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Considering a Krispy Kreme Franchise? Don’t Overlook These 31 Important Franchise Fees

by Franchise Chatter on November 13, 2016

in Donuts Franchise, Franchise Fees



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Don't Invest in a Franchise Until You Check Out This List

Krispy Kreme Photo by tinywookie042

This post was updated on August 27, 2017 to reflect information from Krispy Kreme’s 2017 FDD.

If you are considering a Krispy Kreme franchise, don’t get blindsided by these 31 important franchise fees (from the initial franchise fee, to the royalty fee, to 29 other fees found in Items 5 and 6 of Krispy Kreme’s 2017 FDD).

1.  Development Fee:  $12,500 to $25,000 per Store

  • The standard development fees (each, a “Development Fee”) are $25,000 for a Factory Store, $12,500 for a Tunnel Oven Shop, $12,500 for a Fresh Shop, and $25,000 for a Commissary Facility.
  • You must sign a Development Agreement regardless of the total number of Krispy Kreme Stores or Commissary Facilities you commit to develop. You must pay to Krispy Kreme a development fee applicable for the number of Krispy Kreme Stores and Commissary Facilities to be developed under the Development Agreement (“Development Fee”).
  • The number and format of Krispy Kreme Stores and Commissary Facilities to be developed under a particular Development Agreement are determined by mutual agreement. In determining that number, Krispy Kreme looks at a number of factors, including format of Store, size of the territory, demographic data and trends, population density and growth rates, and other conditions.
  • The Development Fee is payable on execution of the Development Agreement, is fully earned, and is non-refundable, except that a pro rata portion will be refundable if Krispy Kreme exercises its right to terminate the Development Agreement based upon its determination that an applicable law, enacted or revised after the Development Agreement was signed, will have a materially adverse effect on its rights, remedies, or discretion in franchising Krispy Kreme Stores or Commissary Facilities.

2.  Franchise Agreement and Commissary Facility Agreement:  $12,500 to $25,000 per Store



  • The standard initial franchise fees (each, an “Initial Franchise Fee”) are $25,000 for a Factory Store, $12,500 for a Tunnel Oven Shop, $12,500 for a Fresh Shop, and $25,000 for a Commissary Facility.
  • The Initial Franchise Fee, which is in addition to the Development Fee, is payable on execution of the Franchise Agreement or Commissary Facility Agreement and is deemed fully earned at that time. It is not refundable.
  • Separate Franchise Agreements or Commissary Facility Agreements are required for each Store or Commissary Facility opened under a Development Agreement.

3.  Required Purchases

  • Before you open your Store or Commissary Facility, you must purchase certain items from Krispy Kreme.
  • The estimated costs of these items are:
  • Opening Inventory Package. The cost of the opening inventory of supplies, raw materials, and related products that you must purchase ranges from $5,000 to $8,000 for a Fresh Shop; $10,000 to $13,000 for a Tunnel Oven Shop; $40,000 to $50,000 for a Factory Store; and $40,000 to $50,000 for a Commissary Facility.
  • Production Equipment. The cost of the production equipment ranges from $56,000 to $96,000 for a Tunnel Oven Shop; $175,000 to $380,000 for a Factory Store; and $175,000 to $760,000 for a Commissary Facility. No production equipment is necessary for a Fresh Shop and only limited production equipment is necessary for a Tunnel Oven Shop.
  • Equipment for Authorized Off-Premises Sales. If Krispy Kreme allows Authorized Off-Premises Sales, you need to purchase equipment to service wholesale customers with doughnuts and other products. Such Authorized Off-Premises Sales may only be authorized if you and Krispy Kreme enter into an agreement in the form attached as Exhibit E-1 to either a Franchise Agreement or a Commissary Facility Agreement. The cost of this off-premises sales equipment ranges from $90,000 to $100,000 for a Factory Store, and from $90,000 to $210,000 for a Commissary Facility.
  • All of these payments are non-refundable, unless otherwise indicated above. Although Krispy Kreme has waived or negotiated certain of these fees in the past, it expects that they will be uniformly imposed on franchisees who receive this Disclosure Document.

4.  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.

