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Franchise Costs: Detailed Estimates of Dunn Brothers Coffee Franchise Costs (2017 FDD)

by Franchise Chatter on November 20, 2013

in Coffee Franchise, Franchise Costs

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Dunn Bros Coffee Photo by plasticfootball

This post was updated on February 23, 2017 to reflect information from Dunn Brothers Coffee’s 2017 FDD (Item 7).

Detailed Estimates of Dunn Brothers Coffee Franchise Costs Based on Item 7 (Estimated Initial Investment) of Dunn Brothers Coffee’s 2017 Franchise Disclosure Document

Dunn Brothers Coffee Shop

  • Except where otherwise noted, all fees that you pay to the franchisor or its affiliates are non-refundable. Third-party lessors, contractors, and suppliers will decide if payments to them are refundable.

1.  Initial Franchise Fee:  $30,000 to $37,000

  • The high range is the Initial Franchise Fee for new franchisees and the low range is the Initial Franchise Fee for a franchisee who already owns and operates a Shop.
  • The franchisor also offers a discounted Initial Franchise Fee for franchisees committing to open 2 to 3 shops.

2.  Coffee Origin Tour:  $0 to $4,000

  • Within 24 months after you sign the Franchise Agreement, you must participate in a coffee origin tour that the franchisor organizes. The franchisor will provide you with a $2,000 one-time credit towards the cost of the tour, but you must pay for the remaining costs. Costs may vary based on destination.
  • The low end of this estimate assumes only one person participates in the coffee origin tour while the high end of the estimate assumes 2 people participate in the tour.

3.  Grand Opening Advertising:  $3,000

  • During a 90-day period beginning 2 weeks before your Shop opens, you must spend a minimum amount of $3,000 on approved grand opening advertising.

4.  Travel Expenses While Training:  $500 to $4,400

  • You must pay travel and living expenses of any person you send to training. In addition, you also may have to pay compensation to any attendee during the training program.

5.  Architecture Fees:  $2,500 to $19,400

  • The franchisor encourages you to use its designated architect for your blueprints and site plans. If you do not use the designated architect, you must pay the designated architect to review and consent to your blueprints and site plans.
  • The current fee for the review of your blueprints and site plans is $2,500.

6.  Leasehold Improvements (Including Fixtures):  $144,000 to $220,000

  • The Dunn Brothers Coffee Shop ordinarily will be leased rather than owned. The franchisor estimates that an average Dunn Brothers Coffee Shop will have approximately 1,600 to 2,000 square feet.
  • The exact cost or impact of your rental expense will depend on several factors, including the condition of the premises, whether you elect to do more than the minimum required renovations, the landlord’s agreement to reimburse you for certain improvements, the size and location of the premises for your Shop, local market conditions, and other economic factors.
  • A space previously occupied by a coffee shop or a similar use likely will result in lower leasehold improvement costs.
  • The franchisor must approve the leasehold improvements before you begin construction.
  • You may incur fewer leasehold improvement expenses if you open a Non-Roasting Dunn Brothers Coffee Shop, which will have approximately 750 to 1,200 square feet.

7.  Sewer and Water Access Charge:  $0 to $15,000

  • This amount estimates the connection fees for water and sewer access, assessed by the local municipality, and is based on many factors, including the use, rates, Shop size, and seating capacity.
  • The low end assumes these fees are paid by your landlord.

8.  Prepaid Rent and Security Deposit:  $0 to $12,000

  • You usually must pay one month base rent as a security deposit to the landlord.
  • The franchisor estimates that for a Shop having 1,600 to 2,000 square feet, the base rent obligations will be approximately $15 to $35 per square foot, although in certain locations in major metropolitan markets, the monthly base rent may be higher.
  • In addition, landlords may require you to pay a percentage of gross sales, to which a credit in the amount of base rent is applied.
  • Leases are usually “triple net” and therefore impose an obligation toward common area maintenance costs, insurance charges, real estate taxes and special assessments, HVAC charges, utility charges, water and sewer charges, security charges, trash removal charges, mall charges, promotional and marketing charges, food court charges, and charges for membership in a merchants association.

9.  Equipment (Including Furniture and Fixtures):  $148,000 to $176,000

  • To insure uniform quality of products and services throughout the Dunn Brothers Coffee system, you must purchase or lease equipment that the franchisor has approved, including the Computer System.
  • You and the equipment suppliers will determine the precise amount of any initial or periodic equipment payments at the time of the transaction. The payments ordinarily are not refundable. Investment obligations beyond the initial cash outlay requirements will be necessary and you may finance at your discretion.

10.  Roaster and Associated Leasehold Improvements for Venting:  $32,000

  • If you open a Non-Roasting Dunn Brothers Coffee Shop, you will not have to purchase a roaster.

11.  Drive Thru Leasehold Improvements and Equipment:  $0 to $17,000

12.  Opening Inventory:  $9,000 to $10,000

  • You must purchase your opening inventory of coffee, coffee beans, coffee products, food items, and paper products from approved suppliers. Payments will usually be due to these suppliers when the order is placed. In the future, the franchisor or one of its affiliates may be an approved supplier of these products.

13.  Insurance Premiums:  $4,200 to $9,600

  • Insurance estimates for annual commercial general liability and property premiums, umbrella/excess liability premiums, and workers’ compensation/employer’s liability premiums.

14.  Utility Deposits and Business Licenses:  $0 to $3,000

  • This amount includes utility and security deposits and business licenses. Deposits are generally refundable but license fees are not.

15.  Attorneys’ Fees:  $0 to $4,000

  • This amount is an estimate for your attorneys’ fees related to your purchase of the Franchise and purchase or lease of your Shop.

16.  Additional Funds – 3 Months:  $15,000 to $50,000

  • This amount estimates your initial start-up expenses not otherwise mentioned in the table, including payroll costs, rent, advertising, taxes, small wares, paper and cleaning supplies, and telephone hook-up. It does not include product inventory costs beyond the opening inventory costs identified in the table.
  • The amounts are estimates, and the franchisor cannot guarantee that you will not have additional expenses starting the business.
  • This amount may be lower if you open a Non-Roasting Dunn Brothers Coffee Shop.

17.  Total:  $388,200 to $616,400

  • This total is an estimate of your initial investment and is based upon the franchisor’s estimate of average costs and market conditions prevailing as of the date of the disclosure document and the franchisor’s experience in the business.

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