If you are considering a Dunkin’ Donuts franchise, don’t get blindsided by these 28 important franchise fees (from the initial franchise fee, to the royalty fee, to 26 other fees found in Items 5 and 6 of Dunkin’ Donuts’ 2017 FDD).
1. Initial Franchise Fee: $40,000 to $90,000
- You must pay the initial franchise fees immediately below for Dunkin’ Donuts’ standard franchise offerings in the Development Area Type that your Restaurant will be located.
- The Designated Market Areas (“DMAs”) are defined by Nielsen Television Media Marketing, and the counties included in these DMAs are listed in Appendix V-A of the 2017 Disclosure Document.
Development Area Type 1: $90,000
- Albany-Schenectady-Troy, NY
- Bangor, ME
- Binghamton, NY
- Boston (E. Mass/Southern NH)
- Hartford-New Haven, CT
- New York, NY
- Portland, ME
- Providence, RI
- Springfield, MA
- Syracuse, NY
- Utica, NY
Development Area Type 2: $80,000
- Chicago, IL
- Elmira, NY
- Ft. Myers, FL
- Miami-Ft. Lauderdale, FL
- Orlando/Daytona/Melbourne, FL
- Philadelphia, PA
- Rochester, NY
- Tampa/St. Pete/Sarasota, FL
- Watertown, NY
- West Palm Beach/Ft. Pierce, FL
- Wilkes-Barre/Scranton, PA
- Youngstown, OH
Development Area Type 3: $70,000
- Jacksonville, FL
- Baltimore, MD
- Cleveland, OH
- Greenville, NC
- Pittsburgh, PA
- Salisbury, MD
Development Area Type 4: $60,000
- Burlington, VT-Plattsburg, NY
- California (All DMAs)
- Lancaster/Harrisburg/York, PA
- Washington, DC
Development Area Type 5: $50,000
- Atlanta, GA
- Presque Isle, ME
Development Area Type 6: $40,000
- All other geographic areas in the U.S. not described above.
- In Dunkin’ Donuts’ fiscal year ended December 2016, the initial franchisee fees paid by its franchisees ranged from $0 to $90,000, based on factors such as development area type and other factors.
- Dunkin’ Donuts intends to offer qualified military veterans a 20% initial franchise fee discount on up to a total of five Dunkin’ Donuts and/or Baskin-Robbins restaurants developed under either past or present incentive offers. These reduced fees only apply if all of the terms and conditions of the Military Veterans Development Incentive are met.
2. Reimbursement of Expenses: varies
- If you are developing a Restaurant and you or your architect is not prepared for a scheduled meeting when required, you must reimburse Dunkin’ Donuts for certain out-of-pocket costs.
3. Real Estate Lease Related Charges: varies
- A security deposit or other charges payable under your real estate lease or sublease may be required before the business opens.
- If you sublease from Dunkin’ Donuts, the security deposit is refundable at the end of the sublease term if, after Dunkin’ Donuts receives a final accounting from the landlord under the Prime Lease, you have no outstanding financial obligations to Dunkin’ Donuts under either your franchise or lease agreements.
4. Administrative Fee: varies, but no less than $25,000
- If you sign a Contract for Development and Construction (“CDC”), then you will pay Dunkin’ Donuts an Administrative Fee in an amount that Dunkin’ Donuts agrees upon in the CDC. The Administrative Fee will vary based on the complexity of the transaction, but in no event will it be less than $25,000.
- To the extent that Dunkin’ Donuts has advanced funds on your behalf to purchase equipment between the time when you signed the CDC and the closing, you must also reimburse Dunkin’ Donuts at the closing for those amounts.
5. Training Related Fees Paid to Dunkin’ Donuts: initial online access fee of $340 per location and thereafter an annual subscription fee, which is currently $340 per location
- You will be required to pay an initial non-refundable online access fee of $340 per location and thereafter an annual subscription fee, which is currently $340 per location. The above fees are quoted as of the date the 2017 Disclosure Document is prepared. These fees may change.
