Dunkin'

Start a Dunkin' Donuts Franchise | Costs and Requirements

If your entrepreneurial senses are tingling, and you think you’re ready to start a franchise, then a Dunkin’ Donuts franchise might be your sweet spot. Here’s what you need to know.

How To Know If You’re Ready To Start a Franchise

Before you get into Dunkin’ Donuts franchises, you should know whether or not becoming a new franchisee is the right business opportunity for you. It’s a rewarding business, but has its challenges.. 

Take a look at some of the pros and cons of being your own boss and the aspects of starting a franchise.

Pros of Being a Franchise Owner

• Independence
• Flexibility
• Self-sufficiency
• Sense of achievement 
• Opportunities for leadership
• Income potential
• Automatic brand awareness and customer base

Cons of Being a Franchise Owner

• Financial risk
• Work schedule Potential challenging situations with employees
• Must follow the franchise model 

Related: #1 on the Franchise 500: Even Without the 'Donuts', Dunkin' Takes the Cake

Unique Requirements of a Franchise Owner

While being a franchise owner is a version of entrepreneurship, some unique aspects come with franchising. 

Answer these questions for yourself about the realities of being a franchise owner:

• Are you willing to follow someone else’s rules, even when you disagree or think your way is better?
• Can you accept mentoring or advice on how to run your business from the parent company?
• Are you comfortable sharing your finances and paying royalty fees?
• Can you “buy in” to the franchise system you choose?

Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

Are You Interested in Opening a Dunkin' Franchise?

If you’re still on board for the franchise journey, keep reading to discover all about Dunkin’.

A History of Dunkin’ Donuts

It’s essential for franchise owners to know the background of their business. If you’re intererested in opening a Dunkin’, you should touch up on the franchise’s history. 

In 1948, Bill Rosenberg opened  a local coffee shop in Quincy, Massachusetts (just south of Boston) called The Open Kettle. 

Like McDonald’s and Starbucks, Dunkin had small, humble beginnings with cheap menu items. The original price for coffee and donuts? Five cents and ten cents, respectively. 

Rosenberg switched the name to Dunkin’ Donuts in 1950 and started franchising five years later. By 1965, there were over 100 locations. 

Now called Dunkin' (no Donuts), Dunkin' locations focus on donuts, bagels, coffee, and breakfast sandwiches. Typically, most Dunkin’ locations cater to those looking for a breakfast starter, but it can still be valuable for customers throughout the day. 

Dunkin' is a national brand, and, as their slogan says, "America runs on Dunkin'." Dunkin’ has a solid national and international presence, boasting over 9,400 U.S. franchises and another 3,4000+ internationally.

Perks of Starting a Dunkin’ Franchise

Owning a Dunkin' franchise can be a wise choice for franchisees who are community-oriented and enjoy food service. 

Related: The 10 Commandments of Franchise Ownership

It is also suitable for franchisees who want options for restaurant layout and operational times. A franchisee might be able to run drive-thru only, freestanding storefronts, or a combination of both. They may also be in a position to operate 24/7. 

Other perks include:

• Recognized brand
• Large customer base
• Numerous available markets
• Active quality support team
• Training programs
• Relevant to its customers and culture

Dunkin' has made several improvements to its restaurant designs and continues to maintain its foothold in the market. As a franchisee, you can take advantage of Dunkin's local branding methods and new seasonal products. 

Customers may also take advantage of Dunkin' Rewards and reward opportunities specific to your location. You also may see the benefits of an expanded snack menu and breakfast options. This automatic diversification of revenue may result in better chances of customer conversion.

To be a part of the Dunkin’ team, you’ll want to ensure you are financially sound enough for initial investment fees  and other startup costs. In addition, you should be aware of and prepare for the ongoing fees associated with franchise ownership, including advertising, royalty, and potential renewal fees.

Related: Want to Make Smart Investments? Use These Expert Tips.

Dunkin’ Franchising FAQs

Are you looking for more facts and figures about opening a Dunkin’ location? Take a look at these Dunkin’s FAQs and their answers. 

What Are the Costs of “Traditional” Dunkin’ Opportunities?

• Initial franchise fee: $40,000-$90,000
• Franchise fee: 2-6% 
• Store size: 1200-1600 square feet
• Advertising fee: 5%
• Total investment range: $526,900-$1,787,000

What Are the Costs of “Nontraditional” Dunkin’ Opportunities?

• Initial franchise fee: $1,000-$2,250 per year
• Franchise fee: 5.9%
• Store size: 500 square feet
• Advertising fee: 2.5%
• Total investment range: $121,400-$972,800

How Much Money Will You Make?

