I previously wrote an article where I looked at what it costs to open a Baskin-Robbins franchise. This is another part in the same series where I try and help educate potential franchisees.
It’s all part of a project to make potential franchisees make better decisions, which is crucial for your long-term happiness as a business owner.
Needless to say, understanding fee structures is crucial for your continued success, particularly when you consider becoming a franchise owner.
When you go in business for yourself, you can generally get a very good understanding of fees. Because you’ll usually need to read 400 pages of FDDs (franchise disclosure documents) when opening a franchise, it’s easy to get lost or overlook crucial information.
The short answer is that it costs between $210,900 and $1,832,500 to open a Dunkin’ Donuts franchise location. At the same time, the Dunkin’ Donuts franchise fee ranges between $45,340 and $100,340, which is included in the overall cost number.
It’s important to look at investment numbers relative to what you’re expecting to make from that investment (ROI – return on investment). For instance, if you can make $300,000 per year on a $800,000 investment, it’s a good decision. However, if you make $50,000 per year on a $1M investment, that’s a much worse ROI, assuming other things are equal.
Dunkin’ Donuts Franchise Fee & Costs
Understanding the fee structure of Dunkin’ Donuts is imperative for any potential franchisee, but it’s only a portion of understanding what life as a franchisee looks like. I’ve previously highlighted how I feel some franchises are borderline misleading when representing facts to potential franchisees (the gym industry is notorious for this).
While it’s important you understand the overall costs of starting a franchise, it’s important to also take a bird’s eye view on the company you’re considering investing in.
- Are current franchisees happy?
- Can you find unexpected costs franchisees are incurring that you didn’t anticipate?
- Are there reports of unhappy franchisees of a company as a full picture of said company wasn’t adequately reported to a potential franchisee prior to investing?
When you review Dunkin’ Donuts’ franchise disclosure document (FDD), you’ll find fees & costs listed in Item 5 and 6. Whereas Item 6 lists continuous fees you’ll pay to Dunkin’, Item 5 lists the initial fees you’re encountering.
Taking a look at Item 5, it’s interesting how Dunkin’ Donuts does its franchising fee and really quite atypical. It’s not uncommon that there is some degree of variability in the way franchising fees are structured.
For instance, some companies allow veterans to obtain licenses at lower initial fees than non-veterans. That’s somewhat common practice, although it’s not necessarily a given. Dunkin’ Donuts, on the other hand, has structured the initial fees depending on geographic locations. If you’re looking to open a location in Utica, NY, your initial franchise fee for a Dunkin’ Donuts is $90,000. However, if you’re looking to open a Dunkin’ Donuts in Atlanta, GA, your initial franchise fee is “only” $50,000. The considerable difference in franchise fees depending on the location you’re hoping to open a location dictates most of the range in the initial franchise fees that I mentioned in the beginning of this article.
When you’re looking to open a Dunkin’ location, it’s important that you understand the initial fee structure as it’ll impact how much money is due and when. One advantage of Dunkin’ over other franchises is that the training fee is included in the original franchising fee for a select number of people, which isn’t always the case, and why Dunkin’s franchising fee may look considerably higher than other companies’.
However, it’s not to say that their fee structures are on the lower end of the spectrum even if you account for training being part of what you’re originally paying for.
Whether you’re looking at Dunkin’ or another company, it’s crucial that you study Item 5 in a detailed manner because it also outlines initial marketing expenses, multi-brand locations, and more. If you’re looking to get started and expect to want to proceed with one of these units within the next 3 to 6 months, I’d be happy to get on a call and more meticulously go over the fee structures.
You’ll find that Dunkin’ Donuts and Baskin-Robbins has very similar royalty structures which is likely because they’re owned by the same company. Dunkin’ Donuts has a 5.9% royalty of gross sales, which is the same as Baskin-Robbins. You’re also paying 5.0% of gross sales in continuing advertising fees, which is due weekly. What’s good to know is that the additional training fee for one more employee is $4,000 per person.
What I personally like about Dunkin’ Donuts is that it’s pretty straightforward what you’ll pay. Whether you like the fee structure or not is a different story. However, it’s not going to be one of the businesses where there’s a lot of convoluted surprises.
Again, if you open a gym (and some of them are bad), they’ll contractually lock you into renewing equipment each X number of years, which adds up. That’s not Dunkin’.
