The Costs of Running a Dairy Queen Franchise

Introduction

Franchising can be a great way for a business to grow and grow. While the Dairy Queen having opened its doors in 1940, it is one of the oldest and most established franchises in the world. The Dairy Queen franchise is estimated to have over 5,800 outlets in 26 countries, with an annual collection of over .5 billion. This growing franchise shows no signs of slowing down in its success anytime soon.

Despite its undeniable success, the Dairy Queen franchise has a set of operating costs that any prospective franchisee should consider. While being part of the Dairy Queen Franchise Empire has its own set of privileges, its initial and ongoing fees can add up quickly. Knowing these fees in advance can help prepare an individual for the costs that come with owning and operating a Dairy Queen franchise.

Operating Expenses

When evaluating the cost of running a Dairy Queen franchise, it is important to understand the major expenses associated with the business. These can include franchise fees, permits and licenses, real estate fees, building renovations, equipment, employee training, inventory, insurance and marketing.

• Franchise Fees: Franchise fees are required to own and operate a Dairy Queen franchise. Costs can vary, but often range from ,000 to ,000.
• Permits and Licenses: Depending on the state, city, or county in which you operate, you may need to obtain special permits and licenses. These are usually around 0 to 0.
• Real Estate: The cost of the location you choose will depend on the area and other factors. Renting or leasing can be a more affordable option than buying outright.
• Building Renovations: To open a Dairy Queen franchise, you must meet certain requirements and renovate the building to match the brand’s design. These renovations can cost anywhere from ,000 to 0,000 depending on the size of the restaurant.
• Equipment: Your equipment costs will depend on the size of the restaurant and the type of equipment you decide to purchase. This cost can vary from ,000 to ,000.
• Employee Training: Employee training is necessary for a successful Dairy Queen franchise. The franchise will provide training, but this may have additional costs.
• Inventory: The cost of inventory will depend on various factors, such as the size of the restaurant, food costs, and the type of food served.
• Insurance: It is important to secure insurance for your deductible to cover potential losses or liabilities. The cost of insurance may vary.
• Marketing: Marketing is essential for any business and franchises are no exception. The cost of marketing will depend on the size of the franchise and the type of campaigns you plan to run.

Franchise fees

When starting a Dairy Queen franchise, there are many costs to consider. Depending on the franchisee’s experience and type of store, fees can range from ,000 to ,000, plus an ongoing royalty fee of 4.5%.

In addition to the initial and ongoing fees, additional fees are paid each month. These include local advertising contributions of 2-4%, a marketing fund contribution of 1% and a second royalty of 0.50-1% for national advertising. Adding these expenses brings the total cost of buying and operating a Dairy Queen franchise closer to a minimum of ,000, plus ,000 to ,000 in monthly fees.

When you invest in one of Dairy Queen’s 5,400 locations nationwide, a new business partner has to spend a lot of money just to get their store off the ground. The total cost is estimated between 0,000 and ,862,000. This range includes start-up costs, cost of location, equipment, advertising, working capital, insurance, and initial inventory.

When purchasing an existing Dairy Queen location, the costs associated with the business purchase will be added to the total cost. The range for an existing deductible is usually between ,000 and 0,000.

Besides upfront costs and ongoing fees, franchise owners also need to have working capital on hand to cover operating expenses and payroll. Typically, the working capital requirement within a Dairy Queen franchise is approximately ,000.

Permits and licenses

In the United States, state laws require all businesses, including Dairy Queen franchises, to obtain specific permits or licenses to conduct business legally. Depending on the state you are importing a franchise from, required permits and licenses may vary. Typically, fees to obtain licenses and permits range from to hundreds of dollars. On average, permits and licenses for a Dairy Queen franchise cost approximately 0 .

In addition to regular permits and licenses, periodic inspections and renewals may be required for some of them. For example, health inspection is generally required for all food service operations such as Dairy Queen. The inspection can be done monthly, annually, semi-annually and costs up to 0 each time. On the other hand, license renewals, usually done annually, can cost up to 0 .

Some of the common permits and licenses required are as follows.

• Business license
• Food service license
• Building permit
• Health permit
• Sign a permit
• liquor license

It is important to understand each state’s requirements and obtain the required permits and licenses before opening a Dairy Queen franchise.

