Krispy Kreme Franchise Cost & Opportunities
Who can remain unresponsive to a doughnut filled with Krispy’s special Kreme? Probably none. Turn this passion into a business with checking krispy kreme franchise application conditions and opportunities.
Information About Krispy Kreme
The history of the Krispy Kreme rooted to the beginning of the 1930s. The first doughnut store of the Company established in 1937 in North Caroline. The Company started by selling doughnuts to grocery stores. As they recognized the demand of people, they started to sell it directly to people just outside the bakery. The unique delightful taste of the doughnuts spread to other states. After 10 years, Krispy Kreme decided to sell franchises.
In the 1950s, the Company reserve more for research and development. The doughnut-making process was mechanized with automatic doughnut cutter. All the process, from proofing to frying and glazing become totally automatic. In 1962, this technological process replaced by a new one. Instead of cutting procedure, air pressure has preferred. It is the way of doing the doughnuts today.
In 2001, the first Store outside of the US has opened in Canada. For more than 15 years, the Company evaluates krispy kreme franchise international applications. Today, there are approximately 1,500 units of the Krispy Kreme in all over the world.
Franchise Opportunities of Krispy Kreme
Krispy Kreme Doughnut Corporation offers three different formats of franchising. Each of these is a retail facility. There is also an opportunity for Commissary Facilities serving for the manufacturing of products.
- Factory Store: It is a retail sales facility. The Store works under the System Standards to manufacture and produce fresh doughnuts on-site. The Store may supply fresh doughnuts to Tunnel Oven Shops and Fresh Shops depending on the capacity of the Store.
- Tunnel Oven Shop: It is a retail sales facility. There should be an impinge oven in the Store. It has only limited capacities for manufacturing such as icing and filling. The Store receives doughnuts from a Factory Stores or a Commissary Facility.
- Fresh Shop: It is a retail sales facility. There may be a limited manufacturing capacity or no such a capacity. Like Tunnel Oven Shop, it receives doughnuts from a Factory Stores or a Commissary Facility.
- Commissary Facility: It is not a retail sales facility but manufacturing facility. The facility produces doughnuts and other beverages for Tunnel Oven Shops and Fresh Shops.
For the first three options, you are under krispy kreme franchise agreement, while there is a Commissary Facility Agreement for the last one.
What Should I Do?
Like many other franchise opportunities, there is financial requirements and qualifications for application discussed with below. First of all, make sure you meet the requirements and qualifications.
You can contact the Company to learn locations and the forms of the franchises available. In terms of territory protection issues, note that the Company does not have any protection principle. You will jump into the competition of the market directly. As a franchise, you have right to own and operate the Store. You are not expected directly operate the store as full-time personnel. However, there should be a General Manager who is responsible for managerial and operational processes.
For the application process, you are expected to prepare a business plan and a proposal.
- A business plan should include an analysis of the market conditions where you want to operate the Store. Demographic properties, economic conditions, industry etc. should be presented in this part.
- You should include the necessary budget for the leases and the equipment.
- Your past experience, especially related to franchising, business management etc. should be included in detailed.
- It is an advantage to add documents to support your financial capacity.
Once you send necessary documents for pre-assessment, you will meet a representative of the company. The Company may offer you to be partners. In this case, they may buy a percentage of the ownership.
Once the location and your business plan approved, you are expected to complete training. Then you are ready for investment and operation.
Training and Support
Franchisor offers initial training for all Store and Commissary Facilities. Initially, the program includes operations. If available Operations Director is expected to attend a program. General Manager and one assistant General Manager or equivalent are also required to complete the initial program. If you prefer a multi-unit company, then four employees serving in your supervisory should attend courses. The location of the initial courses depends on the preference of the franchisor. It may be in the franchiser’s facility, in one of the facilities or in the headquarter of the Company.
The main training program required for Factory Owners, the initial training program takes approximately 16 weeks. The duration may change for Tunnel Oven Shops, Fresh Shops, and Commissary Facilities.
The franchisor may offer additional training programs, online courses, seminars etc. They may be obligatory or optional.
The Company assists franchisees for the Opening Day of the Store. The assistance includes a minimum of seven days support.
Requirements and Opportunities
- You should prove your capacity of at least $300,000 liquid assets.
- The kripsy kreme franchise profit margin is at least 20 percent and up to 60 percent.
- You are not required to operate the Store directly, but a General Management is a must.
- General Manager should complete the initial training. S/he should also attend periodic additional courses if required by the franchisor.
- Franchisor support all the franchisees on the opening of the store.
- The franchisor may require an Operational Director and may want her/him to own up to 25 percent of the Facility.
- Franchisees are required to sell only products that approved by Krispy Kreme.
- The initial agreement term is 15 years. If the requirements and qualifications are met, the agreement may be renewed for the following 15 years.
Costs & Fees
The costs and fees depend on the form of the franchise you want to operate. Accordingly, krispy kreme profit per store also differs. Initial franchise fee changes between $12,500 and $25,000. You should pay 4,5 percent of your net sales as royalty fee and 1,5 percent as the advertisement royalty fee.
There are other types of initial and ongoing fees you are expected to pay. On average, the initial investment is between $400,000- $2,500,000 including equipment, training expenses, grand opening spending etc. for retail sales facilities. It reaches between $1,500,000- $4,500,000 for a Commissary Facilities.
The Company does not offer any financial assistance.