Shipley Donuts
Shipley Donuts offers franchises specializing in donuts, kolaches, coffee, and specialty drinks. Known for its variety of baked goods, it operates in the quick-serve food industry.
About Shipley Donuts
Shipley Do-Nuts is an American doughnut company and coffeehouse chain with more than 300 franchised stores in Texas, Oklahoma, Louisiana, Arkansas, Tennessee, Mississippi, Florida, Alabama, Maryland, and as of 2018, Colorado. Its headquarters are located in Northside, Houston, Texas.
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Shipley Donuts franchise FAQ
How much does it cost to open one — the total initial investment?
The total estimated initial investment necessary to begin operation of a Shipley Do-Nuts shop ranges from $503,461 to $1,024,946, including between $80,000 and $90,000 that must be paid to the franchisor and/or its affiliates. [p.1]
What is the initial franchise fee?
The initial franchise fee is $40,000 and must be paid in one lump sum upon execution of the Franchise Agreement [p.12, p.57, p.67].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is 5% of the previous week's Gross Sales [p.68]. Additionally, you must spend at least 2% of the previous week's Gross Sales on Local Advertising and Promotion [p.93], though this does not count towards a credit for contributions to a Regional Advertising Cooperative except as specified [p.93].
How long is the initial franchise agreement, and can I renew it?
The initial franchise agreement typically lasts for an unspecified term, but you have the right to enter into two consecutive renewal franchise agreements, each with a term of 5 years [p.67]. This means the total potential duration under the franchise agreement could be up to 10 years if both renewals are exercised [p.67].
Can I sell or transfer my franchise, and what does that require?
You cannot sell or otherwise assign or transfer all or any interest in the franchise without the franchisor's prior written consent [p.105]. However, if the proposed transferee is not a member of your immediate family, the franchisor will not unreasonably withhold consent to the assignment and sale, provided they do not exercise their right of first refusal [p.105].
On what grounds can the franchisor terminate the agreement?
The franchisor can terminate the agreement on several grounds, including if the franchisee fails to comply with lawful provisions of the franchise agreement and does not cure such failure within a reasonable period [p.5]. Additionally, the franchisor may terminate the agreement if the franchisee fails to comply with the Development Schedule [p.39].
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 details on specific net worth or liquid capital requirements for franchisees. However, it does require maintaining adequate reserves and working capital sufficient to cover risks and contingencies for at least 3 months [p.85].
Do I get an exclusive or protected territory?
Yes, you will receive a protected territory. Specifically, you will be granted a one-mile radius around your Shop Location within which neither the franchisor nor any affiliate will operate or grant a franchise for a similar shop during the term of the agreement [p.36]. However, these restrictions may not apply if you are operating in a Nontraditional Location or if there are existing Shipley Do-Nuts shops in the area as of the Effective Date [p.64].
What training and ongoing support does the franchisor provide?
The franchisor provides an Initial Training Program at no additional cost for the first shop, but trainees are responsible for travel and living expenses. For subsequent shops, initial training is not required. Additionally, the franchisor offers On-Site Opening Training for up to 15 days during a new shop's opening, with the possibility of extending this period based on their discretion. They may also provide additional on-site training or assistance upon request, though this comes at an extra cost. [p.34, p.75]
How many franchised outlets are there, and how many have closed or been terminated?
According to the FDD excerpts, as of December 31, 2024, there were 355 franchised shops open. However, this number includes some that were excluded from Item 19 because they were not open for at least 16 months or operated differently than typical shops. The exact number of closed or terminated franchises is not specified in the provided excerpts.
Does the franchisor share any financial performance or earnings information?
The franchisor does provide certain historical financial performance representations for both company-owned and franchised shops that have been open for at least 16 months as of December 31, 2024. This information is detailed in Item 19 of the franchise disclosure document [p.53]. However, the franchisor does not make any representations about a franchisee's future financial performance or past financial performance of company-owned or franchised outlets other than what is included in this document [p.55].
What am I restricted to selling, and where must I buy supplies?
You are required to sell only those products, services, and programs that are part of the System, as defined in the FDD [p.81]. You cannot sell any product or service not included in the System without obtaining advance written approval from the franchisor, which may be denied for any reason [p.81]. You must buy certain supplies, goods, and services from the franchisor, its affiliates, or suppliers designated by them [p.18, p.81]. This includes Franchisor Products and Services whether proprietary, non-proprietary, trademarked, or otherwise [p.18]. The specific sources of supply are subject to change at any time with notice from the franchisor [p.81].