Krispy Kreme Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

For a Hot Light Theater Shop

1.  Development Fee:  $25,000

2.  Initial Franchise Fee:  $25,000

3.  Real Estate and Improvements for 3 Months:  $20,000 to $75,000

• Your land acquisition costs will vary depending on a multitude of factors including whether the property is purchased or leased, the size and location of the property, and the availability of financing on commercially reasonable terms.

• For a Hot Light Theater Shop, the approximate size of the site is 27,000 to 50,000 square feet and the building itself will be between 2,700 and 3,500 square feet. Hot Light Theater Shops may be located only in freestanding buildings on leased or owned property. The Hot Light Theater Shop location must be one accessible to vehicular traffic and have a drive-thru window.

• In addition, site improvement costs may vary based on numerous factors, including but not limited to, soil and environmental conditions, availability of utilities to the site, the topography of the site, the size of the parcel, and local zoning and other building requirements.

• If you elect to purchase the site, it is anticipated the range of cost of the property plus the site improvements may be $500,000 to $1,500,000 depending on location. Acquisition costs may be beyond this range in certain cases or localities.

• Rent will vary widely from location to location, but should range from $80,000 to $300,000 per year plus other occupancy related costs including common area maintenance, property taxes, and insurance. The amounts in the chart are estimates of rent for a 3-month period.

4.  Construction Costs:  $800,000 to $2,200,000

• This item assumes building a new structure.

• Krispy Kreme will provide you with the general model plans, specifications, and standards that you will need to adapt for the construction of a Hot Light Theater Shop.

• The building must be a stand-alone building of construction that meets all applicable building requirements with a drive-thru corridor and an indoor dining facility.

• Construction costs may be beyond this range in certain cases or localities.

5.  Equipment/Signage/Furniture/Fixtures:  $230,000 to $370,000

• This line item is for the standard furniture, fixtures, and equipment including interior and exterior signs, point-of-sale computer systems, headsets, and furniture (including retail equipment such as drink dispensers, cup dispensers, product display cases, etc.).

• You must purchase or lease certain of these items from Krispy Kreme, its affiliates, or designated suppliers.

• If your Hot Light Theater Shop produces Products for Fresh Shops and Box Shops, you will need additional equipment such as racks, rack covers, and pans, among other items. The amount you will spend depends on the number of Fresh Shops and Box Shops to which you deliver.

6.  Truck:  $25,000 to $50,000 per truck

• You will also need to purchase or lease a truck. The cost to purchase a truck generally ranges between $25,000 and $50,000. Typically, a truck can be leased with payments ranging from $1,300 to $1,600 per month depending on the type of truck and lease. Truck lease payments are not included in the chart.

7.  Initial Inventory:  $40,000 to $50,000

• The inventory start-up package includes doughnut mix which must be purchased from Krispy Kreme or a designated supplier. You must purchase certain items in the initial inventory of supplies and raw materials from Krispy Kreme, its affiliates, or designated suppliers. You may purchase other items from approved suppliers.

8.  Production Equipment:  $270,000 to $400,000

• Krispy Kreme manufactures certain production equipment used in Hot Light Theater Shops. You must purchase the production equipment from Krispy Kreme. The price includes freight, crating, tax, installation, and limited warranty.

9.  Grand Opening Marketing Program:  $25,000 to $45,000

• You must conduct, with Krispy Kreme’s guidance, a Grand Opening Marketing Program during the period beginning 30 days before and ending 90 days after the opening of the Shop. The Grand Opening Marketing Program will utilize the public relations and advertising programs, as well as the media, advertising, and promotional materials that Krispy Kreme has developed or approved in addition to other promotional materials that you may need to produce.

• Amounts spent on the Grand Opening Marketing Program, up to 1% of the Shop’s annual Net Sales, will be credited against your first year’s annual requirement to spend at least 2.5% of the Shop’s annual Net Sales, as the Local Advertising Requirement.

• Experience has shown that the cost of the Grand Opening Marketing Program generally ranges between $25,000 and $45,000 and depends greatly on the market.

10.  Training Expenses:  $45,000 to $50,000

11.  Security Deposits and Other Pre-Paids:  $7,500 to $20,000

12.  Additional Funds for 3 Months:  $75,000 to $100,000

• Additional Funds is an estimate of the funds for a 3-month period needed to cover start-up costs such as various pre-opening expenses including initial employee wages, utility deposits, insurance premiums, licenses, permit costs, recruitment, advertising expenses (other than grand opening expenses), Platform fees, electricity, telephone, and other supplies (other than supplies purchased from Krispy Kreme).

• These figures are estimates, and Krispy Kreme cannot guarantee that you will not have additional expenses opening the Hot Light Theater Shop and starting the business.

• Your costs will depend on a number of factors including but not limited to the following examples: the number of Shops that you operate; your management skill, experience, and business acumen; local economic conditions; the local market for your Products and services; the prevailing wage rate; and competition.

13.  Total Estimated Initial Investment:  $1,587,500 to $3,410,000

• To compile these estimates, Krispy Kreme relied on its experience. You should review these figures carefully with a business advisor before making any decision to purchase the franchise.

For a Fresh Shop

• Total Estimated Initial Investment:  $440,500 to $1,207,500
  

For a Box Shop

• Total Estimated Initial Investment:  $200,500 to $453,000