SORRY THE FDD SCREENCAPTURE HAD A TECHNICAL GLITCH!
Dunkin' Donuts is another franchise we get a lot of calls about. A lot of people think they want to buy a Dunkin' - but is it a good investment? How much does a Dunkin' Donuts Franchise Cost, and how much can I make?
Dunkin' Donuts is another one of those Iconic brands that often entices people just by virtue of the huge name, to think it is the best franchise option out there. Because surely this 12,000 location strong brand I see everywhere is the biggest moneymaker out there. Let's take a look.
We just got access to the brand new 2018 FDD for Dunkin so all the numbers for today are are as up to date as you can get. The cost to open a Freestanding location ranges between $245,200 to $1,717,103 - and none of these numbers include real estate costs. A shopping center storefront is $228,621 to $1,202,880. Setting up a Dunkin in a Gas or Convenience store location will range between $108,904 to $741,100 and that price will vary depending on whether the baked goods are actually made on site. There is also an APOD or Alternative Points of Distribution model which ranges between $97,500 to $542,805. These are non traditional locations like transportation terminals, casinos, colleges, military bases etc.
Your ongoing fees will include what Dunkin' Donuts calls their Continuing Franchise Fee 5.9% of Gross sales, and a continuing Advertising fee of 5% of Gross,
The franchisee goes on to say "After talking to dozens of franchise owners just like us, we learned that this was more than an unusual litigation binge. This was a corporate strategy.
In order to compete with Starbucks, Dunkin' Donuts has announced a plan to open 15,000 stores by 2016.
The NY daily News article goes on to say: Dunkin' Donuts has sued other franchise owners 154 times since 2006, this was written in 2008. Over the same stretch of time, McDonald's was involved in five lawsuits. And Subway, a company that has four times the number of locations as Dunkin' Donuts, sued its franchises 12 times.
Now we can't be certain of the validity of this specific claim, and the Dunkin' Donuts 2018 FDD does not reflect the number of lawsuits suggested in that article however we were able to access the 2008 FDD and sure enough there were dozens of lawsuits listed. There is a sharp contrast between the 2008 and 2018 FDD's with many fewer lawsuits. We can only speculate why this may be the case, maybe Dunkin' realized that these lawsuits can really hurt a brand long term. Look at Tim Hortons.
So the question everyone wants to know - how much can I make with a Dunkin' Donuts franchise? Let's look at the FDD. So Dunkin' actually has a really nice and clean Item 19 which breaks down stores by regions, as well as by type of store. We don't have enough time to look at every category so we'll just explore averages. For example a freestanding non drive through in the Midwest will see about $894,916 in average sales, a drive through restaurant in the Northeast will see about $1,400,932. Shopping center storefront types are a bit lower between $835,906 and just over a million ($1,068,982), and gas and convenience sites between about $620,159 and $932,175. Again I'm not doing justice to the numbers or regional breakdown and encourage anyone who is interested in a Dunkin' Donuts franchise to check the FDD themselves to get a better handle on their specific region and selected store type.
Now a million dollars may sound like a lot of money but how does that compare to other franchises? Well if we consult the QSR50, which is a great list comparing the top 50 QSR franchises and Ill post that link down below, we see Dunkin' Donuts is 13 spots from the bottom sorted by annual revenue. Now the 2018 QSR50 is not yet available so we expect these numbers will change. But from a revenue standpoint we see Chick-Fil-A way at the top at over 4.4 million in revenue per store, and Baskin Robbins way at the bottom with only $237,000 per store. Remember from that million comes your royalties, salaries, rent, taxes, and lots of other expenses. So from a purely revenue standpoint Dunkin' Donuts is not near the top comparatively.
So is Dunkin' Donuts franchise a good investment? Depending on your situation and most importantly your location, it could be. We suggest investors always look at several franchises to compare call your options, maybe even those outside of food franchises.
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http://www.dunkinfranchising.com/franchisee/en.html
https://www.dunkindonuts.com/en
http://www.unhappyfranchisee.com/category/franchisor/dunkin-donuts-franchisor/