Krispy Kreme Franchise Costs & Fees

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Description

Year Business Began: 1937Franchising Since: 1947Headquarters: Winston-Salem, North CarolinaEstimated Number of Units: 1,400Franchise Description: The franchisor is Krispy Kreme Doughnut Corporation. Krispy Kreme Stores may be operated in three different formats, namely a Factory Store, a Tunnel Oven Shop, and a Fresh Shop. Each store is a retail facility used principally for on-premises sales of a variety of fresh doughnuts, beverages, and other related food products and services that the franchisor prescribes. The differences in store formats are as follows:Factory Store — a retail sales facility that manufactures and produces fresh doughnuts on-site, under the System Standards. Additionally, Factory Stores may have the capacity to supply fresh doughnuts to Tunnel Oven Shops and Fresh Shops.Tunnel Oven Shop — a retail sales facility with an impinger oven and limited manufacturing capabilities (e.g., icing and filling equipment) that receives doughnuts from a Factory Store or a Commissary Facility and finishes them as necessary to sell in accordance with System Standards.Fresh Shop — a retail sales facility with limited manufacturing capabilities (e.g., icing and filling equipment), or no manufacturing capabilities, that receives doughnuts from a Factory Store or a Commissary Facility and finishes them, as necessary, to sell in accordance with System Standards.Franchises are also offered for Commissary Facilities that produce doughnut products for Tunnel Oven Shops and Fresh Shops. Commissary Facilities are not Krispy Kreme Stores. They are manufacturing facilities that supply doughnuts and other products to Tunnel Oven Shops and Fresh Shops. Commissary Facilities are not used for retail sales.Training Overview: Under the Franchise Agreement and the Commissary Facility Agreement, the franchisor will provide initial training on the operation of a Store or Commissary Facility for the Operations Director (if applicable), one General Manager, one assistant general manager or equivalent, and up to four employees serving in a multi-unit supervisory capacity, such as a district manager. They must complete the training to the franchisor’s satisfaction. The initial training program may be provided at the franchisor’s designated training facility and/or at an operating Store or Commissary Facility. Currently, the initial training program for Store and Commissary Facility managers is conducted in Winston-Salem, North Carolina and at various store locations the franchisor selects. The initial training program lasts approximately 16 weeks for Factory Stores, but this may be adjusted for Tunnel Oven Shops, Fresh Shops, and Commissary Facilities. Managers may be required to attend and successfully complete periodic and additional training programs. The franchisor’s opening team will assist franchisees for a minimum of seven days in the opening of the Store or Commissary Facility.Territory Granted: The Franchise Agreement and Commissary Facility Agreement grant to franchisees the right to own and operate a Store or a Commissary Facility at a specific location. Franchisees will not receive any exclusive territory under any Franchise Agreement or Commissary Agreement. Franchisees may face competition from other franchisees, from outlets the franchisor owns, or from other channels of distribution, or competitive brands that the franchisor controls. Franchisees may engage only in On-Premises Sales from the Store and may not engage in any sales activities from their CommissaryFacility, except for as noted in the FDD with respect to Authorized Off-Premises Sales and AuthorizedFundraising Sales.Obligations and Restrictions: Franchisees (or the managing shareholder or partner) are not obligated to participate personally in the direct operation of the Store or Commissary Facility. Under the Franchise Agreement and Commissary Facility Agreement, franchisees must designate a General Manager, who must provide direct, on-premises supervision of the Store or Commissary Facility. The General Manager must complete initial and periodic additional training to the franchisor’s satisfaction. The franchisor may, at its sole discretion, require the Operations Director to own up to 25% in the Store or Commissary Facility or, if the franchise is a corporation, limited liability company, or partnership. Franchisees must sell and distribute only those Products that the franchisor approves or specifies. Franchisees may not offer for sale any products that the franchisor has not approved. Franchisees must offer for sale any products that the franchisor requires.Term of Agreement and Renewal: The length of the initial franchise term is 15 years from the Store or Commissary Facility’s opening date. On the expiration of the term of the agreement, franchisees may sign the then-current franchise agreement for one successor term of 15 years if franchisees (and their owners and affiliates) are in good standing.Financial Assistance: Neither the franchisor nor any agent or affiliate offers any direct or indirect financing to franchisees. Neither the franchisor nor any