6. Marketing Start-Up Fee: minimum of $10,000 per opening or remodel event, and $5,000 per relocation
- In connection with the opening, remodeling, or relocation of your Restaurant or Combo Restaurant, you must undertake promotional activities in the manner and to the extent that Dunkin’ Donuts prescribes in accordance with its brand standards, which it will provide to you. The brand standards will advise you of the manner and timing of payment for each activity.
- The minimum required Marketing Start-Up Fee is currently $10,000 per opening or remodel event, and $5,000 per relocation that Dunkin’ Donuts approves.
- The promotional activities are designed to promote the opening, re-opening, or relocation of your Restaurant and the fee is spent by you.
- If you fail to administer these promotional programs yourself, Dunkin’ Donuts may require you to pay the fee to it or one of its approved vendors to conduct these activities for you.
7. Continuing Franchise Fee: 5.9% of gross sales
- Due Date: Due on or before Thursday of each week, for the seven-day sales reporting period ending at the close of business on Saturday, twelve days previous.
- Gross sales include all revenue related to the Restaurant.
8. Continuing Advertising Fee: 5.0% of total gross sales
- Due Date: Due on or before Thursday of each week, for the seven-day sales reporting period ending at the close of business on Saturday, twelve days previous.
- Additional fees may be due if agreed to by 2/3 of the Restaurants (regional or national).
9. Franchise Transfer Fee (for a majority interest in the first 3 years): $12,500 (or $20,000 if the restaurant is a Dunkin’ Donuts/Baskin-Robbins Combo), plus the amount listed in the table below
- Due Date: Upon transfer.
- Due if you transfer 50% or more interest during the first 3 years after your purchase of the franchise.
Gross Sales for Trailing 12-Month Period — Transfer Fee (Dunkin’ Donuts only):
- Less than $400,000 in gross sales for trailing 12-month period — $5,000 transfer fee
- $400,000 or more, but less than $600,000 in gross sales for trailing 12-month period — $6,000 transfer fee
- $600,000 or more, but less than $1,000,000 in gross sales for trailing 12-month period — $8,000 transfer fee
- $1,000,000 or more, but less than $1,400,000 in gross sales for trailing 12-month period — $12,000 transfer fee
- $1,400,000 or more in gross sales for trailing 12-month period — $20,000 transfer fee
10. Franchise Transfer Fee (for a majority interest, after 3 years have elapsed): an amount based upon the Gross Sales of the Restaurant for the 12 months preceding the date of the contract of sale
- Due Date: Upon transfer.
- Due if you transfer 50% or more interest more than 3 years after your purchase of the franchise.
Gross Sales for Trailing 12-Month Period — Transfer Fee (Dunkin’ Donuts only):
- Less than $400,000 in gross sales for trailing 12-month period — $5,000 transfer fee
- $400,000 or more, but less than $600,000 in gross sales for trailing 12-month period — $6,000 transfer fee
- $600,000 or more, but less than $1,000,000 in gross sales for trailing 12-month period — $8,000 transfer fee
- $1,000,000 or more, but less than $1,400,000 in gross sales for trailing 12-month period — $12,000 transfer fee
- $1,400,000 or more in gross sales for trailing 12-month period — $20,000 transfer fee
11. Franchise Transfer Fee (no change of control): then-current Fixed Documentation Fee, which is currently $2,000 per restaurant, plus an additional $2,000 for each new transferee
- Due Date: Upon transfer.
- Due in the event of a transfer that does not result in a change of control (as defined in the franchise agreement).
12. Franchise Transfer Fee (transfer to spouse or children): then-current Fixed Documentation Fee, which is currently $2,000 per restaurant, plus an additional $2,000 for each new transferee
- Due Date: Upon transfer.
- Due if you transfer any of your interest to your spouse and/or children.
