20 Substantial Fees Every Duck Donuts Franchisee Needs to Know | Franchise Chatter4 min read

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Duck Donuts Franchise

If you are considering a Duck Donuts franchise, don’t get blindsided by these 20 important franchise fees (from the initial franchise fee, to the royalty fee, to 18 other fees found in Items 5 and 6 of Duck Donuts’ 2020 FDD).

1.  Initial Franchise Fee:  $40,000

  • You are required to pay an initial franchise fee of $40,000 when you sign a Franchise Agreement (“Initial Franchise Fee”) except for a Franchise Agreement executed in connection with a Multi-Unit Option Agreement for which the Initial Franchise Fee is $30,000.
  • The Initial Franchise Fee is non-refundable and is deemed fully earned upon signing of the Franchise Agreement.
  • Duck Donuts may adjust the Initial Franchise Fee if you sign a Multi-Unit Option Agreement or under special circumstances including for Duck Donuts locations operated in non-traditional venues such as airports or other transportation terminals, arenas, amusement parks, enclosed shopping malls, military installations, or other locations that create unique circumstances.
  • Duck Donuts may also adjust the Initial Franchise Fee for individuals and organizations that previously or currently own other Duck Donuts locations or for former owners and employees of Duck Donuts and their families.

2.  Multi-Unit Option Fee:  $20,000 for the first Duck Donuts location you option and $10,000 for each additional Duck Donuts location you option

  • To encourage qualified new franchisees, Duck Donuts offers new franchisees and current franchise owners the option to operate a minimum of one additional Duck Donuts location through Multi-Unit Option Agreements.
  • If you are a new franchisee, you meet Duck Donuts’ qualifications, and you wish to purchase an option for additional Duck Donuts locations, you must, in addition to signing the Franchise Agreement and paying the Initial Franchise Fee: (1) sign a Multi-Unit Option Agreement; and (2) upon signing the Multi-Unit Option Agreement, pay Duck Donuts an option fee of $20,000 for the first Duck Donuts location you option and $10,000 for each additional Duck Donuts location you option.
  • If you are a new franchisee, you must pay the Initial Franchise Fee for your first Duck Donuts location but your Initial Franchise Fee for each additional Duck Donuts location you option through a Multi-Unit Option Agreement shall be $30,000 less your Option Fee of $20,000 for the first Duck Donuts location you option and $30,000 less your Option Fee of $10,000 for each additional Duck Donuts location you option.
  • In all cases, you must exercise the options within a number of years of executing the Multi-Unit Option Agreement equal to the number of optioned Duck Donuts locations as defined in the Multi-Unit Option Agreement. For example, if you sign a Multi-Unit Option Agreement for 2 additional Duck Donuts locations, you must exercise your option to open the first Duck Donuts location within 1 year and the second Duck Donuts location within 2 years of signing the Multi-Unit Option Agreement.
  • Upon exercising the option to develop each additional Duck Donuts location, you must sign the then-current Franchise Agreement. The Multi-Unit Option Agreement must be signed, and the Option Fee paid, when you sign your first Franchise Agreement for a Duck Donuts location optioned under a Multi-Unit Option Agreement.
  • The Option Fee is deemed fully earned and nonrefundable when paid.
  • Duck Donuts may adjust the Option Fee under special circumstances, including for Duck Donuts locations operated in non-traditional venues such as airports or other transportation terminals, arenas, amusement parks, enclosed shopping malls, military installations, or other locations that create unique circumstances.
  • Duck Donuts may also adjust the Option Fee for individuals and organizations that previously or currently own other Duck Donuts locations or for former owners and employees of Duck Donuts and their families.

3.  Royalty:  5% of Gross Sales

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  • Due Date:  Weekly via Electronic Funds Transfer (EFT).

4.  Local Advertising:  1% of Gross Sales

5.  National Ad Fund:  2% of Gross Revenues

  • Due Date:  Weekly via Electronic Funds Transfer (EFT).
  • Deposited in National Ad Fund administered by Duck Donuts.

6.  Transfer Fee:  $15,000

  • Due Date:  Due upon transfer.

7.  Audit Fee:  $2,000 to $5,000

  • Payable only if audit shows an underpayment.

8.  Collection Costs, Attorneys’ Fees, and Interest:  fees and costs incurred; interest at 12% or highest permitted by law

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9.  Indemnification:  varies

  • You must reimburse Duck Donuts if it is sued and/or held liable for claims arising out of operation of your Franchised Business.

10.  Additional Training:  $500 per additional person or the then-current training fee

11.  Consulting Assistance:  $75 per hour

  • You must also pay Duck Donuts’ travel expenses if it is required to travel.

12.  Evaluation of Suppliers:  Duck Donuts’ expenses

13.  Insurance:  all insurance payments incurred by you and paid by Duck Donuts when you fail to do so, plus interest

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  • Due Date:  Payable on demand.
  • Duck Donuts, at its option, may obtain required insurance coverage on your behalf if you fail to do so.

14.  Royalty Late Fee:  $50

  • Payable on any royalty payment not received by 5 days from the due date.

15.  Returned Check and Insufficient Electronic Funds Fee:  $30 for each insufficient fund occurrence

  • You must pay this fee for any checks returned to Duck Donuts by its depository for lack of funds or any occurrence of insufficient electronic funds in your account.

16.  Software Fees:  $50 per month

  • Due Date:  Monthly via ACH.
  • This fee covers the administration of the website and franchise management information system.

17.  Brochures:  Duck Donuts’ cost, plus a 5% administrative fee

  • Due Date:  Upon purchase.

18.  Relocation Fee:  25% of Duck Donuts’ then-current Initial Franchise Fee

  • Due Date:  Upon approval of relocation.
  • This amount will cover Duck Donuts’ administrative costs in connection with relocation of your Duck Donuts location.

19.  Mystery Shopper Fee:  $240 to $740 annually

  • Due Date:  Monthly as incurred.

20.  Miscellaneous Fees:  varies

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