Detailed Estimates of Duck Donuts Franchise Costs Based on Item 7 (Estimated Initial Investment) of Duck Donuts’ 2020 Franchise Disclosure Document

1.  Franchise Fee:  $40,000

2.  Multi-Unit Option Fee for a Minimum of One Additional Location (if applicable):  $20,000 for first Duck Donuts location optioned and $10,000 for each additional Duck Donuts location optioned

3.  Security Deposit (not including lease payment):  $2,500 to $6,500

• Though you have the option to purchase or lease, it is likely you will lease the premises of your Duck Donuts location. Duck Donuts retail stores typically occupy approximately 1,300 square feet of commercial space.

• The costs to lease or purchase commercial space will vary depending upon many factors, including geographic location, real estate market conditions, facility size, the availability and cost of labor and materials, the condition of the premises, and your landlord. Therefore, the franchisor does not provide estimates of lease payments.

• The estimates in this category reflect only the security deposit you may have to pay to your landlord. Landlords may require a security deposit. These deposits may be refundable depending on the agreements made with the landlord.

4.  Design Professional Fees:  $12,000 to $18,000

• Your Duck Donuts location shall conform to Duck Donuts’ standards and specifications for appearance, layout, and design.

• You must use the franchisor’s Approved Supplier for the preparation of architectural and working drawings necessary to complete construction and/or buildout of the Duck Donuts location to meet the franchisor’s minimum standards and specifications.

• You must contract with the franchisor’s Approved Supplier for architecture and contracting services for the construction or modification of your Duck Donuts location.

• The franchisor must approve all plans before you begin construction/buildout. The franchisor must approve all subsequent, material changes to the plans and drawings before such changes may be implemented.

5.  Construction Improvements:  $104,119 to $244,642

• The costs associated with this category reflect an estimate of the layout and construction buildout costs for your Duck Donuts location. These costs may vary depending upon the size of your Duck Donuts location, its geographic location, and condition.

6.  Equipment:  $91,000 to $111,000

• Equipment necessary for the operation of a Franchised Business is listed in the Operations Manual which the franchisor provides to you. Payment for all equipment must be made in accordance with the terms of the supplier.

7.  Grand Opening and First Year Marketing Plan:  $10,000 to $20,000

• These are the costs the franchisor estimates you will incur to obtain the initial grand opening and first year marketing plan materials required to start your Franchised Business.

• Costs estimated to comply with the grand opening requirements defined in the Franchise Agreement and Operations Manual, including advertising, signage, giveaways, product discounts, and entertainment.

8.  Register/Computer System/Security System/Office Supplies:  $15,000 to $17,000

• Costs estimated to comply with the equipment, software, computer, and cash register requirements defined in the Franchise Agreement and Operations Manual. Systems must be purchased from Approved Suppliers.

9.  Permits and Licenses:  $100 to $2,000

• These costs will vary depending on the permit and issuing body.

10.  Signage:  $6,000 to $11,000

• The cost of signage, both interior and exterior, will depend on the size and location of your Duck Donuts location, your landlord’s particular requirements, local and state ordinances, and zoning requirements. You must purchase signage from the franchisor’s Approved Supplier.

11.  Training:  $2,000 to $4,000

• You are responsible for making arrangements and paying the expenses for you and your initial store manager(s) and other individuals involved in the Franchised Business you desire to have trained to attend the training program including transportation, lodging, meals, and wages.

• The amount varies due to the distance you must travel and the type of accommodations you choose. The estimate contemplates 2 individuals attending the franchisor’s initial training program.

12.  Insurance:  $3,000 to $5,000

• You shall obtain and maintain insurance, at your expense, prior to the commencement of construction or any operations under the Franchise Agreement, in form, amounts, and with insurers satisfactory to the franchisor, which insurers must have an A.M. Best Company rating of A-VII or better, and naming the franchisor an additional insured for operational liability, including product liability, and for any and all damages that could result from injury or death to any person as a result of handling, eating, or ingesting any of the items sold at your Duck Donuts location.

13.  Professional Fees:  $750 to $2,500

• The franchisor encourages you to employ professionals, such as attorneys and accountants, to advise you in connection with the Franchised Business. It is your obligation to ensure compliance with federal, state, and local laws in the operation of your Franchised Business. These fees may vary significantly depending upon the nature and extent of advice that you seek, and the level of professional fees charged in your area.

14.  Initial Inventory:  $10,000 to $15,000

• The estimates in this category include the cost of your initial opening inventory, which will include a two to three week supply of all supplies necessary to operate your Duck Donuts location.

15.  Additional Funds for 3 Months:  $20,000

• This estimates the initial working capital needed, including employees’ salaries and utility costs. However, these figures are estimates and the franchisor cannot guarantee that this amount will be sufficient. The franchisor does not guarantee that additional working capital will not be necessary during the start-up phase or after.

• Your costs will depend on factors such as: how well you follow the franchisor’s methods and procedures; your management skills, experience, and business acumen; local economic conditions; the local market for Duck Donuts product; the prevailing wage rate; competition; and the sales level reached during the initial period.

16.  Total (not including multi-unit option or monthly lease/rent):  $353,350 to $573,000

• Total does not include your monthly rent/lease or the optional Option Fees for a minimum of one more location.

• There are no other fees to be paid by you to the franchisor to commence operation of the Franchised Business.