This post was updated on August 27, 2017 to reflect information from Krispy Kreme’s 2017 FDD.
Detailed Estimates of Krispy Kreme Franchise Costs Based on Item 7 (Estimated Initial Investment) of Krispy Kreme’s 2017 Franchise Disclosure Document
For a Tunnel Oven Shop
1. Development Fee: $12,500 per Tunnel Oven Shop
2. Initial Franchise Fee: $12,500 per Tunnel Oven Shop
3. Real Estate and Improvements (3 Months): $10,000 to $41,250
- Your land acquisition costs will vary depending on a multitude of factors including whether the property is purchased or leased, the size and location of the property, and the availability of financing on commercially reasonable terms.
- For a Tunnel Oven Shop, the approximate size of the site is 27,000 to 50,000 square feet and the building itself will be between 1,000 to 2,500 square feet.
- Stores may be located in leased properties, such as strip centers and other such facilities, or may be in a freestanding building on leased or owned property.
- The Store location will preferably be one accessible to vehicular traffic and have a drive-thru window.
- In addition, site improvement costs may vary based on numerous factors, including but not limited to, soil and environmental conditions, availability of utilities to the site, the topography of the site, the size of the parcel, and local zoning and other building requirements.
- If you elect to purchase the site, it is anticipated the range of cost of the property plus the site improvements may be $500,000 to $1,500,000 depending on location.
- Acquisition costs may be beyond this range in certain cases or localities.
- Rent will vary from location to location, but should range from $40,000 to $165,000 per year, plus other occupancy related costs including common area maintenance, property taxes, and insurance.
- The amounts in the chart are estimates of rent for a 3-month period.
4. Construction Costs: $300,000 to $650,000
- This item assumes build-out of an existing structure. Construction costs for a free-standing Tunnel Oven Shop are comparable to those of a Factory Store.
- The franchise will provide you with general, model plans, specifications, and standards that you will need to adapt for the construction of your Tunnel Oven Shop.
- Construction costs may be beyond this range in certain cases or localities.
5. Equipment/Signage/Furniture/Fixtures: $90,000 to $190,000
- This line item is for the standard furniture, fixtures, and equipment, including interior and exterior signs, point of sale computer systems, headsets, and furniture (including retail equipment such as drink dispensers, cup dispensers, product display cases, etc.).
- You must purchase or lease certain of these items from the franchisor, its affiliates, or designated suppliers.
6. Initial Inventory: $10,000 to $13,000
- You must purchase certain items in the initial inventory of supplies from the franchisor, its affiliates, or designated suppliers. You may purchase other items from approved suppliers.
- The initial inventory of partially completed donuts is supplied from a Commissary Facility or Factory Store.
- Doughnut mixes must be purchased from the franchisor or a designated supplier.
7. Production Equipment: $56,000 to $96,000
- The franchisor manufactures certain production equipment used in Tunnel Oven Shops. You must purchase the production equipment from the franchisor. The prices include freight, crating, tax, installation, and limited warranty.
8. Grand Opening Marketing Program: $20,000 to $45,000
- You must conduct, with the franchisor’s guidance, a Grand Opening Marketing Program during the period beginning 30 days before and ending 90 days after the opening of the Store.
- The Grand Opening Marketing Program will utilize the public relations and advertising programs, as well as the media, advertising, and promotional materials that the franchisor has developed or approved in addition to other promotional materials that you may need to produce.
- Amounts spent on the Grand Opening Marketing Program, up to 1% of the Store’s annual Net Sales, will be credited against your first year’s annual requirement to spend at least 3% of the Store’s annual Net Sales, as the Local Advertising Requirement.
- Experience has shown that the cost of the Grand Opening Marketing Program generally ranges between $20,000 and $45,000 and depends greatly on the market.
9. Training Expenses: $15,000 to $20,000
10. Security Deposits and Other Pre-Paids: $7,500 to $20,000
11. Additional Funds – 3 Months: $25,000 to $50,000
- Additional Funds is an estimate of the funds for a 3-month period needed to cover start-up costs such as various pre-opening expenses including initial employee wages, utility deposits, insurance premiums, licenses, permit costs, recruitment, advertising expenses (other than grand opening expenses), electricity, telephone, and other supplies (other than initial supplies purchased from Krispy Kreme).
- These figures are estimates, and the franchisor cannot guarantee that you will not have additional expenses opening the Tunnel Oven Shop and starting the business.
12. Total Estimated Initial Investment: $558,500 to $1,150,250
- The estimates for a Tunnel Oven Shop are based on general information and pro-forma costs, and are for guidance purposes only.
For a Fresh Shop
- The total estimated initial investment necessary to begin operating a Krispy Kreme Fresh Shop ranges from $440,500 to $963,000.
For a Factory Store
- The total estimated initial investment necessary to begin operating a Krispy Kreme Factory Store ranges from $1,287,500 to $2,450,000.
For a Commissary Facility
- The total estimated initial investment necessary to begin operating a Krispy Kreme Commissary Facility ranges from $1,617,500 to $4,115,000.