ Donuts Core Initial Training program takes a minimum of 20 days to complete, and the the program is comprised of the classroom/instructional phases. This program does include online training, in-restaurant practice (typically in the franchisee’s home market) or travel time and is offered a minimum of 25 times a year at Dunkin’ Brands University in Braintree, Massachusetts, or in a designated training Restaurant.
The classroom and in-restaurant time is based on 10 hour days. Some of the franchisor’s required classes are only offered on the Internet and are referred to as online training. These classes will require approximately 65 hours to complete. This is in addition to the classes listed above.
In addition, for the first Restaurant, the franchisor may require franchisees to participate for up to 10 days in the opening of another Restaurant. Franchisees must attend and require their employees to attend further training as the franchisor may from time to time require. This training may require travel to the franchisor’s training facility.
Dunkin’ Donuts Management of an Outlet
Dunkin Donut franchisees are mandated to at all times manage their network with at least two individuals. One of those individuals must be the franchisee or another partner, shareholder (if franchisee is a corporation) or member (if franchisee is a Limited Liability Company).
The other individual must be a designated representative of the organization. Both of these individuals are required to have successfully completed the required training program, which may vary based on the roles in their organization.
- Dunkin’ Donuts Franchisee Territory
Dunkin Donut franchisees are not given an exclusive territory, and they may not demand for one. The franchisee’s right to operate a Restaurant pursuant to a Franchise Agreement is limited solely to the location set forth in the Franchise Agreement. Franchisees are not granted any minimum territory.
The franchisor has the absolute right to distribute (or license others to distribute) products identified by its trademarks (or by any other name or trademark) anywhere and in any form (e.g., in packaged form or otherwise), regardless of the proximity to the franchisee’s location, through any distribution methods or channels.
- Obligations and Restrictions
Dunkin Donut franchisees must of necessity devote continuous efforts to the development, management and operation of Dunkin Donut franchise. This means devoting sufficient time and resources to ensure full and complete compliance with their obligations to the franchisor, to their customers and to others.
Franchisees are not allowed to conduct any other business or activity at the restaurant without the franchisor’s prior written approval. Franchisees may only offer or sell products approved by the franchisor and they must offer for sale the full menu prescribed by the franchisor, according to their location. Franchisees are not permitted to sell or distribute goods or services through the use of the Internet or other electronic communications without prior permission.
- Term of Agreement and Renewal
The length of the Dunkin Donut franchise is usually 20 years. The laws in some states require a franchisor to renew a franchise agreement, unless it has good cause not to renew. If franchisees and their Franchise Agreement qualify for renewal under these laws, the franchisor will offer renewal to them as required by law.
Dunkin’ Donuts Financial Assistance for Franchisees
Dunkin Donut has facilitated certain lending arrangements, through third-party lenders which may provide financing for qualified franchisees. The amount of financing and period of repayment varies by program, circumstances, and creditworthiness of the applicant.
But asides this, Dunkin Donut does not typically offer financing; however, it may from time to time, at its discretion, offer voluntary financing to existing franchisees for specific programs such as the purchase of specialized equipment or accelerated development in specified markets.
- The Location
Dunkin donut real estate and construction experts are always on standby to assist franchisees to identify and develop their restaurant’s physical space. Franchises are mandated to abide by Dunkin Donut requirements when choosing their location and the company would provide the construction team for the new restaurant so as to meet company standards.
Dunkin Donut preferred site criteria are as follows;
- Site Size – 1/4 – 2 acres
- Building Size – 1,200 to 2,600 square feet
- Each Dunkin Donut site must have high visibility from major location arteries, easy entry and exit, a minimum of one (1) parking space for every three (3) seats, and they have an option to run a 24 hour operation.
