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“Dunkin Donuts franchise is not the best franchise to invest in.”
It’s Time To Reconsider Your Next Donut Franchise Move!
One of the franchise owners lists out three reasons why buying a Dunkin Donuts franchise isn’t a good idea. He cites the high cost of opening, daunting expansion goals, and limited growth potential as his reasons”.
Hey, I’m Dan Rowe. We’re experts on everything from finding a great franchise to financing to opening day. If you have any questions about buying a franchise, leave a message here, and we’ll get back to you as soon as possible! Our website has honest reviews and information about franchises to find the best one to start your entrepreneur journey.
Fransmart has analyzed existing franchisee’s complaints, competitors’ proposals, and the parent company’s marketing agenda report and concluded that the Dunkin Donuts franchise is not the best franchise investment in the QSR industry.
Before we get into the negative aspects of buying a Dunkin’ Donuts franchise, let me ask you one question; Are you also interested in any other franchise opportunity in the fast-food or quick-service restaurant industry?
Being experts in this industry, we have found some Multibagger franchise opportunities in the fast-food industry. The investment in these 11 Fast-casual restaurant Franchise opportunities is worth more when compared to fast-casual restaurant franchises like Dunkin Donuts, McDonald’s, and KFC.
Everyone Loves Freshly Brewed Coffee In The Morning!
Dunkin’ Donuts is an American doughnut and coffeehouse chain brand based in Canton, Massachusetts. Dunkin’ Donuts and Baskin-Robbins are now subsidiaries of Dunkin’ Brands, headquartered in Canton.
Dunkin Donuts is one of the most well-known coffee franchises in the world. Dunkin Donuts has over 10,000 restaurants worldwide, with over 3,500 of them located in the United States.
Dunkin’ Brands has developed an “asset-light, 100% franchised business model” that has allowed the company to expand quickly. The company’s earnings were $629.2 million last year, while sales hit $8.8 billion in 2018. However, even though the company saw some same-store growth in 2018, the growth rate was 0.6% lower from 2014-16.
Potential new franchisees can ask us any questions. The Dunkin Donuts franchise fee, startup costs, royalty payments, income potential, and overall growth prospects are more frequently asked questions of all.
How much is the cost for Dunkin Donuts Franchise?
- Total investment range: $97,500 to $1.7 million
- Initial franchise fee: $40,000 to $90,000 (varies by location)
- Net worth: $500,000 minimum
- Liquid Capital: $250,000 minimum
- Ongoing costs of buying a Dunkin’ franchise
- Royalty fee: 2-6% of gross sales
- Advertising fee: 5% of gross sales
5 Reasons Why You Might Decide Against Buying A Dunkin Donuts Franchise.
We say, don’t get fooled by the promises of investment opportunities. Be sure to do your research and consult with the current franchise owner before making a decision. If you’re still interested, we have this blog to provide you with information about franchises. We’re not affiliated with any other companies, and we promise to give you only the facts.
#1 Racial Discrimination against franchisee owner
Recently, Dunkin’ Donuts has been accused of racism against Asian-Americans. Several franchisees allege that Dunkin’ Donuts forced them to sell a certain number of its products in not-so-pleasant conditions, while white franchise owners didn’t have to go through the same.
While the company has said that these allegations aren’t true, it’s still worth considering whether or not investing in a Dunkin’ Donuts franchise is worth your time and money.
#2 Financial barrier to entry
If you want to invest in a Dunkin Donuts franchise, you should know the main pitfalls of owning a Dunkin Donut shop. The franchise fee for Dunkin Donuts is $40,000-$90,000, which is quite expensive. The massive fee is broken down into three installments for $20,000 each with a $4,500 startup fee and a $495 monthly fee.
Also, many franchise owners are unhappy with the additional cost of remodeling their existing stores. As a franchisee of Dunkin’, you’ll have to keep your business relevant, up to date, and customer-oriented. These factors include remodeling the interior of your store every 10 years, which can get expensive. Unlike some franchises like Ike’s Love and Sandwich, the company does not provide simplified operations, inexpensive remodeling costs for its franchisees, nor does it make it clear whether or not these estimates are provided at the beginning of the franchisee selection process.
#3 Shift In Consumer Choices
If you are thinking of buying a Dunkin Donuts franchisee, be aware that the coffee shop giant has lost its appeal. A new report compiled by a research firm shows that Dunkin Donuts’ franchise restaurants have fallen in sales by an average of 1.3 percent in the past years. By comparison, rivals experienced a 2.2 percent increase in sales during the period, with an average per-store growth of 4.5 percent.
The number of Americans eating donuts has been steadily declining, while people developing diabetes and heart disease continue to rise.
As a result, more Dunkin’ Donuts franchisees are contacting us to help them sell their business store or invest in trendy healthy fast-food franchises like Slapfish or GFG. A shift in consumers is another reason why investing in a Dunkin’ Donuts franchisee is a bad idea now.
#4 Limited creativity with Dunkin Donuts
Any franchise is a partnership between the franchisee and the franchisor, and compliance with branding requirements is critical to prevent customer confusion. Still, with Dunkin Donuts, you have not even the slightest control over any decision.
Dunkin Donuts doesn’t let franchisees choose their products, advertisements, or even their location. One of the biggest reasons you should not buy the Dunkin Donuts franchise, that it comes with many restrictions. As part of the Dunkin Franchise program, you’re required to comply with all branding requirements, owing to some rigid standards that don’t let you express creativity in any way. If you’re looking to expand your business acumen, Dunkin Donuts can’t help you.
#5 Becoming a Dunkin’ franchisee is capital and time-intensive
To apply for a franchise, you should have at least $250,000 in liquid assets and a net worth of $500,000—also, experience in food service or retail management.
Becoming a Dunkin’ franchisee can be a grueling process for any individual or organization. Experts warn potential owners to be prepared to meet all of the franchise business’ requirements before signing on the dotted line. The Dunkin’ Donuts franchise application is a long and complex process, with a reported failure rate of over 90%.
Prepare to wait up to 18 months before you can open your Dunkin’ franchise. They will check your criminal history, credit score, and financial stake in the business. They will also look at your business plan and how you execute during meetings with their franchise managers.
You’ll need to prove your net worth, verify your education, provide proof of funds, and provide proof of insurance — Dunkin Donuts require all these things even before you apply!
Also, Dunkin’ is not following the trend of other new franchisors who offer financing for their franchisees. Instead, they provide a list of preferred SBA lenders and more work for franchise buyers.
Takeaway of This Blog
Franchise buyers should be aware of certain challenges they may face in operating a Dunkin Donuts franchise. The brand lacks a solid customer base in some key regions, and it is currently facing increasing competition from local players.
Here’s what you need to know before you decide on buying a Dunkin’ Donuts franchise. –
- The training program lasts from three months to a year. –
- You will operate your own business, but the brand sets the whole menu and prices.
- You will be bound by a strict non-compete clause of five years even after selling the company.
Sources:
https://www.nerdwallet.com/article/small-business/dunkin-donuts-franchise
https://www.lendingtree.com/business/small/how-to-finance-a-dunkin-donuts-franchise/
https://www.hissingkitty.com/complaints-department/dunkin-donuts
https://www.jacksonlewis.com/sites/default/files/assets/event-materials/2017-NRN-Top-100-PDF.PDF
https://www.dunkinrunsonyou.run/#Detail_About_Dunkin_Donuts_And_Its_Survey
https://essayzoo.org/research-paper/apa/business-and-marketing/dunkin-donuts.php