Do you want to take a plunge into the world of entrepreneurship? Perhaps you are seeking a business opportunity that has a low-risk profile? If so, a franchise could be the perfect solution for you. But before you take the leap, it’s essential to do your research and find out franchisee requirements in QSR. So, this article will provide you with an overview of what it takes to open a Shipley Do-Nuts franchise and the costs you can expect to incur.
Shipley Do-Nuts is a Houston-based donut chain founded in 1936 and has grown to include franchises all over the United States.
You need to invest between $440,000 to $700,000 to open a Shipley Do-Nuts franchise. Variations in costs for different locations are due to differences in real estate and buildout costs. However, before you make any final decisions, it’s essential to understand the expenses related to your specific site.
There are a couple of ways of getting reliable cost estimates for starting a quick-service restaurant cost (QSR) franchise.
Obtaining a Franchise Disclosure Document (FDD)
The first step is to contact the franchisor and request an FDD. This document contains information about the franchise, its costs, and its business model.
As detailed in the FDD, franchisees need to pay several fees to the franchisor. These fees include an initial franchise fee and ongoing royalties and marketing fees.
Reach Out To Existing Franchisees
Reaching out to existing franchisees is another way to learn about the costs of opening a Shipley franchise. Franchisees are typically happy to share their experiences and provide helpful advice to those considering opening a franchise. They will give you an idea of the day-to-day costs of running the business and any unexpected costs they’ve incurred.
Speak With A Franchise Consultant
If you’re still unsure where to start or want expert advice on franchising, you can always speak with a franchise consultant. Franchise consultants are experienced in franchising and can provide you with tailored advice to suit your needs.
Now that you know how to get reliable cost estimates for starting a Shipley Do-Nuts franchise, here is a breakdown of the fees you can expect to pay:
Initial Franchise Fee
The franchise fee is a one-time charge that you’ll pay upon signing the franchise agreement and is not refundable. Think of it like a license fee that grants you the right to use the Shipley Do-Nuts brand name and business model. Shipley Do-Nuts’ franchise fee is $40,000.
To have your store up and running, you’ll need to purchase essential equipment, such as donut-making machines, ovens, display cases, and furniture. The franchisor has a list of recommended vendors where you can buy your equipment. However, you may also source it yourself.
The cost of store equipment will vary depending on the size of your space, but you can expect to spend between $150,000 and $200,000.
For your store to meet Shipley Do-Nuts standards, you may need to make some leasehold improvements. These are changes or additions you make to the property you’re leasing.
Expected leasehold improvements for the Shipley Do-Nuts franchise include installing new flooring, painting the walls, and adding signage.
The cost of leasehold improvements will vary depending on the size and condition of your space, but you can expect to spend between $150,000 and $200,000.
Having completed all the necessary renovations, you’ll need to stock your store with supplies, such as donut mix, packaging, coffee beans, and napkins. You can expect to spend between $7500 and $15,000 on opening inventory.
You may not turn a profit during the first few weeks or months of your business, so it’s essential to have some financial cushion to cover your day-to-day expenses, such as rent, utilities, and payroll.
Shipley Do-Nuts requires that you have at least $100,000 in working capital available.
In addition to the initial franchise fee, you’ll also be required to pay monthly royalties to the franchisor. At Shipley Do-Nuts, the monthly royalty is five percent of your gross sales and covers the ongoing support and marketing provided by the franchisor.
Once you join Shipley Do-Nuts, you’ll contribute to their monthly marketing fund. This collective fund promotes the Shipleys brand and will help drive customers to your location. The marketing fee is two percent of your gross sales.
There you have it! It costs between $440,000 and $700,000 to open a Shipleys franchise. This cost includes the initial franchise fee as well as store equipment. While the upfront costs can be sizable, remember that you’ll be getting the support of an established brand and a proven business model. Your Shipley Do-Nuts franchise can be an excellent investment with careful planning and execution.