agent or affiliate guarantees any notes, leases, or other obligations franchisees make. The franchisor does not receive direct or indirect payments for placing financing. Investment Tables: Estimated Initial Investment Name of Fee Low High Development Fee (per Fresh Shop) $12,500 $25,000 Initial Franchise Fee (per Fresh Shop) $12,500 $25,000 Real Estate and Improvements – 3 Months $8,000 $75,000 Construction Costs $250,000 $1,600,000 Equipment/Signage/Furniture/Fixtures $90,000 $230,000 Truck (per truck)N/A$50,000Equipment and Displays for Authorized Off-Premises Sales (excluding truck costs)N/A$100,000 Initial Inventory $5,000 $50,000 Production EquipmentN/A$380,000 Grand Opening Marketing Program $20,000 $45,000 Training Expenses $15,000 $50,000 Security Deposits and Other Pre-Paids $2,500 $20,000 Additional Funds (3 months) $25,000 $100,000 ESTIMATED TOTAL $440,500 $2,750,000 *The estimated initial investment range covers from a Fresh Shop up to a Factory Store, including a Tunnel Oven Shop. Please see FDD for more details. Estimated Initial Investment for a Commissary Facility Name of Fee Low High Development Fee (per Commissary Facility) $25,000 $25,000 Initial Franchise Fee (per Commissary Facility) $25,000 $25,000 Real Estate and Improvements – 3 Months $20,000 $75,000 Construction Costs $1,000,000 $2,500,000 Equipment/Signage/Furniture/Fixtures $90,000 $250,000 Truck (per truck) $25,000 $50,000 Equipment and Displays for Authorized Off-Premises Sales (excluding truck costs) $90,000 $210,000 Initial Inventory $40,000 $50,000 Production Equipment $175,000 $760,000 Grand Opening Marketing Program $25,000 $45,000 Training Expenses $45,000 $50,000 Security Deposits and Other Pre-Paids $7,500 $20,000 Additional Funds (3 months) $75,000 $100,000 ESTIMATED TOTAL $1,617,500 $4,115,000 Other Fees Type of Fee Amount Royalties (Franchise Agreement only, except for Authorized Off-Premises Sales by a Commissary Facility) 4.5% of Net Sales of the Store, including Fundraising Sales, and excluding any Authorized Off-Premises Sales. For any Authorized Off-Premises Sales by a Store or a Commissary Facility, 4.5% of Net Sales. Transfer $5,000, plus any applicable transfer fee for any other agreements, as well as our costs and expenses (including legal and accounting fees) incurred in relation to the transfer. Opening Term Cost and expenses the franchisor’s opening team incurs in connection with the opening of the Store, other than travel, room and board and salaries, for which the franchisor is responsible. Brand Fund (Franchise Agreement only, except for Authorized Off-Premises Sales by a Commissary) Up to a maximum of 2% of Net Sales. Advertising Placement Fund (Franchise Agreement only, except for Authorized Off- Premises Sales by a Commissary) Up to a maximum of 1% of Net Sales. Additional Copies of Advertising (Franchise Agreement only) Cost associated with providing additional copies of advertising materials. Local Advertising Requirement (Franchise Agreement only) At least 2.5% of Net Sales. Local and/or Regional Cooperatives (Franchise Agreement only) Up to 3% of Net Sales. Required Purchases Varies. Management Development Fee $25,000 per hired employee. Hosting Fee $150 per Store per month. Maintenance Fee $150 per Store per month. Additional Service Fee $65 per hour. Systems Fee The then-current fees (currently $0) Replacement Fee for System Standards ManualsCurrently $1,000 Relocation Fee Fee of $2,500 plus the franchisor’s expenses associated with the relocation of a Store or Commissary Facility. Audit/Inspection Expenses Cost of audit or inspection, includes legal fees, accountants’ fees and travel expenses, room and board, per diem charges and other associated expenses. Costs and Attorneys’ Fees Varies. Indemnification Varies. Training of Additional Managers Franchisees must pay their managers’ wages, salaries, travel, room and board, and living expenses during training. Additional or Special Training The franchisor’s reasonable fee plus their managers’ wages, salaries, travel, room and board, and living expenses during training. Interest on Late Payment 1.5% per month or the highest rate of interest permitted by law, whichever is less. Fees to Evaluate Proposed Alternative Suppliers The franchisor’s reasonable costs and expenses. Successor Fee $10,000 The above information has been taken from the FDD of Krispy Kreme. Year of FDD: 2018Franchise Direct’s Disclaimer

Estimated Initial Investment for a Commissary Facility
Name of Fee Low High
Development Fee (per Commissary Facility) $25,000 $25,000
Initial Franchise Fee (per Commissary Facility) $25,000 $25,000
Real Estate and Improvements – 3 Months $20,000 $75,000
Construction Costs $1,000,000 $2,500,000
Equipment/Signage/Furniture/Fixtures $90,000 $250,000
Truck (per truck) $25,000 $50,000
Equipment and Displays for Authorized Off-Premises Sales (excluding truck costs) $90,000 $210,000
Initial Inventory $40,000 $50,000
Production Equipment $175,000 $760,000
Grand Opening Marketing Program $25,000 $45,000
Training Expenses $45,000 $50,000
Security Deposits and Other Pre-Paids $7,500 $20,000
Additional Funds (3 months) $75,000 $100,000
ESTIMATED TOTAL $1,617,500 $4,115,000