Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of DQ Grill & Chill Franchise Costs (2017 FDD)

by Franchise Chatter on November 3, 2015

in Fast Casual Restaurant Franchise, Franchise Costs, Frozen Dessert Franchise, Hamburger Franchise

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DQ Grill & Chill Exterior Photo

This post was updated on May 8, 2017 to reflect information from DQ Grill & Chill’s 2017 FDD (Item 7).

Detailed Estimates of DQ Grill & Chill Franchise Costs Based on Item 7 (Estimated Initial Investment) of DQ Grill & Chill’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.

1.  Initial Franchise Fee:  $35,000

2.  ALTA Survey:  $0 to $5,000

  • In some cases, ADQ may require you to submit an ALTA survey for your proposed franchised site in connection with, and before ADQ will approve your application for a franchise.
  • An ALTA survey is a land survey completed by a third-party surveyor to the standards adopted by the American Land Title Association (ALTA) and the American Congress on Surveying and Mapping (ACSM).
  • The cost for the survey will depend upon a  number of factors including the location, size, type, and condition of the lot.

3.  Initial Training Fees and Costs:  $1,225 to $11,825

  • There are four required components to training:  (1) the MTRA ($175/person); (2) SERVSAFE certification ($200 to $400/person); (3) a cake decorating certification course ($100 to $250/person); and (4) American Dairy Queen’s (ADQ) training program, which is made up of three phases ($3,300/person).
  • If you pay the full initial franchisee fee, you can send three people to ADQ’s training program without paying a training fee.

4.  Travel and Living Expenses for Training Programs:  $23,000 to $38,500

  • The total 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.

5.  Building, Construction, and Leasehold Improvements:  $550,000 to $900,000

  • This estimate is for site work and building construction, but excludes the cost of land. If you lease your facility, estimated costs range from $300,000 to $450,000 or more, and if you own your facility, estimated costs range from $550,000 to $900,000 or more.
  • If you purchase land, your investment for land generally will range from $250,000 to $800,000, depending on many variables including the size of the property and land prices in your geographic market.
  • Currently, ADQ has two prototypical freestanding building models, the GC Core47 and the GC Core72. The GC Core47 is 1,886 square feet, seats approximately 47, and requires a minimum lot size of 27,126 square feet. The cost of site work and building construction for the GC Core47 generally ranges from $550,000 to $800,000 or more.
  • The GC Core72 is 2,612 square feet, seats approximately 72, and requires a minimum lot size of 38,736 square feet. The cost of the site work and building construction for the GC Core72 generally ranges from $550,000 to $900,000 or more.

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

  • The franchisor 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:  $15,000 to $45,000

  • If you lease your facility, estimated costs range from $15,000 to $30,000 or more, and if you own your facility, estimated costs range from $15,000 to $45,000 or more.
  • The franchisor will provide you with design criteria information to assist you, your architects, and engineers in preparing building plans for your restaurant. The franchisor will not prepare building plans for you, but will make available prototypical design intent plans for freestanding DQ Grill & Chill restaurants.
  • You must sign the design services agreement attached to the disclosure document to receive the franchisor’s prototypical design intent plans.

8.  Equipment (includes signs and point-of-sale systems):  $390,000 to $530,000

  • Your investment in equipment and fixtures is highly variable for your restaurant. The investment depends to a great extent on the size of the building and whether you lease or own.

9.  Training Inventory:  $5,000 to $15,700

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

10.  Opening Inventory:  $8,300 to $38,900

11.  Utility Deposits, Business Licenses, and Government Charges:  $4,000 to $17,000

  • This amount includes utility and security deposits and business licenses. Deposits are generally refundable, but license fees are not.
  • You may be required to submit an impact study to a local government agency to receive necessary local permits and approvals for your restaurant.
  • 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.  Attorneys’ 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:  $51,000 to $198,000

  • This amount is projected to cover initial operating expenses for one restaurant for three months, such as managerial salaries, rent, debt service, local advertising, taxes, freight, office expenses, security, Payment Card Industry (“PCI”) compliance, credit card processing, internet connection, and 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.
  • The high end of this amount assumes that you enter into a Multi-Unit Development or Multi-Territory Agreement and hire a Designated Supervisory Employee.

14.  Total:  $1,083,525 to $1,850,425

  • This total is an estimate of your initial investment for a single, new DQ Grill & Chill restaurant (not including land and non-standard improvement costs) or your first restaurant under an MUD or MultiTRA, and is based upon the franchisor’s estimate of nationwide average costs, market conditions prevailing as of the date of the disclosure document, and the franchisor’s and its predecessors’ experience in the business since 1940.

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