As a Dunkin’ Donuts franchise owner, there is no guarantee for what you might make, just like any business venture you embark on. Although owning a franchise can offer more stability than a small business without corporate backing, there is still no way to make an exact calculation for that. 

When you are ready to complete an application form to continue your research on Dunkin’, they will provide their Franchise Disclosure Document (FDD) which includes information to help you evaluate the opportunity potential to those filling out an application form.

Related: 4 Tips for Creating a Strong Franchise Infrastructure #FranchiseBible

Does Dunkin’ Offer Discounts or Incentives?

Dunkin' offers some incentives and discounts for particular circumstances and qualified veterans around franchise fees. 

Will Dunkin’ Provide Financing?

Dunkin’ partners with lenders and SBA-backed financers to provide franchise investors with financial assistance. These lenders offer financing options on:

• Business acquisition loans
• Equipment loans and leases
• Real estate loans
• Refinancing

Related: What is an SBA Loan? Everything You Need to Know

How To Open a Dunkin' Franchise

If you’re ready to become a Dunkin’ franchise owner, here’s the step-by-step guide to open your own storefront. 

1. Get Your Finances in Order

Before making any financial commitment or signing a franchise agreement, you must perform your due diligence and establish if this is the right franchise opportunity for you.  

• Speak to existing franchisees and ask questions directed to the Dunkin' team
• Check into revenue and fees (industry fees, royalty fees, marketing fees)
• Make sure your net worth and available liquid capital match the brand’s requirements to ensure you qualify to open a Dunkin' franchise

The nitty gritty about becoming a franchise owner is that the financial requirements can cause quite a barrier to entry. Before you jump to step two, check out the economic facts about the Dunkin’ Donuts franchise cost:

• Required liquid assets: $250,000
• Necessary net worth: $500,000

While these numbers might look high, becoming a Dunkin’ franchise owner is considerably less than competitor brands, like Krispy Kreme, which averages a cost of $440,500 to $4,115,000, according to FDD data, to open. 

2. Evaluate Your Options

As you decide if opening a Dunkin' franchise is the right decision for you, make sure you take time to explore the opportunity. Research the Dunkin’ brand and your local area to see if a Dunkin' franchise would do well in your community. 

While competition is healthy in general, it can be even more crucial to the success of Dunkin’ locations. In some situations, coffee shops (of the same brand) located very close to each other can actually drive more traffic to each of the locations. 

Additionally, you may want to consider high-traffic areas and locations near the highway. 

3. Create a Business Plan

A business plan is a document you will present to franchise officials to show them how you will earn money, manage finances, run operations, and other vital details. The powers that be will use it to evaluate your strategic planning. 

Your business plan should include the following:

• Executive summary
• Market analysis
• Target audience
• Logistics and operations
• Financial details

A significant benefit of becoming a franchise owner is that your business plan will not have to be put together from scratch. The corporate side will offer established operations and marketing systems for you. 

4. Obtain a Franchise License Agreement

The franchise license agreement is the terms of use of your contract for becoming a part of a greater business. You are a tenant, and the corporation is the landlord. 

Related: Ready to Commit? - Franchise License Agreement - Entrepreneur.com

The agreement will include clauses about:

• Ownership rights of the brand
• Trademarks
• Proprietary business operations
• Conditions of your ownership
• The initial term and renewal agreement

5. Create a Business Entity

Next, you’ll need to decide which type of business entity based on how you’d like to categorize your expenses. You’ve got two options:

• Limited liability company (LLC)
• Corporation

Make sure you weigh your options to see which is best for you and your business. 

6. Pick Your Space

The paperwork is finished, the contracts are signed, and it’s time to find the perfect space for your new store. The franchisor will likely have guidelines and regulations for the space, so keep that in mind as you begin your search. They may even have real-estate professionals on staff to help you find the right location.

Other specifics to consider are:

• Size
• Setup
• Appliances
• Amenities
• Branding possibilities 

7. Employ Your Team

This is one of the most exciting parts of becoming a franchise owner. While some things will not be your choice, who you hire will be. Most corporations will likely have job descriptions, titles, and a database. However, it will be up to you who you choose for your new team. 

Ready To Run on Dunkin’?

Starting your Dunkin’ franchise could be an exciting new business venture for you. If you have the financial capital and drive, you can build your dream one donut at a time. 

Looking for more on all things franchise? Explore Entrepreneur’s Franchise Center here.