Dairy Queen
Date of Incorporation: 1940
Franchising Since: 1944
Headquaters: Minneapolis, Minnesota
Country: U.S.
Description: American Dairy Queen Corporation (ADQ), the head franchisor, grants sublicenses to sell soft-serve treat products, drinks, and quick service food items. If the franchisee operates a fuel center, the franchisee also will sell convenience store items and fuel. ADQ is a wholly-owned subsidiary of its parent corporation, International Dairy Queen, Inc. (IDQ), which is a wholly-owned subsidiary of its parent corporation, Berkshire Hathaway, Inc.
Franchise Offer: Three types of franchises are available:
i.) The Dairy Queen/Fuel Center sublicense grants you the right to operate a DQ Grill & Chill restaurant or Dairy Queen/Limited Brazier store adjacent to a fuel dispensing and travel store business ("fuel center").
ii.) The DQ Grill & Chill sublicense is for a quick service food restaurant with indoor seating offering a full approved menu of soft-serve, drink and food items.
iii.) The Dairy Queen/Limited Brazier sublicense is for a store that generally is located in a fuel center or a shopping center, store front, office building or other similar location, and that offers a full approved menu of soft-serve and drink items, and a limited approved menu of Brazier food items. Dairy Queen/Limited Brazier stores are considerably smaller than DQ Grill & Chill restaurants.
Financial Assistance: ADQ does not offer direct or indirect financing to the franchisee. The franchisee must obtain necessary financing through 3rd parties. Neither ADQ nor its affiliates finance any part of the initial franchise Fee. Neither ADQ nor its affiliates will offer site acquisition, equipment or leasehold financing services to the franchisee for the establishment of the franchisee’s sublicensed business. ADQ periodically arranges with 3rd party finance companies or banks to make financing programs available to franchisees. These arrangements ordinarily involve no more than arranging to put franchisees in contact with sources of financing. There is no assurance that financing will be offered in any particular instance.
Training and Assistance: Unless otherwise stated, at least three people from each DQ Grill & Chill restaurant the franchisee develops, including the designated manager and two assistant managers, and at least two people for each Dairy Queen/Limited Brazier store the franchisee develops, including the designated manager and one assistant manager must attend all training components. There are currently four required components to training:
1) The Management Training Readiness Assessment (MTRA), which is administered at a location and time designated by ADQ, and measures leadership, customer service, decision-making, prioritizing and business math.
2) SERVSAFE certification, which can be received through a course that is part of or equivalent to the National Restaurant Association's SERVSAFE program. SERVSAFE courses are offered online, as well as at various universities, vocational schools and community colleges.
3) The American Dairy Queen Corporation’s training program is made up of three phases:
a. Phase 1 includes a mix of 16 hours of classroom training and 127 hours of ‘On-the-job’ training.
b. Phase 2 is made up of 120 hour of ‘On-the-job’ training at a designated, certified restaurant.
c. Phase 3 includes 40 hours of classroom training based at franchise headquarters in Minnesota.
4) A cake decorating certification course
The franchisee must pay for ADQ's training program before sending any trainees to the training program. The franchisee must pay any training fees, costs, travel, living expenses, salaries, benefits and other expenses associated with sending their trainees to ADQ's training.
Territory: The franchisee will not receive an exclusive territory. The franchisee may face competition from other sublicensees (franchisees), from ADQ or ADQ affiliates, or from other channels of distribution or brands that ADQ controls. The franchisee must operate his or her restaurant or store at a site that is approved in writing.
Term of Agreement and Renewal: The term of the franchise agreement is 20 years or the term of the restaurant premises lease, whichever period is shorter. The franchisee has an option to renew for up to 10 years.
Obligations and Restrictions: It is not required for the franchisee to participate personally in the on-premises operation of the Dairy Queen franchise. At least one control person must be designated as responsible for the day-to-day on-premises management of the restaurant. The control person, manager, and any assistant managers, if required, must successfully complete American Dairy Queen's initial training program.
Total number of Units: 5,815 units
Investment Tables:
Initial Investment:
| Expenditures | Low | High |
|---|---|---|
| Initial franchise fee | $25,000 | $25,000 |
| Initial training fees (required for 2 training attendees) | $5,700 | $5,700 |
| Management Training Readiness Assessment fee ("MTRA") (2 training attendees) | $200 | $200 |
| "SERVSAFE" program (2 training attendees) | $200 | $600 |
| Cake Decorating course (1 to 2 training) | $100 | $500 |
| Travel and living expenses for orientation and training programs (2 training attendees) | $8,600 | $14,800 |
| Opening team fee | $9,500 | $9,500 |
| Pre-opening inventory | $6,000 | $13,000 |
| Building construction and leasehold improvements | $280,000 (leased facility) and 580,000 (owned facility) |
$425,000 (leased facility) and $1,000,000 (owned facility) |
| Building plans, design intent plans and architectural seal | $15,000 (leased facility) and $15,000 (leased facility) | $30,000 (leased facility) and $45,000 (owned facility) |
| Equipment (including signs, EPOS system and TV/DVD player) | $280,000 (leased or owned facility) | $370,000 |
| Insurance premiums (First 12 months) | $6,000 | $20,000 |
| Utility deposits, business licenses and government charges | $4,000 | $17,000 |
| Attorney's fees | $1,000 | $5,000 |
| Supplies/uniforms | $150 | $750 |
| Grand Opening | $500 | $2,500+ |
| Additional funds | $15,000 | $30,000 |
| TOTAL | $656,950 | $1,559,550 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| Continuing license fee | 4% of Gross Sales for a DQ Grill & Chill; 7% of Gross Sales for a Dairy Queen/Limited Brazier restaurant |
| Sales promotion program fee | 3% to 6% of Gross Sales |
| Transfer fee | Currently $4,000 |
| Additional store development fee discount reimbursement charge | $12,000 to $24,000 |
| Renewal fee | $1,200 to $2,500 |
| Termination fee | ½ times the continuing license fees due in the last 12 months of operation |
| Audit costs | Cost of audit (about $3,000 to $5,000) |
| Interest and late fee expenses | Interest at 18% per annum or at maximum rate permitted by law; late fee of up to $50 for any late report or payment |
| Remodeling expenses | Varies |
| EPOS Cash Register Annual Hardware Maintenance Program | Currently averaging 3% to 4% (on an annual basis) of the list price |
| Annual Software Support | $1,200 annually (includes "help desk") |
| Gift Card Program | $150 annually |
| Costs and attorneys' fees | Varies |
| Management Skills and Professional Development Courses | $175 per person per day |
| Marketing and other area meetings | Cost of transportation and meals |
| Training Materials | $100 to $400 |
| Training Cancellation Fee | $150 or $650 |
| Internet Connection | $10 to $80 per month |
Date of FDD: 2009
The above information has been taken from the UFOC/FDD and online sources of Dairy Queen.
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