Most people would associate glazed doughnuts with Krispy Kreme. Maybe, even you. After all, the company gained its fame through the simple yet satisfying treat.
Furthermore, the brand has been around for over 70 years. It has stores both in the US and other countries. As far as customer recognition is concerned, Krispy Kreme and its trademark glazed treats are contenders.
Fortunately, you could take advantage of Krispy Kreme’s massive popularity by buying a franchise! If you’re considering the business, read on to know the Krispy Kreme franchise cost.
Average Krispy Kreme Franchise Cost
According to Entrepreneur.com, the initial investment for a Krispy Kreme franchise runs from $275,000 to a little over $1.9 million. The cost includes:
- Franchise fee
- Real estate
- Business licenses
- Liquid assets
The exact Krispy Kreme franchise cost varies based on the following:
- Your location
- The size of your store
- The equipment and supplies required by your store
- The number of units
To be able to use the world-renown brand, you should pay a Krispy Kreme franchise startup fee of about $12,500 to $25,000. The exact price varies depending on the type of store. For instance:
- A flagship factory store requires a $25,000 franchise fee
- A tunnel oven shop requires $12,500
- A fresh shop requires $12,500
- A commissary facility requires $25,000
Krispy Kreme also charges an up-front territorial or exclusivity fee. The price would depend on the size of your market as well as the type and number of stores you plan to develop.
After paying the Krispy Kreme franchise startup fee, you would next pay for location expenses. The franchise has four different stores (as indicated above) that you could choose from. Each prototype requires a development fee. The prices per store are as follows:
- Factory store: $25,000
- Tunnel oven shop: $12,500
- Fresh shop: $12,500
- Commissary facility: $25,000
The cost of rent for each unit varies on the area size. A small shop, for instance, could cost $61 per square foot or $140,000 annually.
Equipment and Supplies
If you ever wondered how Krispy Kreme produces their doughnuts, you might want to know the machines they use. Typically, the company manufactures specialized doughnut-making equipment. These tools could produce around 65 to 1,000 dozens of sweet fried doughs per hour.
The cost of equipment for a Krispy Kreme franchise depends on your store. The list of average costs includes:
- Factory store: $175,000 to $380,000
- Tunnel oven shop: $56,000 to $96,000
- Commissary facility: $175,000 to $760,000
Note that no production equipment is necessary for a fresh shop.
Of course, to be able to produce the well-loved treats, you’d have to purchase supplies. Again, the cost of the opening inventory depends on the type of store.
For instance, supplies for a Krispy Kreme factory store and commissary facility cost around $40,000 to $50,000. A fresh shop, on the other hand, requires $5,000 to $8,000. Prepare $10,000 to $13,000 for a tunnel oven shop.
You should obtain a business license to be able to operate legally. The price for this crucial franchise expense varies based on the location of your shop.
For instance, the city of Chicago requires a fee of around $660 to $1,100 for a retail food license. The permit is valid for two years.
Check the official website of the area you’re in to know about the exact costs of licenses and permits.
Make sure you have enough capital to keep your business afloat. This money is essential for covering daily franchise expenses especially when you’re just starting. The said asset would support debt and regular payments, unexpected costs, and purchase of materials.
Apart from that, your liquid asset is as important as the Krispy Kreme franchise startup fee. That’s because the former would serve as your ticket to owning a KKD unit.
According to the Krispy Kreme franchise page, you should have a minimum of $2 million in liquid assets. Also, you should have enough finances to support 10 stores if you wish to sign a development agreement.
Once you open your Krispy Kreme franchise, you would also be paying the following fees:
- Royalty fee: 4.5% of net sales
- Brand fund fee: Up to 2% of net sales
- Ad placement fund fee: Up to 1% of net sales
Aside from these, you should prepare for other fees that the company would charge once the business is operating:
- Local advertising: At least 2.5% of net sales
- Local and/or regional cooperatives: Up to 3% of net sales
- Management development fee: $25,000 per hired employee
- Hosting fee: $150 per store (monthly)
- Maintenance fee: $150 per store (monthly)
- Additional service fee: $65 per hour
- Replacement fee for Systems Standards Manuals (if your copy is lost, destroyed, or damaged): $1,000
- Interest on late payment: 1.5% per month
- Successor fee: $10,000
If you are venturing into a development agreement, you should add these fees on your expenses:
- Transfer fee: $5,000
- Management development fee: $25,000
- Attorneys’ fees: Varies depending on the lawyer
- Indemnification: Varies depending on damages
Requirements to Become a Krispy Kreme Franchise Owner
Aside from millions of assets, the company would only consider your franchise application if you:
- Have a proven track record in the restaurant/retail food industry
- Can capitalize on shared services of existing operations to achieve an efficient startup
- Can conform with the Code of Conduct (for instance, FCPA)
- Have a strong entrepreneurial spirit
- Have an understanding and passion for the Krispy Kreme brand
- Have an unwavering commitment to customer service
You should also consider the location you choose for your franchise. The company would only allow you to set up a business in an area wherein you are a resident.
Can Krispy Kreme assist you with funding? Yes, in some areas.
For instance, the company offers in-house financing for the equipment costs. You could also get funding from third-party sources that the corporation has a relationship with. Funds from these financiers would cover the startup and inventory expenses.
You would also receive tons of support from Krispy Kreme. For one, you would undergo training as a franchise owner. The program would equip you with knowledge essential for running the business.
You would also receive ongoing support including:
- Toll-free line
- Field operations
- Grand openings
As long as you could comply with the requirements, the company would assist you all the way. Do some business with Krispy Kreme and share the sweetness!