Krispy Kreme Franchise Costs, Fees & FDD

Year Business Began: 1937

Franchising Since: 1947

Headquarters: Winston-Salem, North Carolina

Estimated Number of Units: 1,600

Franchise Description: The franchisor is Krispy Kreme Doughnut Corporation. Krispy Kreme shops offer and serve a variety of doughnuts, beverages, and other related products and services. The franchisor’s parent company is Krispy Kreme Doughnuts, Inc. Franchises for Krispy Kreme shops are offered in two different shop formats:

• Hot Light Theater Shop – a retail sales facility that manufactures and produces fresh doughnuts on-site. Hot Light Theater Shops may have the capacity to supply fresh doughnuts to Fresh Shops and Box Shops. Hot Light Theater Shops were formerly known as Factory Stores.
• Fresh Shop – a retail sales facility with limited manufacturing capabilities (e.g., icing and filling equipment), or no manufacturing capabilities, that receives doughnuts from a Hot Light Theater Shop and finishes them as necessary to sell in accordance with system standards.

Training Overview: Under the Franchise Agreement, the franchisor will provide initial training on the operation of a shop for the operations director (if applicable), one general manager, one assistant general manager or equivalent, and up to four employees serving in a multi-unit supervisory capacity, such as a district manager. They must complete the training to the franchisor’s satisfaction. The initial training program may be provided at the franchisor’s designated training facility and/or at an operating shop. Currently, the initial training program for shop managers is conducted in Winston-Salem, North Carolina and at various store locations the franchisor selects. The initial training program lasts approximately eight weeks for hot light theater shops, but this may be adjusted for fresh shops. The franchisor’s opening team will assist franchisees for a minimum of seven days in the opening of the shop. Managers may be required to attend and successfully complete periodic and additional training programs.

Territory Granted: The Franchise Agreement grants to franchisees the right to own and operate a shop at a specific location. Franchisees are not granted any exclusive territory, protection, or other right in the contiguous space, area, market of the shop, and the franchisor reserves the right to operate and to grant others the right to operate shops and doughnut factories at any location on such terms and conditions as it deems appropriate, and such shops or doughnut factories may be in direct competition with the shop.

Obligations and Restrictions: Franchisees (or the managing shareholder or partner) are not obligated to participate personally in the direct operation of the shop. Under the Franchise Agreement, franchisees must designate a general manager, who must provide direct, on-premises supervision of the shop. The general manager must complete initial and periodic additional training to the franchisor’s satisfaction. The franchisor may, at its sole discretion, require the operations director to own up to 25% in the shop or, if the franchise is a corporation, limited liability company, or partnership. Franchisees must sell and distribute only those products that the franchisor approves or specifies. Franchisees may not offer for sale any products that the franchisor has not approved. Franchisees must offer for sale any products that the franchisor requires.

Term of Agreement and Renewal: The length of the initial franchise term is 15 years from shop’s opening date. On the expiration of the term of the agreement, franchisees may sign the then-current Franchise Agreement for one successor term of 15 years if franchisees (and their owners and affiliates) are in good standing.

Financial Assistance: Neither the franchisor nor any agent or affiliate offers any direct or indirect financing to franchisees. Neither the franchisor nor any agent or affiliate guarantees any notes, leases, or other obligations franchisees make. The franchisor does not receive direct or indirect payments for placing financing.

 
Estimated Initial Investment

Name of Fee	Low	High
Development Fee	$12,500	$25,000
Initial Franchise Fee	$12,500	$25,000
Real Estate and Improvements – 3 Months	$10,000	$95,000
Construction Costs	$325,000	$2,860,000
Equipment/Signage/Furniture/Fixtures	$175,000	$550,000
Truck (per truck)	$0	$50,000
Initial Inventory	$5,000	$50,000
Production Equipment	$0	$425,000
Grand Opening Marketing Program	$20,000	$45,000
Training Expenses	$17,500	$55,000
Security Deposits and Other Pre-Paids	$5,000	$25,000
Additional Funds – 3 Months	$40,000	$125,000
ESTIMATED TOTAL*	$622,500	$4,330,000

*The estimated initial investment range covers from a fresh shop up to a hot light theater shop. Please see FDD for more details.

 
Other Fees

Type of Fee	Amount
Royalties	4.5% of net sales of the shop, including fundraising sales.
Transfer	$5,000, plus any applicable transfer fee for any other agreements, as well as the franchisor’s costs and expenses (including legal and accounting fees) incurred in relation to the transfer.
Opening Team	Costs and expenses the franchisor’s opening team incurs in connection with the opening of the shop, other than travel, room and board and salaries, for which the franchisor is responsible.
Brand Fund	Up to a maximum of 2% of net sales.
Advertising Placement Fund	Up to a maximum of 1% of net sales.
Additional Copies of Advertising (Franchise Agreement only)	Cost associated with providing additional copies of advertising materials.
Local Advertising Requirement	At least 2.5% of net sales.
Local and/or Regional and/or National Advertising Cooperatives	Up to 3% of net sales.
Required Purchases	Varies.
Hosting Fee	$150 per shop per month.
Maintenance Fee	$150 per shop per month.
Additional Service Fee	$65 per hour.
Systems Fee	The then-current fees (currently $0).
Replacement Fee for System Standards Manuals	Currently $1,000.
Relocation Fee	Fee of $2,500 plus the franchisor’s expenses associated with the relocation of a shop.
Audit/Inspection Expenses	Cost of audit or inspection, includes legal fees, accountants’ fees and travel expenses, room and board, per diem charges and other associated expenses.
Costs and Attorneys’ Fees	Varies.
Indemnification	Varies.
Training of Additional Managers	Franchisees must pay their managers’ wages, salaries, travel, room and board, and living expenses during training.
Additional or Special Training	The franchisor’s reasonable fee plus their managers’ wages, salaries, travel, room and board, and living expenses during training.
Interest on Late Payment	1.5% per month or the highest rate of interest permitted by law, whichever is less.
Fees to Evaluate Proposed Alternative Suppliers	The franchisor’s reasonable costs and expenses.
Successor Fee	$10,000

The above information has been compiled from the FDD of Krispy Kreme. Year of FDD: 2022.

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