Date of Incorporation: 1940
Franchising Since: 1944
Headquaters: Minneapolis, Minnesota
Business 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: ADQ offers franchises (licenses) for the development of DQ Grill & Chill restaurants. A DQ Grill & Chill Restaurant is a quick service food restaurant with indoor (and outdoor, in certain locations) seating from which you will sell the full line of approved DQ soft-serve, treat, food and drink menu items. (Other types are franchise (sublicense) programs are available.)
Financial Assistance: ADQ generally does not offer direct or indirect financing to the franchisee. The franchisee must obtain necessary financing through third parties. ADQ periodically arranges with third 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. The franchisee may be eligible for expedited and streamlined Small Business Administration (SBA) loan processing through the SBA's Franchise Registry Program.
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 must attend all training components. There are currently four required components to training:
- 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.
- 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.
- The American Dairy Queen Corporation’s training program is made up of three phases:
- Phase 1(Product and Equipment Training) is scheduled as close to the projected opening date as reasonably possible, and lasts about 2 1/2 weeks.
- Phase 2 (Systems & Management Training) typically commences shortly after required attendees complete Phase 1, must be completed within 6 months prior to opening, and lasts about 2 1/2 weeks.
- Phase 3 (People, PRIDE and Profit Training) occurs within six months of opening, and lasts about five days. If required attendees do not pass Phase 3 within one year after completion of Phase 2, the franchisee will need to pay an additional $850/person for required attendees to attend Phase 3.
- A cake decorating and 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 franchisees (sublicensees), 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. The franchisee is not granted any minimum area or territory.
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 one additional 10 years or for the term of the renewed lease, whichever is shorter.
Obligations and Restrictions: : It is not required for the franchisee to participate personally in the on-premises operation of the Dairy Queen franchise. However, the franchisee must have a designated manager and two assistant managers (as those terms are defined in the franchise agreement) who personally invest their full time and attention and devote their best efforts to the on-premises general management of the day-to-day operations of the restaurant, and meet ADQ's restaurant or retail management experience requirements. The franchisee must also designate at least one person who is responsible for actively directing the business affairs regarding the restaurant and overseeing the general management of the day-to-day operation of the restaurant (a "control person"). ADQ requires the franchisee to offer and sell only those goods and services that ADQ has approved, and carry the required menu items that ADQ designates for the business.
Total number of Units: 5,900
For a DQ Chill & Grill
|Name of Fee||Low||High|
|Initial franchise fee||$35,000|
|Initial Training Fees and Costs||$1,075||$10,360|
|Travel And Living Expenses for Training Programs||$15,100||$27,000|
|Building Construction and Leasehold Improvements||$300,000||$900,000|
|Construction Consultation Services||$0||$7,500|
|Building Plans, Design Intent Plans and Architectural Seal||$15,000||$45,000|
|Equipment (Including Signs and Cash Registers)||$340,000||$458,000|
|Utility Deposits, Business Licenses and Government Charges||$4,000||$17,000|
|Additional Funds (3 Months)||$50,000||$197,300|
|Name of Fee||Amount|
|Continuing License Fee||4% of Gross Sales|
|Sales Promotion Program Fee||5% to 6% of Gross Sales|
|Termination fee||3 ½ times the continuing license fees due in the last 12 months of active operation or the entire period of the restaurant has been open, whichever is shorter|
|Interest Expenses||18% per annum or at maximum rate permitted by governing law|
|Late Fees||$50 per delinquent report or payment|
|Modernization Expenses||Up to $95,000 or more each time the franchisee modernizes, plus $9,500 to $34,000 or more for signage|
|Insurance||$6,000 to $20,000 for annual premiums|
|Costs and attorneys' fees||Varies|
|Training Materials||$150 to $500|
|Training Cancellation Fee||$150 or $650|
Date of FDD: 2012
The above information has been compiled from the FDD of Dairy Queen.
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