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Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of DQ (Dairy Queen) Treat Franchise Costs (2017 FDD)

by Franchise Chatter on May 5, 2014

in Franchise Costs, Frozen Dessert Franchise

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DQ Treat

This post was updated on May 10, 2017 to reflect information from Dairy Queen’s 2017 FDD (Item 7).

Detailed Estimates of DQ (Dairy Queen) Treat Franchise Costs Based on Item 7 (Estimated Initial Investment) of Dairy Queen’s 2017 Franchise Disclosure Document

  • The initial investment amounts do not include the cost of land, and the amounts in several categories will vary depending on building size, whether you lease or own the space or building, and whether you are a new or conversion franchisee, among other factors.

For Street Locations

1.  Initial Franchise Fee:  $25,000

2.  Initial Training Fees and Costs:  $750 to $8,000

  • There are four required components to training:  (1) the MTRA ($175/person); (2) SERVSAFE certification ($200 – $400/person); (3) a cake decorating certification course (not required for captive-venue locations) ($100 – $250/person); and (4) ADQ’s training program, which is made up of three phases ($3,300/person).
  • If you pay the full new initial franchisee fee, you can send two people to ADQ’s training program without paying a training fee.

3.  Travel and Living Expenses for Training Programs:  $5,200 to $9,600

  • The amount of travel and living expenses will vary depending on the number of training attendees and the types of training completed by your training attendees; these estimates assume you send three people to all four training components.

4.  Building, Construction, and Leasehold Improvements:  $250,000 to $600,000

  • The estimates include site work, buildout, mechanical, and other related fees, but do not include land costs. A street location will have approximately 1,000 to 1,800 square feet and will ordinarily be owned. A captive-venue location will have approximately 600 to 1,400 square feet and will ordinarily be a leased space within a larger structure.
  • If you purchase the land and building for a street location, the land costs will generally vary from $200,000 to $600,000 or more.

5.  Prepaid Rent and Security Deposit:  $2,500 to $5,500

  • You usually will be required to pay one month base rent as a security deposit to the landlord and may be required to pay an additional security deposit under a sublease. ADQ estimates base rent for 750 square feet will be $3,500 to $7,000 or more per month, plus approximately 8% to 12% of gross sales in excess of a specified amount to which base rent is credited.

6.  Construction Consultation Services:  $0 to $7,500

  • ADQ requires that it consult with and assist you on all pre-opening construction and equipment installation for the franchised premises, and that you sign the construction consultation services agreement included in the disclosure document.

7.  Building Plans, Design Intent Plans, and Architectural Seal:  $7,000 to $35,000

  • ADQ will provide you with design criteria information to assist you, your architects, and engineers in preparing building plans. If you develop a freestanding street location, you may be required to purchase ADQ’s prototypical design intent plans for street locations if they are available, for a fee of $3,000 (which is included in your initial franchise fee for new locations).
  • In either case, you must sign the design services agreement included in the disclosure document, and will need to hire an architect to prepare building plans for your store.

8.  Equipment (includes signs and point-of-sale systems):  $210,000 to $329,000

  • Your investment in equipment and fixtures is highly variable for your store. The investment depends to a great extent on the size of the building or space and whether you are in a captive-venue or street location.

9.  Training Inventory:  $2,500 to $5,000

  • You must purchase the training inventory used by you and your employees at your store during ADQ’s on-site opening assistance.

10.  Opening Inventory:  $5,000 to $10,000

11.  Utility Deposits, Business Licenses, and Government Charges:  $3,000 to $15,000

  • This amount includes utility and security deposits and business licenses. Deposits are generally refundable, but license fees are not.
  • These estimates may be significantly higher in some unique jurisdictions where local authorities may require fees in excess of $100,000 for electrical, sewer/water, and/or other miscellaneous connections.

12.  Attorney’s Fees:  $1,000 to $8,000

  • This amount is an estimate for attorney’s fees in connection with your purchase of the franchise and purchase or lease of the franchised premises.

13.  Additional Funds – 3 Months:  $41,000 to $155,000

  • This amount is projected to cover initial operating expenses for one store for three months, such as managerial salaries, rent, debt service, local advertising, taxes, freight, office expenses, security, Payment Card Industry (PCI) compliance, and/or authorized music systems, but you may have additional expenses starting the business.
  • This amount does not include hourly labor or food costs beyond the opening inventory costs listed.

14.  Total:  $552,950 to $1,212,600

  • This total is an estimate of your initial investment for a single store, and is based on ADQ’s estimate of nationwide average costs, market conditions prevailing as of the date of the disclosure document, and ADQ’s and its predecessors’ experience in the business since 1940.

For Captive Locations

  • The total estimated initial investment necessary for a DQ Treat store in a captive-venue location (e.g. shopping malls or centers) ranges from $361,450 to $699,300.

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