If you have been wondering how much does a Dunkin’ Donuts franchise costs and what the requirements are to start it, you’re in the right place. We will outline the important must-know information about this franchising opportunity to all those entrepreneurs who consider investing money in it.
- At the start of 2022, there were 9,083 U.S based Dunkin’ Restaurants and 3,536 international franchises.
- The Dunkin’ Donuts cost in range from $121,400 to $1,787,700
- The Dunkin’ Franchise Initial Fee is in the range of $40,000 to $90,000
- The franchisees must pay a 5.9% of Royalty Fee and a 5.0% of Ad Fund Fee from Gross Sales.
- The Dunkin’ shops are high earners; on average, they make more than $1,000,000 in Gross Sales per year.
How Much Does The Dunkin’ Donuts Franchise Cost
The cost of a Dunkin’ Donuts franchise ranges from $121,400 to $1,787,700. Will be starting costs on the lower or higher end of our estimation depend primarily on the type of the location and its geographical position.
Freestanding locations with a drive-thru will cost the most, but these types of franchises are also the best gross sales earners.
Starting this brand franchise in a shopping center or gas convenience location will be a much cheaper option, so investors with a limited startup budget can opt for opening this type of store.
Suppose the investor chooses to buy/rent land and construct a new building; in that case, the starting cost can be a few million dollars. However, owning a store real estate can be advantageous in the long run because the franchisee will not need to pay a monthly rent that is not small for this type of facility.
Investors who have minimal startup capital on disposal can try to negotiate with the landlord that he makes all necessary building improvements. In this way, the Dunkin starting cost will be minimal; the franchisee will pay the landlord for constructing expenses that have occurred at the start by paying higher monthly rent.
Dunkin’ Donuts franchise cost list:
- Store Building Costs: $19,500 to $600,00
- Site Development Costs: $0 to $350,000
- Additional Development Costs: $4,700 to $90,000
- Equipment, Fixtures & Signs: $57,000 to $300,000
- Restaurant Technology System: $9,700 to $95,000
- Licenses, Permits, Fees and Deposits: $500 to $5,500
- Opening Inventory: $4,000 to $20,000
- Miscellaneous Opening Costs: $9,500 to $70,000
- Uniforms: $0 to $1,200
- Insurance: $4,500 to $16,000
- Initial Training Expenses: $2,000 to $35,000
- Marketing Start-Up Fee: $0 to $10,000
- Additional Funds (First 3 Months): $0 to $105,000
- Estimated Total Investment: $121,400 to $1,787,700
Low estimation is related to the circumstances in which the investor has negotiated a build-to-suit lease in which the landlord incurs most development costs.
Dunkin’ Donuts Franchise Fee
The investor who wants to start a Dunkin’ Donuts franchise will need to pay a one-time cost of the Initial Fee, which ranges from $40,000 to $90,000, and ongoing royalties that the franchisor calculates according to the store gross sales.
The owners of this brand franchises are obligated to pay a Royalty Fee of 5.9% and an Ad Fund Fee that is 5.0%. So when we combine all fees, we get a calculation that the owner will need to pay a total of 10.9% to the franchisor from gross sales that the store delivers per week/month.
This percentage of royalties is standard for the franchising industry, which means that this franchisor leaves plenty of profit space for its franchisee. Donuts Industry delivers excellent margins, so an investor can anticipate that his store will provide a high paycheck at the end of the month.
Before the cost of the Initial Fee is paid, the new owner of the Dunkin franchise must sign the Franchise Agreement (20 years term). In exchange for the cost of fees, the investor gets franchisor support in all segments of the business operations.
Dunkin’ Donuts franchise fee list:
- Initial Fee: $40,000 – $90,000 – for 20-year term
- Royalty Fee: 5.9% of Gross Sales – an ongoing cost
- Ad Fund Fee: 5.0% of total Gross Sales – an ongoing cost
- Continuing Training Fee: $340 per year
Veterans of the U.S Army Forces have a 20% discount on the Initial Fee, which means that the franchisor will reduce the cost of starting a Dunkin franchise from $8,000 to $18,000 for this group of investors.
Dunkin’ Donuts Franchise Profit
The average earning Dunkin Donuts franchise delivers gross sales between $634,942 to $1,467,695. The sales level depends on the type of location and does the shop has a drive-thru option.
The doughnuts are very profitable products, so the franchisee can expect his Dunkin franchise unit to make a profit margin of at least 12% of the gross sales.
If the Dunkin’ franchise owner can operate a business that is on the average level of this company, in that case, his salary will be between $76,000 to $175,000 per year. The precise profit calculation will depend on the type of location and the gross sales that the store delivers.
The freestanding franchises with drive-thru of this donut brand are the highest earners in term of gross sales; this type of location, on average, make $1,467,695 of gross sales per year.
Dunkin’ franchise’s average Gross Sales by type of location
- with drive-thru $1,467,695 per year
- non drive-thru $1,027,870 per year
Shopping Center/Store Front Type:
- with drive-thru $1,308,351 per year
- non drive-thru $803,467 per year
Gas & Convenience Site Type:
- with drive-thru $1,131,996 per year
- non drive-thru $634,942 per year
We gather all information about this brand’s average Gross Sales from data that the franchisor has revealed in the Dunkin Donuts Franchise Disclosure Document.
Dunkin Franchise Requirements That Investors Must Meet
The Dunkin Donuts franchisee applicants must have a Net Worth of $250,000 to $500,000 and own liquid assets in a minimum of $125,000. If the investors can’t meet these capital requirements franchisor will decline their application.
This franchising opportunity is not cheap, and because of that, every franchisee applicant must show the franchisor that they have available funds to cover the starting investment cost.
Also, this franchising brand requires that the franchisee pay the Initial Fee cost from non-borrowed funds. So this amount investor will need to pay out of pocket(from savings), not from funds acquired from the loan sources.
In the list of Dunkin franchise requirements, we can’t find any obligation regarding past business experience, which means that these franchises can start rookie entrepreneurs who are starting their first business venture.
With more than 12,800 franchises in more than 40 countries, this brand is the leading brand in the coffee & doughnut industry. At present, this company is seeking new franchisee applicants, which means that this franchising opportunity is available to the U.S. based investor and to those that live abroad.
Dunkin, as a company, doesn’t offer in-house financing, but they have a connection with third-party funding sources, which means that they can assist investors who need to get a loan to cover starting costs.
Baskin Robbins and Dunkin are part of the same company, Inspire Brands, Inc., and because of that, it is possible to operate these two brands’ stores under one roof.
The donut stores from this franchisor generate revenue for their owners from doughnuts, coffee, espresso, bagels, muffins, croissants, breakfast sandwiches, etc. These types of products have a good profit margin, so potential investors in this business opportunity can expect a high paycheck at the end of the year.
However, every potential investor must understand that Dunkin’s profit potential will depend on the business skillset of an on-site franchise manager and the store’s geographical position.
Dunkin franchise cost can be high, so investors who are searching for the cheapest option to start this donut store can opt to buy the already existing facility. This franchisor has a lot of units across the United States which means that with little research, it is possible to find a franchisee who is willing to sell his business to you.