The Baskin-Robbins is an ice cream brand that offers an excellent business opportunity for relatively low initial investment, so this review about Baskin-Robbins franchise cost, fee, and profit can be helpful to all aspiring entrepreneurs who don’t know where to start.
This company started with the business in 1945, and they are one of the pioneers of the Ice Cream Industry in the U.S. At present, this franchisor operates in more than 50 countries in more than 7,700 locations.
This franchising company has approximately 2,500 stores in the U.S and more than 5,000 units in international locations. So, this information about the Baskin-Robbins franchise cost and owner profit can be the first step in starting a new business venture for those investors who live in and outside of the United States.
How Much Does The Baskin-Robbins Franchise Cost
The opening of the Baskin-Robbins franchise will cost investors between $ 91,000 and $ 625,000. Whether starting this store will require a low or high initial investment fund will primarily depend on the facility size and the franchise’s location.
The most significant starting expense is related to the leasehold improvements that the new franchisees will be obligated to do inside the shop. These space modifications usually cost an investor between $115,000 to $197,760.
However, as a company, this franchisor offers the possibility of funding all necessary real estate improvement expenses, and in that case, the leasehold development cost can be $0!
Still, the franchisee will need to return to the franchisor money, and that cost will be incorporated in the monthly rent. So, rent will likely be based on development costs and reflect a rate of return of the franchisor’s initial investment.
The higher-end ($625,000)of this above initial investment prediction about Baskin-Robbins franchise cost is related to the locations that have a drive-thru and operate in standalone buildings.
Baskin-Robbins franchise list of starting costs:
- Leasehold Improvements: $123,000 to $267,000
- Equipment, Fixtures and Signs: $115,000 to $197,760
- Initial Fee: $0 to $25,000
- Miscellaneous Opening Costs: $9,500 to $28,000
- Licenses, Permits, and Deposits: $6,000 to $20,000
- Opening Inventory: $5,000 to $8,000
- Insurance: $3,500 to $8,300
- Opening Marketing Campaigns: $3,000 to $5,000
- Store POS System: $1,440 to $15,000
- Expenses During Initial Training: $1,000 to $9,000
- Uniforms: $400 to $800
- Working Capital(first 3 months): $0 to $52,500
- Estimated Total Investment: $91,000 to $625,000
The Veterans of the U.S Army forces do not pay the Initial Fee. It means that they will save $25,000, so Baskin-Robbins franchise cost will be reduced to a minimum for this group of investors.
Baskin-Robbins Franchise Fee
Except for paying a one-time Initial Fee of $25,000, the owner of the Baskin-Robbins franchise will need to pay 5,9% of the Royalty Fee and 5 % of the Ad Fund Fee. These fees the franchisor calculates according to gross sales, and franchisees must pay them every week.
When we combined all ongoing fees, we came to the total of 10,9 % that franchisee will need to forward to the franchisor. This amount of payments will be a pretty high ongoing operating cost, but franchisees get the proven concept and franchisor support in all business segments for paying them.
Although this percentage of the royalties is on the higher end of the franchising industry, it will not burden the overall business profitability of this store. Ice cream stores make excellent margins, so there will still be much profit space left for the owner of this franchise.
This franchisor usually offers the 20 years duration of the Franchise Agreement to franchisees, which means that investors will not need to pay every few years for the Renewal Fee cost. So, the owners can be safe to plan a long-term future under the framework of this brand.
Baskin-Robbins franchise list of the fees:
- Initial Fee: $25,000 – one time cost
- Royalty Fee: 5.9% of gross sales – an ongoing cost
- Ad Fund Fee: 5.0% of total gross sales – an ongoing cost
This franchisor offers specific incentive programs for some franchisees; usually, these are multi-units owners. So investors who wish to own more than one franchise can take advantage of that because, for them, the franchisor will reduce the Royalty Fee for a certain period after opening a new franchise.
Baskin-Robbins Franchise Profit
The Baskin-Robbins franchise units make gross sales between $420,000 to $1,400,000 per year, with a 20% profit margin. So the owner of this franchise can expect to make between $84,000 to 280,000 of the annual salary.
Will the owner’s annual salary be on the higher or lower end of our profit estimation will depend on the type of location. This franchisor offers a few types of franchises: the so-called ”Combo” and ”Single Brand” locations.
The Baskin-Robbins is operating under the same company as Dunkin Donuts. So, the ”Combo” locations are standalone buildings, in which one franchisee operates a Baskin and Dunkin franchise units under the same roof. Usually, these combo franchises make, on average, $1,389,000 of gross sales per year.
However, only a few percent of the investors will have the necessary funds to start ”Combo” locations, and that is due to the enormous initial cost. So the estimated profit of the ”Single Brand” franchise unit will be more objective data to all interested investors in this concept.
On average, Single Brand Baskin-Robbins franchises make a gross sales of $419,003, so the owner of this type of location can expect to make approximately $85,000 per year. Although it seems like a small amount, this is one of the most profitable franchises in the franchising industry.
According to ProfitableVenture, independent ice cream shop owners can expect margins between 30% to 60% of the gross sales. It means that when we reduce all franchisor royalties, we can make projections that the Baskin-Robbins franchise profit margin will be at least 20%.
All information about this franchise’s average gross sales is extracted from their Franchise Disclosure Document. So, this represents the most accurate data that can be found because all pieces of information are gathered directly from existing franchise unit owners.
Franchisor Overview
Burt Baskin and Irv Robbins founded this ice cream brand in 1948 in Glendale, California. With more than 7,500 franchises worldwide, they are in the group of the most spread brands by the number of units. At present, this is the most recognizable ice cream brand in the U.S.
The most significant advantages of starting this franchise are the relatively low initial starting cost and the excellent profit margins compared to how much salary other franchising systems deliver to their owners.
Usually, the most popular fast-food franchises deliver 7% to 13% of the margins to their owner. So we can conclude that the Baskin-Robbins franchise profit margin of 20% is one of the highest compared to all other franchising systems that today operate on the market.
If we analyze this company’s number of units, we see that they have been on a steady growth trajectory ever since the start of the business in the 1940s.
Opening this ice cream store is a relatively low-risk investment because this franchisor has been operating together with franchisees successfully on the market for more than 70 years.
We must mention that this franchisor has wholly reduced the Initial Fee cost for the Veterans. So this franchising opportunity will be the ideal choice for retired Veterans who want to start their own business.
As mentioned above, this franchisor is part of the same company as Dunkin Donuts. So investors who have a high investing budget and wish to own both of these brand stores can make it possible now.
Summary
When we analyze the Baskin-Robbins franchise cost and profit ratio, we can conclude that owning this ice cream store can be a very lucrative business opportunity. This market is very competitive, so an owner who operates under the trademarks of this brand can expect more regular customers than independent ice cream shops have.
Although these franchises are not on the top of the franchising industry by the gross sales, they deliver excellent profit margins. It means that investing in this franchise will pay off to the investor, so this will be an ideal opportunity for aspiring business owners who want to start an ice cream store.