The franchisor is Dunkin’ Donuts Franchising LLC.Inspire Brands is the ultimate parent company. The franchisor develops, operates and franchises retail restaurants utilizing the Dunkin’ system. Franchised restaurants sell doughnuts, coffee, espresso, bagels, muffins, croissants, breakfast sandwiches, and related bakery items, as well as other food and beverage products. The restaurant types offered are as follows:
- Freestanding: A restaurant, either newly constructed or an existing structure (to be retrofit), that does not share any common walls with any third party.
- Shopping Center/Storefront: A restaurant that shares a common wall (or walls) with third parties. The restaurant could be an anchor (endcap) or inline tenant space in a strip center, or it could be a location in a high density, multiple level construction (typically urban/downtown office building setting), sharing common wall and ceiling/floor construction with any third party.
- Gas/Convenience Restaurants: A restaurant that is a sub-or shared tenancy within a gas/convenience host environment.
- Special Distribution Opportunity (SDO): These restaurants and any cart or kiosk locations are sometimes referred to as special distribution opportunities or non-traditional outlets, and may be located within another host establishment, such as a stadium or another retail facility.
- Training Overview: Franchisees must at all times manage their network with at least two individuals, one of whom must be the franchisee or another partner, shareholder (if franchisee is a corporation) or member (if franchisee is a limited liability company) and the other must be a designated representative; both of whom must successfully complete the required training program, which may vary based on the role in their organization. The Dunkin’ Brand Training program takes a minimum of 20 days to complete the virtual, classroom, and instructional phases. (These days may not be consecutive.) The Dunkin’ Brand Training program does not include travel time and is offered virtually or in a training certified franchisee restaurant. In addition, for the first restaurant, the franchisor may require franchisees to participate for up to 10 days in the opening of another restaurant. Franchisees must ensure that all their employees are trained in its restaurant standards and required procedures. Franchisees must attend and require their employees to attend further training as the franchisor may from time to time require. This training may require travel to a certified training restaurant.
Territory Granted: Franchisees will be granted the right to operate one restaurant at a specific location that is specified in the Franchise Agreement or its exhibits, and only at that location. Franchisees will not be granted any additional rights, any minimum territory, or other protected rights. Franchisees will not have any right to distribute products other than through their restaurant, including alternative channels of distribution.
Obligations and Restrictions: Franchisees must devote continuous best efforts to the development, management and operation of their business. This means devoting sufficient time and resources to ensure full and complete compliance with their obligations to the franchisor, to their customers and to others. If franchisees choose to use a business entity (partnership, corporation or LLC) to operate the business at any restaurant, franchisees, and their officers, directors, shareholders, members and partners (as applicable) must personally guarantee such entity’s performance of all of the franchisee’s obligations under the franchise agreement and lease (if applicable). Franchisees may not conduct any other business or activity at the restaurant without the franchisor’s prior written approval. Franchisees may only offer or sell products approved by the franchisor and they must offer for sale the full menu required by the franchisor. Franchisees are not permitted to sell or distribute goods or services through the use of the Internet or other electronic communications without the franchisor’s prior written authorization.
Term of Agreement and Renewal: The length of the franchise term is typically 20 years. Renewal is conditional for an additional term of 20 years if, and only if, all requirements are met.
Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee a franchisee’s note, lease, or obligation.
Investment Tables:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $10,000 | $90,000 |
| Building Costs | $19,500 | $600,000 |
| Site Development Costs | $0 | $350,000 |
| Additional Development Costs | $4,700 | $90,000 |
| Equipment, Fixtures and Signs | $57,000 | $300,000 |
| Restaurant Technology System | $9,700 | $95,000 |
| Licenses, Permits, Fees and Deposits | $500 | $7,500 |
| Real Estate Costs | Varies | |
| Opening Inventory | $4,000 | $20,000 |
| Miscellaneous Opening Costs | $9,500 | $70,000 |
| Uniforms | $0 | $3,000 |
| Insurance | $4,500 | $16,000 |
| Travel and Living Expenses While Training | $2,000 | $50,000 |
| Marketing Start-Up Fee | $0 | $10,000 |
| Additional Funds for First 3 Months of Operation | $0 | $108,000 |
| ESTIMATED TOTAL* (doesn’t include real estate costs) | $121,400 | $1,809,500 |
*The estimated initial investment range covers the multiple variations of restaurant types referenced above. Please see FDD for more details.
| Type of Fee | Amount |
|---|---|
| Continuing Franchise Fee | 5.9% of gross sales. |
| Continuing Advertising Fee | 5% of total gross sales. |
| Loyalty Program Contribution Payment | Varies. Currently, 1.6% of loyalty program sales. |
| Franchise Transfer Fee (for a majority interest in the first 3 years) | $12,500 (or $20,000 if the restaurant is a combo) plus the amount listed in table in the FDD. |
| Franchise Transfer Fee (for a majority interest, after 3 years have elapsed) | An amount based upon the gross sales of the restaurant for the 12 months preceding the date of the contract of sale. |
| Franchise Transfer Fee (no change of control or transfer to spouse or children) | The then-current fixed documentation fee, which is currently $2,000 per restaurant plus an additional $2,000 for each new transferee. |
| Audit Costs | The franchisor’s cost to audit the gross sales reports, including legal and investigative costs. |
| Immigration Status Review Costs | The franchisors out-of-pocket costs to hire attorneys or others. |
| Interest, Late Fees, and Collection Costs | The then-current late fee or dishonored check fee, and if applicable, interest on unpaid amount at 1.5% per month (but not more than any maximum imposed under applicable law). |
| Indemnification | Varies. |
| SDA Transfer Fee | $10,000 |
| SDA Transfer Fee (for a less than majority interest or transfer to spouse or children) | The then-current fixed documentation fee (presently $2,000 plus an additional $2,000 for each new transferee). |
| Lease Fee | Varies. |
| Fixed Documentation Fee – Generally | The then-current fixed documentation fee (presently $2,000 per restaurant). |
| Fixed Documentation Fee – Transfers | The then-current fixed documentation fee (presently $2,000 per restaurant) plus an additional $2,000 for each new transferee. |
| Costs for Tests Used to Approve Additional Supplier(s) | The franchisor’s out of pocket and internal costs allocated to this activity, typically $1,000 to $10,000 depending on the complexity of the testing. |
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