Financial Requirements for Dunkin’ Donuts Franchisees
- Initial Franchise Fee – $40,000 to $90,000
- Initial Investment – $217,300 to $1,637,700
- Ongoing Royalty Fee – 5.9%
- Ad Royalty Fee – 2-6%
- Net Worth Requirement – $250,000
- Liquid Cash Requirement – $125,000
- Initial Franchise Fee – $40,000 to $90,000
- Building Costs – $19,500 to $588,653
- Site Development Costs – $0 to $295,500
- Additional Development Costs – $4,700 to $150,000
- Equipment, Fixtures and Signs – $25,000 to $269,250
- Electronic Cash Register/Retail Technology System – $16,000 to $61,000
- Opening Inventory – $4,000 to $20,000
- Miscellaneous Opening Costs – $9,500 to $70,000
- Licenses, Permits, Fees and Deposits – $500 to $5,500
- Uniforms – $0 to $1,200
- Insurance – $4,500 to $16,000
- Travel and Living Expenses While Training – $2,000 to $35,000
- Marketing Start-Up Fee – $0 to $10,000
- Additional Funds for First 3 Months of Operation – $0 t$100 ,000
- Estimated Total (doesn’t include real estate costs) – $97,500 to $1,717,103
- Continuing Franchise Fee – 5.9% of gross sales.
- Continuing Advertising Fee – 5% of total gross sales.
- CDC Annual Lease Administration Fee – $1,200 each year
Qualified Veterans who intend to own the Dunkin’ Donuts franchise, and who would want to purchase a Store Development Agreement for five years, would have a 20% discount on the Initial Franchise Fee. It should be noted that they have the right to cancel or modify this program at any time.
Dunkin’ Donuts Franchisee Qualifications
To qualify for a Dunkin donut franchise, franchisees are required to have;
- Experience in food service, retail, and/or multi-unit management experience.
- All single and multi-unit operators are required to have a minimum liquid asset of at least $250,000 and net worth of $500,000 per restaurant (varies by market).
- They should also have the desire and resources to purchase a development opportunity for one or more locations
- And finally, they should have an understanding of the real estate development process and a drive for local store marketing.
11 Steps to Acquire a Dunkin Donuts Franchise
1. Send in an application: The first step to start off with when intending to acquire a Dunkin Donuts franchise is to go their website and complete an application. The application after it is submitted is reviewed by the Dunkin’ Donuts franchise team who would then contact the intending franchisee if all is well.
2. Receive and review Franchise Disclosure Document: If the intending franchisee’s application passed scrutiny, he or she would then be sent the Franchise Disclosure Document (FDD). The franchise disclosure document which is required by the Federal Trade commission provides prospective franchisees with information about the franchisor, the franchise system and the agreements that will be required so that you have the information needed to make an informed decision.
3. Provide proofs: The intending franchisee is required to provide proof of citizenship or Permanent Resident/Alien Registration Card, provide proof of assets, provide credit check and initial financial review. All these documents would have to be submitted for review before the process can be continued.
4. Business Plan: Once the initial screening is complete, the franchisee is then invited to meet with the Franchise Manager to review his or her business plan. After the meeting, the franchisee is then given the opportunity to interact with existing franchisees and ask them questions freely. It should be noted that without this fora, it is typically difficult for franchisees to talk with an intending franchisee.
5. Conduct due diligence: the franchisee is expected to conduct due diligence of the business he intends to start.
6. Select territory and develop business plan: Once due diligence has been completed, the franchisee is expected to develop and submit his business plan while he or she selects a suitable territory.
7. Financial Review: After the business plan has been presented to the Franchise Manager for review and correction, the franchisee is at this point required to submit completed legal entity documentation.
8. Approval: when the financial review is completed without issues, and the business plan has been approved, at this point the franchisee would then have their franchise request approved, and he qualifies to answer a Dunkin Donut franchisee.
9. Training: After the approval nod has been received, the franchisee is expected to sign the Store Development Agreement (SDA). If approval is received, the franchisee then begins franchisee training. The franchisee is then required to select and submit their preferred site for approval.
10. Secure financing: The franchisee is now required to source for funds to start off his or her restaurant. The person can secure a loan from the bank or from any other convenient source.
11. Grand Opening: The franchisee has to make sure to finalize lease or purchase agreements and sign the franchise agreement if it has not been signed previously. They are also required to begin construction of their restaurant if they are starting a new restaurant and not taking over an old one.
In the case of an old one, they have to start making modifications and equipping it. Since construction would take a while, you need to fill in the gap with crew training. After the construction is done and crew have been trained, the restaurant can now set a date for its grand opening and then open to the public.