The Pros and Cons of Buying a Dunkin' Donuts Franchise
In 1946, entrepreneur William Rosenberg founded a company that delivered meals and snacks to factory workers in the Boston area and called it Industrial Luncheon Services. While selling food in factories and at construction sites, Rosenberg noticed that the two most popular items he sold every day were coffee and doughnuts.
Convinced he could make more money focusing on just those two items, he closed Industrial Luncheon Services in 1948 and opened a doughnut shop in Quincy, Massachusetts, called the Open Kettle, which he renamed to Dunkin' donuts a year later.
The First Store
After slow, steady growth, primarily through franchising, Dunkin' grew to 100 locations by 1963, when William’s son Robert took over the leadership of the company, where he stayed for the next 35 years.
Today, there are more than 11,300 Dunkin' Donuts worldwide located in more than 36 countries. In the United States alone, there are more than 8,400 Dunkin' Donuts restaurants located in 36 states, all franchises, in addition to over 3,300 franchised locations internationally. Dunkin' Donuts parent company, Dunkin' Brands Inc., also franchises Baskin-Robbins, and the parent company sometimes co-brands the two concepts.
Dunkin' Donuts offers some of the industry's best field support experts covering franchising, development, construction, and marketing. Dunkin' Donuts has deep expertise in providing franchise opportunities by offering assistance that ranges from site selection through the development process to providing ongoing new product training.
The Company’s training and support teams deliver tools and information franchisees need with a level of support that is “among the best in the Quick Service Restaurant (QSR) industry.” Dunkin' Donuts provides the tools and guidance you would expect from a multi-national conglomerate. Dunkin' Donuts says its technology is state-of-the-art and helps franchisees “operate more efficiently and cost-effectively.”
The Cost of a Dunkin' Donuts Franchise
Dunkin' has grown into a very well-known brand globally, and as such the barriers to entering are rather high. After you pass your criminal background check, credit check and proof of assets check, you'll focus on due diligence and the development of your business plan. This business opportunity requires significant resources, including a net worth of at least $250,000 and liquidity of $125,000.
If you are considering a partnership, Dunkin' requires that one single candidate personally meet the financial qualifications. Additionally, the initial franchise fee is $40,000 to $90,000, and if you want more units, the company requires you to expand at the rate of five stores at a time.
Dunkin' Donuts Franchise Information Summary
- Ranking on Entrepreneur's 2018 Top Franchises list: 3
- Business Established: 1950
- Franchising Since: 1955 (63 years)
- Initial Franchise Fee: $40,000 - $90,000
- Initial Investment: $217,300 - $1,637,700
- Ongoing Royalty Fee: 5.9%
- Ad Royalty Fee: 2-6%
- Net Worth Requirement: $250,000
- Liquid Cash Requirement: $125,000
Pros and Cons
Many consider the product top tier, and the Dunkin' Donuts brand has established itself as a leading coffee alternative to the well-known coffee-house chains. Unless you avoid all advertising, major stores, and urban areas, you have likely heard of and maybe even enjoyed Dunkin' Donuts baked goods and coffee.
An investor with the right amount of resources could consider this winner. If you're willing to do the work, you almost can’t lose, and if you need a hand with some cash to get started, Dunkin’ Donuts has lender relationships that can help you get financing.
- Name Recognition - If you can afford the franchise, Dunkin' Donuts offers excellent profit potential for entrepreneurs willing to put in the effort.
- Competitive - Dunkin' Donuts has earned a top-five spot in all categories of franchises according to Entrepreneur magazine.
- Online University - The Dunkin' Donuts Online University offers numerous learning programs, courses, and resources to franchisees and crew.
- Candidate Profile - Becoming a Dunkin' Donuts Franchisee requires skills and resources that could make this franchise prohibitive for many investors.
- Many Lawsuits - Dunkin' Donuts has been a party to many lawsuits with its franchisees. The company has been involved in 10-15 times the number of lawsuits than the average franchise.