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Want to Own a Dunkin' Donuts Franchise? Know This First

Stocks in this article: DNKN KKD THI SBUX

We really like that franchisee to be able to play in the whole portfolio of concepts. Someone who is committed to five or six stores could probably have some of the lower capital concepts in there, and it really allows them to diversify that portfolio out a bit and it also allows them to be able to fund the infrastructure necessary to build a team and create bench strength within their networks.

So who would make a good Dunkin franchisee? One of the things that we really do value is previous restaurant experience. That's very important. With some of the smaller locations , that may not be an absolute requirement if there was other business experience where people were able to demonstrate that they had managed a business, they built a team, they were responsible for a profit-and-loss statement, and they understood the nuances of that.

I saw on the website about some special incentives that are being offered. Can you talk about those?

Benson: Particularly as we go into newer markets, because there is a ramp-up period and it can take a little bit of time to get the full marketing voice that we would want, and you may be dealing with newer franchisees who have some learning to do in the business, it's not unusual for us to offer reductions in the royalties, the percent of the sales that are paid to us as the franchisor. We tend to discount those in some of our newer markets on a sliding scale.

Another thing that we offer is a support of a local marketing side. Dunkin' will provide franchisees some matching funds in order for them to build their business locally in certain markets, and certain newer markets.

Do you provide financing for franchisees?

Benson: We do not. We work very closely with franchisees in preparing business plans and educating their banks. We'll provide banks information necessary for them to better understand the business and we do have some programs that we work with national lenders, but it's not a situation where anybody who comes into the system, Dunkin' is going to loan them the money to open the store. In fact, we've got fairly rigorous requirements for both liquidity and net worth that are one of the preliminary requirements that we look at when someone would reach out to the brand. That varies based on size.

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