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,
Now Dunkin' Donuts was in the news not too long ago with allegations of racism, and generally
not being a nice corporation towards franchisees overall.
But is that true?
This New York Daily News article article claims a lady who purchased her Dunkin' franchise
with a partner was sued by Dunkin Donuts simply for offering a 15% ownership to a manager.
"They told Asam and me that not only would they force us to sell our stores within 30
days - offering us buyouts for half of what the stores were worth - we'd have to pay a
$100,000 "penalty fee."
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.
Now we always suggest that prospective franchisees do contact a large number of existing franchisees,
and their names will be included in your FDD, as well as speaking to those who left the
system.
Also pay close attention to the Litigation section of the FDD, which is Item 3.
So let's explore more recent litigation.
In Quebec 32 Dunkin Donuts franchisees sued Dunkin for deterioration of brand image, negligent
management, and basically not keeping up with the competition.
They won and were awarded $16.4 million which was reduced on appeal to $10.9 million . Most
of you probably heard about the discrimination lawsuit alleging Dunkin' Donuts would not
allow an Indian woman to open a third franchise.
That one was dismissed, and one other lawsuit alleging racism seems to be ongoing as of
the date of this video.
There are several lawsuits of Dunkin' suing its own franchisees but certainly nowhere
near the level we saw in past years.
There are also some in my opinion, rather funny class action lawsuits relating to Dunkin
' Donuts having allegedly engaged in deceptive advertising practices by trying to convince
consumers that it's products contain real blueberries or Maple Ingredients.
So they call the stuff blueberries and maple, guess what - not a single blueberry or maple
supposedly in it so Dunkin' is getting sued for fraud, unfair competition, deceptive advertising
and a bunch of other stuff.
A similar lawsuit against their Angus steak that is supposedly just a beef patty, Dunkin'
denies these allegations and will vigorously defend againts the lawsuits.
Next we will see someone suing because the bear claw was not actually a bear claw.
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 comparitively.
Growth is strong almost 1000 solo locations opened up in the past 3 years and many more
in the other categories.
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 all your options, maybe
even those outside of food franchises.
Don't forget to like and subscribe and if you need help finding or researching a franchise
give the expertys a call at franchise city.
http://www.nydailynews.com/new-york/brooklyn/dunkin-donuts-business-practices-lots-holes-article-1.278131
http://www.dunkinfranchising.com/franchisee/en.html
https://www.dunkindonuts.com/en
http://www.unhappyfranchisee.com/category/franchisor/dunkin-donuts-franchisor/
https://www.qsrmagazine.com/content/qsr50-2017-top-50-chart?sort=2016_us_average_sales_per_unit_thousands&dir=asc