In this FDD Talk 2017 post, you’ll learn the following:
- Section I – Background information on the Krispy Kreme franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Krispy Kreme franchise, based on Item 7 of the company’s 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Krispy Kreme franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Krispy Kreme’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average, high, and low net on-premises revenue, by tier, for all 186 Factory Stores that were in operation as Factory Stores for 18 months or greater as of January 1, 2017, consisting of 114 franchised Stores and 72 company-owned Stores
- 2016 average, high, and low net on-premises revenue, by tier, for all 53 Tunnel Oven Shops that were in operation for 18 months or greater as of January 1, 2017, consisting of 39 franchised Stores and 14 company-owned Stores
- 2016 average, high, and low net on-premises revenue, by tier, for all 6 Fresh Shops that were in operation for 18 months or greater as of January 1, 2017, consisting of 6 franchised Stores and 0 company-owned Stores
Section I – Background Information
15 Things You Need to Know About the Krispy Kreme Franchise
Sold Chocolate Glazed Doughnut for the First Time to Celebrate Solar Eclipse
1. For the first time in the company’s history, the Original Glazed Doughnut was “eclipsed” by a chocolate glaze as a nod to the total solar eclipse that took place in the U.S. on Monday, August 21. The limited-time doughnut was available only on that day at participating locations in the U.S. and Canada.
2. The special doughnut featured Krispy Kreme’s Original Glazed Doughnut smothered in a rich chocolate glaze. Customers who visited participating Krispy Kreme shops on the 21st were able to watch the doughnuts pass through a chocolate glaze waterfall instead of the traditional glaze.
3. Jackie Woodward, Chief Marketing Officer of Krispy Kreme Doughnuts, said of the event: “The solar eclipse is a rare occasion providing a total sensory experience for viewers across the continental U.S. Chocolate will have the same effect as we introduce a first-time chocolate glazing of our iconic Original Glazed Doughnut.”
Celebrated 80th Birthday of Original Glazed Doughnut
4. On July 14, Krispy Kreme celebrated the 80th birthday of its iconic Original Glazed Doughnut. To celebrate the occasion, customers that day were able to purchase a dozen Original Glazed Doughnuts for 80 cents with the purchase of any dozen at regular menu price at participating shops in the U.S. and Canada.
5. Customers were also invited to share how they celebrated the doughnut’s birthday by posting pictures of the Original Glazed Doughnut using the hashtag #OriginalGlazed and tagging @krispykreme on Instagram and Twitter.
6. In a press release announcing the birthday celebration, Jackie Woodward, Chief Marketing Officer of Krispy Kreme Doughnuts, said, “It’s remarkable that for 80 years, Krispy Kreme’s commitment to delivering world-class doughnuts the Krispy Kreme way – hot, fresh and now – has not changed.”
7. NBA all-star Shaquille O’Neal celebrated the Original Glazed Doughnut’s 80th birthday by handing out doughnuts at a Krispy Kreme pop-up store in Times Square in New York City on July 14. O’Neal owns a Krispy Kreme store in Atlanta, Georgia and is a self-proclaimed member of the “Krispy Kreme family.”
Opened 1,000th International Shop in Peru
8. At the end of March, Krispy Kreme announced that it had opened its first location in Peru and that the shop, which is located in the capital city of Lima, is the brand’s 1,000th international location. The shop is the first of 24 planned shops for Peru according to a development agreement that Krispy Kreme signed with Agape Coral, SAC in 2015.
9. The new shop is three levels and features two dining areas and a terrace. To celebrate the grand opening, the first 300 customers in line received a commemorative t-shirt. In addition, the first 12 people in line won a dozen Original Glazed doughnuts every week for a year, while guests 13 to 300 won a dozen Original Glazed doughnuts each month for a year.
10. Krispy Kreme was founded in 1937 by Vernon Rudolph in Winston-Salem, North Carolina. Rudolph initially sold his doughnuts to convenience stores, but he did sell hot doughnuts to customers who came during production time between midnight and 4 a.m.
11. Krispy Kreme’s iconic logo was designed by a local North Carolina architect named Benny Dinkins.
12. Franchising began in 1947. Krispy Kreme became a staple of the Southeast region of the United States, but eventually expanded into other areas of the country. In 1976, Krispy Kreme became a wholly-owned subsidiary of Beatrice Foods of Chicago, Illinois. In 2000, the company went public after a successful IPO.
13. In May 2016, JAB Beech, a German investment firm, made an offer to purchase the company for $1.35 billion that would make the company privately-owned again; the transaction closed at the end of July 2016.
14, Today, there are over 1,200 Krispy Kreme locations around the world.
Entrepreneur’s Franchise 500
15. Krispy Kreme has appeared on Entrepreneur’s annual Franchise 500 list every year for the past 3 years. The brand’s highest rank was No. 18 in 2017, while its lowest rank was No. 209 in 2015. Krispy Kreme also ranked on Entrepreneur’s 2017 Top Global Franchises list at No. 7.
Section II – Estimated Costs
- Please click here for detailed estimates of Krispy Kreme franchise costs, based on Item 7 of the company’s 2017 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Krispy Kreme’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.
Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis
- The information provided in Item 19 is a historic financial performance representation of the results of domestic Stores at Traditional Locations for the period beginning December 28, 2015 and ending January 1, 2017 and in operation for 18 months or greater as of January 1, 2017.
Table 1 – Net On-Premises Revenue for the Period Beginning December 28, 2015 and Ending January 1, 2017 (53 Weeks), Factory Stores (186 Total Stores)
- “Net On-Premises Revenue” includes fundraising revenue and coupons, and excludes gift cards and off-premises revenue. The tables do not include figures for Commissary Facilities.
- The franchisor has not audited the franchisee Net On-Premises Revenue figures and cannot vouch for their accuracy.
- Net On-Premises Revenue of company-owned Stores contained in Tables 1, 2, and 3 are derived from the franchisor’s books and records used to prepare its financial statements which are audited by an independent accounting firm.
- Table 1 presents information pertaining to all 186 Stores that were in operation as Factory Stores for the entire 18-month period, consisting of 114 franchised Stores and 72 company-owned Stores.
$1,750,000 and Above