Dairy Queen

Date of Incorporation: 1940

Franchising Since: 1944

Headquaters: Minneapolis, Minnesota

 

Business Description: American Dairy Queen Corporation (ADQ) offers a franchise for the operation of a Dairy Queen/Limited Brazier store at an authorized location. A Dairy Queen/Limited Brazier store is a quick service food establishment from which franchisees will sell the full line of approved Dairy Queen soft-serve treat products and beverage menu items, and a limited number of approved food items.

 

Franchise Offer: ADQ offers Dairy Queen/Limited Brazier stores for locations in office buildings, restaurant fronts, shopping malls, shopping centers, pad sites outside shopping malls and/or shopping centers, airports, bus or train depots or other transportation terminals, and other similar locations.

 

Financial Assistance: Although they may have done so in the past, ADQ and its affiliates generally do not offer financing arrangements or similar assistance to franchisees, except as explained. Neither
ADQ nor its affiliates finance any part of the Initial Franchise Fee. In situations when the landlord or developer of the authorized location will not lease the premises to franchisees, ADQ or its affiliate, DQF, may, in rare occasions enter into a prime lease with the landlord and make the premises available to franchisees by sublease.

 

Training and Assistance: Unless otherwise stated, at least two people from the store, including the franchisee’s designated manager and assistant manager must attend all initial training components. ADQ will periodically conduct or sponsor various meetings, seminars and conventions for franchisees and other franchisees. There are currently four required components to initial training:

  1. The Management Training Readiness Assessment (MTRA).
  2. SERVSAFE certification.
  3. The American Dairy Queen Corporation’s training program (three phases): Phase 1, Product and Equipment Training; Phase 2, Systems & Management Training; Phase 3, People, PRIDE and Profit Training.
  4. A cake decorating and certification course.


Territory: When franchisees enter into a franchise agreement they are granted the right to operate a Store at an authorized location that ADQ has consented to in writing. Franchisees are not granted any minimum area or territory. ADQ does not grant exclusive territories to any franchisee under the terms of a franchise agreement.

 

Term of Agreement and Renewal: : The term of the franchise agreement is 15 years or the term of the restaurant premises lease, whichever period is shorter. The franchisee has an option to renew for one additional 15 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: 6,235

 

Investment Tables:

Initial Investment:

Name of Fee Low High
Initial franchise fee $25,000 $25,000
Initial Training Fees and Costs $750 $6,900
Travel And Living Expenses for Training Programs $5,200 $9,600
Building Construction and Leasehold Improvements $140,000 $600,000
Prepaid Rent and Security Deposit $3,000 $6,000
Construction Consultation Services $0 $7,500
Building Plans, Design Intent Plans and Architectural Seal $7,000 $35,000
Equipment (Including Signs and Cash Registers) $180,000 $328,000
Training Inventory $2,500 $5,000
Opening Inventory $4,000 $8,500
Utility Deposits, Business Licenses and Government Charges $3,000 $17,000
Attorney's Fees $1,000 $7,500
Additional Funds (3 Months) $25,500 $87,300
ESTIMATED TOTAL $396,950 $1,142,800

 

Other Fees:

Name of Fee Amount
Continuing License Fee 5% of Gross Sales.
Sales Promotion Program Fee 5% to 6% of Gross Sales.
Lease-Required Sales Promotion Fees Varies.
Transfer Fee $4,500
Renewal Fee $1,000 times the number of years under renewal term (but not to exceed $10,000)
Audit and Recordkeeping Costs Varies.
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.
Sublease and Lease Administration Fee $1,800 to $3,760 annually.
Modernization Expenses Up to $72,030 or more each time the franchisee modernizes, plus $7,000 to $20,500 or more for signage.
Insurance $3,000 to $7,000 for annual premiums.
Costs and attorneys' fees Varies.
Training Materials $150 to $500
Training Cancellation Fee $150 or $650

Date of FDD: 2013

The above information has been compiled from the FDD of Dairy Queen.

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