Real estate

When considering starting a Dairy Queen franchise, one of the main concerns to consider is the associated real estate costs. Depending on the area in which you plan to open the franchise, these costs can be substantial. According to the latest statistical information, in the United States, the median list price for a home was 9,000 in December 2018, an increase of 5.6% since December 2017. a commercial property was 0,000 in November 2018, an increase of 6.3% over the same period of the previous year.

Real estate costs are an important part of any Dairy Queen franchise setup. Rent varies by location, but in the United States in 2018 the median rent for a single-family home was ,500 per month. Depending on the size of the store and the type of property, rent can be much higher, so be sure to research rent costs in the area where you plan to open your store.

In addition to rent, many landlords require an initial security deposit which can vary from one to several months’ rent. Depending on the location and size of the store, other upfront costs may also include real estate taxes, building permits, and other fees. To make sure your costs are within your budget, it’s important to fully understand what they will be before you decide to open a franchise.

Building renovations

For those wishing to start a Dairy Queen franchise, they should be aware that there will be heavy capital costs associated with building renovations up front. On average, buildings need to be raised to corporate standards, which can be significant if the franchise is opening a new restaurant in an area. Renovation costs can range from 0,000 to million, depending on the condition of the building, the size of the restaurant, and the treatments needed to meet corporate standards.

This cost may be higher if the franchise must repair buildings that have been severely damaged by storms or age-related wear and tear. In these cases, the cost can exceed 2 million USD. Additionally, the cost of building renovations is generally higher for franchisees located in a city or urban or densely populated areas due to the higher cost of labor and materials.

The cost of building renovations also varies by location. On average, the cost of renovations in the United States is around 0,000 and in Canada is around 0,000 CAD.

Franchisees should factor these costs into their calculations and be sure to work with a reliable contractor to ensure a successful project. Additionally, many franchisors are willing to help with the cost of renovations, so it might be worth inquiring ahead of time.

Equipment

When it comes to the costs of running the Dairy Queen franchise, the purchase of equipment is an essential aspect to consider. Depending on the size of the franchise, you may need to purchase many items for preparing, cutting, and cleaning food and beverages. Although Dairy Queen does not require you to buy all your equipment from them, it can often be more cost effective and will be provided at a discount.

Estimated equipment costs for a Dairy Queen franchise vary widely, ranging from a low of ,000 to a high of 5,000. Typically, equipment prices are determined by the cost of kitchen appliances, storage, and shelving. You may also need to invest in food handling and dining equipment, light fixtures and signs. Additionally, technology systems such as point of sale and online ordering may also be necessary for the franchise model.

Kitchen equipment cost estimates may include:

• Grill: ,000 – ,000
• Registration: ,000 – ,000
• Tables and chairs: ,000 – ,000
• Freezers and refrigerators: ,500 – ,000
• Tapestry: ,000 – ,000
• Exhaust hoods: ,500 – ,500

Dairy Queen doesn’t require you to buy your equipment from them, but some of their prices for new cooking and catering items may be lower than other sources. Additionally, outlets like usageSequiment.net carry used equipment at much lower prices, so be sure to explore your options before buying. Depending on the size of your franchise, the equipment used can be much more profitable.

employee training

Employee training is crucial to the success of any business, and that’s probably no more true than for those who want to run their own Dairy Queen franchise. The cost of employee training and development for a Dairy Queen franchise can vary greatly. According to the 2019 Franchise Disclosure Document (FDD) for DQ Grill & Chill Worldwide, the average cost of employee training is estimated to be between ,000 to ,000 Depending on level of training, number of employees and location.

Some franchisees choose to pay additional fees to cover the costs of print training materials and to pay for travel expenses for trainers. Additionally, additional fees may be charged for certification fees, such as food safety and other industry-related studies.

Often, Dairy Queen Corporate offers pre-purchased library training products that can be customized to meet franchise needs. This material is free or offered for a nominal fee. Library training products range from .00 for an ice cream recovery guide to 0 for a computer program.

These library training products can be supplemented with other resources such as third-party online training solutions. A full training program, including video lessons and interactive activities, can cost to 0 per employee . This can be a necessary expense, as even the basics of training employees require upfront costs and the implementation of a successful training program.

