Duck Donuts
Duck Donuts offers fresh-made donuts in retail shops. Known for unique flavors and playful branding, it operates in the quick-serve food industry.
About Duck Donuts
Duck Donuts is an American doughnut shop chain based in Mechanicsburg, Pennsylvania. Duck Donuts was founded in 2006 in Duck, North Carolina, by Russ DiGilio and Robin Griffith, and has since expanded to over 120 locations in the United States. The chain's products include customizable, made-to-order doughnuts, other baked goods, and a range of beverages.
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Duck Donuts franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment to begin operation of a single Duck Donuts franchise ranges from $514,650 to $737,000. This includes $40,000 that must be paid to the franchisor. [p.1]
What is the initial franchise fee?
The initial franchise fee is $40,000 and it is fully earned by the franchisor at the time you sign the Franchise Agreement. This amount is not refundable under any circumstances. [p.12, p.64]
What are the ongoing royalty and advertising fees?
The franchisee must pay a royalty fee of six percent (6%) of Gross Sales [p.64]. Additionally, starting from the second year of the agreement, the franchisee is required to spend at least one percent (1%) of Gross Sales per month on Local Advertising [p.77], with Franchisor potentially requiring up to half of this amount to be allocated to a regional advertising cooperative.
How long is the initial franchise agreement, and can I renew it?
The term of the initial franchise agreement isn't specified in the excerpts. Additionally, whether you can renew the agreement depends on various conditions, such as if the franchisor is offering new franchises, revising their franchise agreement, or facing legal restrictions; in such cases, the franchisor may choose to renew the agreement under the same terms or extend it on a month-to-month basis [p.64].
Can I sell or transfer my franchise, and what does that require?
Yes, you can sell or transfer your franchise, but it requires payment of a transfer fee. The fees vary based on the type of transfer: $20,000 for general transfers, $15,000 to an existing franchisee in good standing, $1,500 for ownership interest changes among existing principals, and $3,500 for transfers to a spouse, parent, or child due to death or permanent disability. [p.85]
On what grounds can the franchisor terminate the agreement?
According to [p.241], the franchisor may terminate the agreement on any grounds available by law. However, [p.250] states that terminating a franchise without reasonable cause is unlawful under Virginia Retail Franchising Act Section 13.1-564. Additionally, [p.6] specifies that good cause for termination includes failure to comply with lawful provisions of the franchise agreement and not curing such failures after notice and a reasonable opportunity to cure, which cannot exceed 30 days.
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts. The FDD does not provide specific details on net worth or liquid capital requirements for franchisees to qualify. [p.85] mentions that a transferee must have sufficient business experience, aptitude, and financial resources, but it does not quantify these financial resources.
Do I get an exclusive or protected territory?
You do not receive an exclusive territory [p.35]. However, you are granted a protected territory under the Franchise Agreement that will be defined after identifying and accepting a specific site for your franchise [p.34]. This territory is nonexclusive within a broader search area and is subject to approval based on certain criteria [p.27].
What training and ongoing support does the franchisor provide?
The franchisor provides Initial Management Training through Duck Donuts University, which is conducted periodically throughout the year [p.33]. Additionally, upon reasonable request or as deemed appropriate by the franchisor, they offer on-site remedial training provided by trained representatives at the franchisee's location for a fee [p.67].
How many franchised outlets are there, and how many have closed or been terminated?
As of December 31, 2024, there were 143 franchised outlets operating in the Duck Donuts System. The FDD does not specify the number of franchised outlets that have closed or been terminated; it only provides information on the total number of outlets as of a specific date [p.48].
Does the franchisor share any financial performance or earnings information?
The franchisor may provide actual records of an existing outlet you are considering buying, but they do not make any representations about future financial performance or past financial performance of company-owned or franchised outlets. This is detailed in [p.48] and [p.47].
What am I restricted to selling, and where must I buy supplies?
You are restricted to offering and selling all products and services that are part of the System, including any additions made in the future. You may only offer products and services that have been previously approved by the franchisor [p.39]. Additionally, you must purchase equipment, ingredients, supplies, and services from the franchisor's designated suppliers or in accordance with their specifications [p.23]. This includes using items on a list of approved brands or meeting certain standards and specifications provided by the franchisor [p.23].