  • Due Date:  Payable each week on the day of the week Krispy Kreme periodically designates, currently Friday.
  • “Net Sales” means all the Store’s and/or Commissary Facility’s revenue from food, beverages, and other products and merchandise of any type sold, whether or not produced at the Store or acquired from any third party, including Krispy Kreme products purchased from other Krispy Kreme franchises (regardless whether owned by you) and services rendered at or away from your Store’s or Commissary Facility’s site (whether or not such sales are authorized by Krispy Kreme), or from any use of the Marks, recorded using the accrual basis of accounting and otherwise in accordance with accounting principles generally accepted in the United States.
  • “Net Sales” includes, but is not limited to:
  • (a) On-Premises Sales, Authorized Off-Premises Sales, and Fundraising Sales;
  • (b) all amounts you receive or have the right to receive from the conveyance of products and services, whether such sales are made for cash or cash equivalents (including, but not limited to, credit, debit, and gift cards) or on credit terms, but excludes: (i) sales and similar taxes collected or which you have the right to collect from customers and which you must by law remit to a taxing authority, (ii) customer refunds, (iii) credits for product returns, (iv) the value of redeemed customer coupons and customer discounts, and (v) sales or delivery of products to other Krispy Kreme Stores or Commissary Facilities (whether or not owned by you); and
  • (c) will not be reduced by any charge or other provision for uncollectible accounts.
  • Krispy Kreme will debit your bank account for Royalties due.

5.  Transfer:  $5,000, plus any applicable transfer fee for any other agreements, as well as Krispy Kreme’s costs and expenses (including legal and accounting fees) incurred in relation to the transfer

  • Due Date:  Before consummation of transfer.
  • Payable on transfer of an interest in you, any owner, or any interest in a Franchise Agreement or a Commissary Facility Agreement.

6.  Opening Team:  cost and expenses Krispy Kreme’s opening team incurs in connection with the opening of your Store or Commissary Facility, other than travel, room and board, and salaries, for which Krispy Kreme is responsible

  • Due Date:  As incurred.
  • As specified in the Development Agreement, the Franchise Agreement, and the Commissary Facility Agreement, if you and your affiliates are opening multiple Stores or Commissary Facilities under Development Agreements, Krispy Kreme will provide for 7 days (i) entire opening team for the 1st Store or Commissary Facility; (ii) 1/2 of an opening team for the 2nd Store or Commissary Facility; (iii) a field consultant for the 3rd Store or Commissary Facility; and (iv) at Krispy Kreme’s option, a field consultant for any subsequent Stores or Commissary Facilities.

7.  Brand Fund (Franchise Agreement only, except for Authorized Off-Premises Sales by a Commissary Facility):  up to a maximum of 2% of Net Sales

  • Due Date:  Payable each week on the day of the week Krispy Kreme periodically designates, currently Friday.
  • Krispy Kreme will debit your bank account for Brand Fund payments due.

8.  Advertising Placement Fund (Franchise Agreement only, except for Authorized Off-Premises Sales by a Commissary Facility):  up to a maximum of 1% of Net Sales

  • Due Date:  Payable each week on the day of the week Krispy Kreme periodically designates, currently Friday.
  • Krispy Kreme will debit your bank account for Advertising Placement Fund payments due.

9.  Additional Copies of Advertising (Franchise Agreement only):  cost associated with providing additional copies of advertising materials

  • Due Date:  As incurred.

10.  Local Advertising Requirement (Franchise Agreement only):  at least 2.5% of Net Sales

  • Due Date:  As incurred.
  • For each year of the Franchise Agreement, you must spend at least 2.5% of Net Sales on approved local advertising and promotion.

11.  Local and/or Regional and/or National Advertising Cooperatives (Franchise Agreement only):  up to 3% of Net Sales

  • Due Date:  As incurred.
  • Krispy Kreme currently does not require Franchisees to be members of local and/or regional and/or national advertising cooperatives.
  • If Krispy Kreme establishes a local and/or regional and/or national advertising cooperative, it will credit your required contributions against your local advertising requirement.
  • The amount of these contributions will be determined by each cooperative by majority vote.
  • At this time, Krispy Kreme has not determined what the amount of the contributions would be if it owns a majority of Stores in the cooperative.

12.  Required Purchases:  varies



  • Due Date:  As incurred.
  • Currently, you must purchase from Krispy Kreme the following items:  doughnut-making equipment, proprietary doughnut mixes and related ingredients, coffee beans and associated beverage syrups, coffee grinders, employee apparel, logoed items and apparel, paper goods, and other related items and supplies.
  • You must purchase such items in sufficient quantity to operate your Store or Commissary Facility.
  • Krispy Kreme may debit your bank account for amounts due.

13.  Management Development Fee: $25,000 per hired employee

  • Due Date:  As of the date of hire of the person.
  • You must pay Krispy Kreme this fee if you hire one of its employees, subject to its consent.

14.  Hosting Fee:  $150 per Store per month

  • Due Date:  As incurred.
  • Under the Service Provider Agreement, you must pay this fee if Krispy Kreme licenses you to use its Platform in accordance with the Service Provider Agreement.

15.  Maintenance Fee:  $150 per Store per month

  • Due Date:  As incurred.
  • Under the Service Provider Agreement, you must pay this fee if Krispy Kreme licenses you to use its Platform in accordance with the Service Provider Agreement.