Inventory

Inventory costs vary greatly depending on the type of franchise you use and the size of the store. For example, an independent Dairy Queen franchisee in the United States might expect to spend ,200 to ,000 on inventory costs in 2019. This includes food, beverages, and other supplies.

It is important for the franchisee to maintain a well-stocked inventory so that the store can meet customer demand. Dairy Queen locations typically offer milkshakes, blizzards, dipped cones, ice cream cakes, classic cones, dairy queen mascot items, and more. Depending on the size of the store and the number of customers, inventory costs can add up quickly.

Assorted toppings such as M&Ms, candies, sprinkles, and other ingredients are also important inventory components. Dairy Queen locations require pre-made goods such as pints of blizzard and filled cooler packs, as well as liters of ice cream, cones, and canisters. An estimated inventory cost for these items ranges from .47 to .17 per unit. The inventory to sales ratio of Dairy Queen locations is typically between 36 and 40%.

The total annual inventory cost for a Dairy Queen location can range from ,000 to 0,000, with inventory costs accounting for approximately 10-14% of store operating costs. As a franchisee, it’s important to understand these numbers and be aware of any variations or changes in the market with respect to item inventory costs. Only this can ensure that you are ordering the right amount at the right time and controlling your inventory costs.

Assurance

Opening a Dairy Queen franchise usually comes with certain insurance requirements, and these costs should be considered when budgeting for a franchise. Depending on the specific franchise requirements, startup costs for insurance can cost anywhere from ,000 to ,000 on average. Regularly occasional insurance expenses tend to range from 0 to 0 per month.

Some of the types of insurance you may need to carry for your Dairy Queen franchise include business liability, bodily injury, property, vehicle, and workers’ compensation. The cost of each of these policies depends on the type of coverage, location, and other factors. Therefore, you should consult an insurance agent before making commitments.

The average total cost of a Dairy Queen deductible insurance policy in 2020 was around ,000.

Marketing

Marketing is an important factor in any business looking to succeed, and a Dairy Queen franchise is no different. It is important to understand the potential costs associated with marketing in order to make an informed decision when considering a Dairy Queen franchise. According to the Franchise Business Review, the 2020 survey estimated that approximately 8% of the total capital investment for a Dairy Queen franchise is devoted to marketing-related costs, which was estimated to be between ,000 and ,000 (USD ) .

Marketing costs are broken down into many different parts that are all essential to reaching the maximum number of potential customers. Some of the major costs associated with marketing a Dairy Queen franchise include advertising in local markets, maintaining and maintaining an online presence, and the cost of promotional items related to the product or service such as T-shirts and coupons.

Advertising in a given local market for a franchise can cost an estimated ,000 (USD) per month. This will include all local, radio and television advertisements that are designed to reach a specific target demographic. It is important to design an advertising strategy that reflects the specifics of the local market served in order to maximize the marketing budget.

An online presence is also essential for any global business. This includes creating and maintaining a website, social media promotion and advertising, and ensuring the online presence is up to date. This cost can vary between 0 (USD) and ,000 (USD) a month and is often managed by digital marketing professionals.

Finally, promotional items are an essential part of marketing campaigns, as they provide a tangible connection with the brand and the product being offered. Depending on the nature of the items purchased and the quantity of the same items ordered, the costs may vary between ,000 (USD) and ,000 (USD) . It is important to budget for promotional items in the early stages of marketing for a Dairy Queen franchise to ensure maximum return on investment.

Conclusion

Investing in a Dairy Queen franchise is an opportunity to tap into one of the largest and most popular franchise operations in the world. However, potential franchisees should be aware of the initial and ongoing costs in order to stay afloat and be successful in the long term.

The costs of a Dairy Queen franchise include franchise fees, permits and licenses, property and building renovations, equipment, employee training, inventory, insurance and marketing. Costs for building permits, licenses and renovations could range from ,000 to ,000 , depending on location and type of renovation. Also, Franchise fee is ,000 and ongoing royalty fee can range from 4-5% of gross sales.

Careful planning and preparation are essential to opening and operating a Dairy Queen franchise. Although it definitely comes with challenges, it can be a great opportunity for all aspiring business owners.