13. Audit Costs: Dunkin’ Donuts’ cost to audit your gross sales reports, including legal and accounting fees
- Due Date: When and as billed to you.
- Dunkin’ Donuts reserves the right to collect its costs to audit your Restaurant if a 3% or greater discrepancy is discovered, or if the audit is done because you did not send it or keep required records.
14. Immigration Status Review Costs: Dunkin’ Donuts’ out-of-pocket costs to hire attorneys or others
- Due Date: When and as billed to you.
- Payable if Dunkin’ Donuts needs outside advice on your legal or immigration status.
15. Interest, Late Fees, and Collection Costs: then-current late fee or dishonored check fee, and if applicable, interest on unpaid amount at 1.5% per month or highest rate allowed by law
- Due Date: When and as billed to you.
- Dunkin’ Donuts can change these fees without notice. They apply if you fail to pay Dunkin’ Donuts, or if your check is dishonored or your EFT is rejected by your bank.
16. Indemnification: varies
- Due Date: Upon demand.
- You must reimburse Dunkin’ Donuts if it is sued and/or held liable for claims arising out of your Restaurant’s operations.
17. SDA Transfer Fee: $10,000
- Due Date: Upon transfer.
- Due if you transfer 50% or more of your direct or indirect interest in the SDA; partial transfers of development obligations and associated rights are not permitted.
18. SDA Transfer Fee (for less than a majority interest): then-current Fixed Documentation Fee, which is currently $2,000, plus an additional $2,000 for each new transferee
- Due Date: Upon transfer.
- Due if you transfer less than a 50% interest in the SDA or SDA entity.
19. SDA Transfer Fee (transfer to spouse or children): then-current Fixed Documentation Fee, which is currently $2,000, plus an additional $2,000 for each new transferee
- Due Date: Upon transfer.
- Due if you transfer any of your interest to your spouse and/or children.
20. Lease Fees: varies
- Due Date: Payable as described in the lease.
- If you lease the Restaurant from Dunkin’ Donuts.
21. Lease Guaranty Fee Agreement: varies
- Due Date: Upon execution.
- Lease guarantees are considered on a case by case basis and are subject to Dunkin’ Donuts’ internal approval process.
22. Fixed Documentation Fee – Generally: then-current Fixed Documentation Fee, which is currently $2,000
- Due Date: Due when you request additional documents, or when requested by Dunkin’ Donuts.
- Due if preparation of additional documents is at your request or becomes necessary.
23. Fixed Documentation Fee – Transfers: then-current Fixed Documentation Fee, which is currently $2,000 per restaurant, plus an additional $2,000 for each new transferee.
- Due Date: Due when additional documents required in connection with transfers, or when requested by Dunkin’ Donuts.
- Due if preparation of additional documents is at your request or becomes necessary.
24. Costs for Tests Used to Approve Additional Suppliers: Dunkin’ Donuts’ out-of-pocket and internal costs allocated to this activity, typically $1,000 to $10,000 depending on the complexity of the testing
- Due Date: When and as billed to you.
- You pay the cost for any additional tests/approvals that you have requested.
25. CDC (Contract for Development and Construction) Option: varies
- Due Date: On or before the Buy-Out Date.
26. CDC Annual Lease Administration Fee: $1,200 each year
- Due Date: Payable in equal monthly installments.
- Due only if you have signed a CDC and have exercised the Buy-Out Option, but Dunkin’ Donuts cannot assign the prime lease to you without recourse.
- The Annual Lease Administration Fee is subject to adjustment for changes to the Index.
27. CDC Rent, if Payable to Dunkin’ Donuts: varies
- Due Date: Fifteenth day of the month preceding.
- Due only if you have signed a CDC.
28. CDC Offset: varies
- Due Date: On or before the Closing Date.
- Only due if, at or before the time of the Closing, you owe Dunkin’ Donuts any amounts. If so, Dunkin’ Donuts can offset those amounts from the amount that it will pay to reimburse you for equipment purchases (as explained in Item 1).
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