16.  Additional Service Fee:  $65 per hour

  • Due Date:  As incurred.
  • Under the Service Provider Agreement, you must pay this fee at the time of service request if Krispy Kreme provides you with services not related to the then-current version of the Platform.

17.  Systems Fee:  Krispy Kreme’s then-current fees (currently $0)

  • Due Date:  As incurred.
  • Krispy Kreme does not currently charge a fee for the use of software beyond the Hosting Fee, Maintenance Fee, and Additional Service Fee described above, but it has the right to charge additional fees for software, hardware, or computer systems and enhancements that it licenses to you or other computer support services it provides to you.

18.  Replacement Fee for System Standards Manuals:  currently $1,000

  • Due Date:  As incurred.
  • You must obtain a replacement copy of the system Standards Manuals if your copy is lost, destroyed, or significantly damaged.
  • Krispy Kreme reserves the right to charge a fee for replacement copies.

19.  Relocation Fee:  Fee of $2,500, plus Krispy Kreme’s expenses associated with the relocation of a Store or Commissary Facility

  • Due Date:  As incurred.
  • Payable if Krispy Kreme grants your request to relocate the Store or Commissary Facility.

20.  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

  • Due Date:  15 days after receipt of inspection or audit report.
  • Payable if you (i) fail to provide in a timely manner any reports or supporting records relating to the operation of the Store or Commissary Facility, or (ii) understate Net Sales by more than 2%.

21.  Costs and Attorneys’ Fees:  varies

  • Due Date:  As incurred.
  • The prevailing party in any legal action arising under your agreement is entitled to reasonable attorneys’ fee and costs.

22.  Indemnification:  varies

  • Due Date:  As incurred.
  • You must reimburse Krispy Kreme for any claims against it related to the development or operation of your Store or Commissary Facility.

23.  Training of Additional Managers:  you must pay your managers’ wages, salaries, travel, room and board, and living expenses during training

  • Due Date:  As incurred.
  • Before the opening of the Store or Commissary Facility, Krispy Kreme will provide its standard initial training for 1 of your general managers. After opening, Krispy Kreme will provide its standard training annually for up to 1 additional manager for the Store or Commissary Facility.
  • Krispy Kreme reserves the right to charge fees for the training of any additional managers.

24.  Additional or Special Training:  Krispy Kreme’s reasonable fee, plus your managers’ wages, salaries, travel, room and board, and living expenses during training

  • Due Date:  As incurred.
  • Your managers must attend any additional or special training Krispy Kreme requires, for which it has the right to charge a reasonable fee.

25.  Interest on Late Payment:  1.5% per month or the highest rate of interest permitted by law, whichever is less

  • Due Date:  As incurred.
  • If you fail to make any payments to Krispy Kreme when due.
  • If you fail to make payments when due under the Service Provider Agreement, the late payment will bear interest of 1% per month.

26.  Fees to Evaluate Proposed Alternative Suppliers:  Krispy Kreme’s reasonable costs and expenses

  • Due Date:  As incurred.
  • Krispy Kreme may impose fees to cover its costs in evaluating alternative suppliers you propose in accordance with the Franchise Agreement or Commissary Facility Agreement.

27.  Successor Fee:  $10,000

  • Due Date:  Upon execution of a successor agreement.

If you sign a Development Agreement, you should review both the above fees applicable to Franchise Agreements and Commissary Facility Agreements, as well as the following fees.

1.  Transfer:  $5,000, plus any applicable transfer fee for any other agreements, as well as Krispy Kreme’s costs and expenses (including legal and accounting fees) incurred in relation to the transfer

  • Due Date:  Before consummation of transfer.
  • Payable on transfer of an interest in you, any owner, or any interest in the Development Agreement, plus any transfer fees required under your Franchise Agreement(s) or Commissary Facility Agreement(s), as applicable.

2.  Management Development Fee:  $25,000

  • Due Date:  As of the date of hire of the person.
  • You must pay Krispy Kreme this fee if you hire one of its employees, subject to its consent.

3.  Costs and Attorneys’ Fees:  Varies

  • Due Date:  As incurred.
  • Payable if incurred by Krispy Kreme in enforcement of any term of the Development Agreement.

4.  Indemnification:  varies

  • Due Date:  As incurred.
  • You have to reimburse Krispy Kreme for claims against it related to your breach of the Development Agreement or the development and operation of your Stores and Commissary Facilities.

If you are looking for information on the estimated initial investment for a Krispy Kreme franchise, check out this post:   Franchise Costs:  Detailed Estimates of Krispy Kreme Franchise Costs



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