Krispy Kreme Franchise Review & Company Secrets!

How much money can you earn with a Krispy Kreme Franchise? How much does it cost to open a Krispy Kreme? Is owning a Krispy Kreme a good investment? We’ll look at that and some dirt on the mega franchise today on Franchise City.

Krispy Kreme was founded by Vernon Rudolph in 1937. He bought a unique recipe and started off with $25 in a rented a building in Winston Salem North Carolina, oddly enough he moved there because his favorite cigarette company, Camel brands was headquartered there. After renting his location he had no money left and had to convince a convenience store owner to lend him money to make the first donuts.
At the time Krispy Kreme sold mostly to convenience stores but would also sell to customers who walked in between midnight and 4am during the production time of the donuts. In the 50’s they created the dooughnut making machine, which revolutionized the process. The company grew over the years, Was sold to Beatrice foods in the 70’s and they actually sold products like soap at Krispy Kreme locations, and had the nerve to change the original doughnut recipe. In 1982 unhappy franchisees banded together and took back the company. The company went public in 2000, and by 2002 was making 5 million doughnuts a day and had 250 stores in 37 states and Canada.
Shortly after going public Krispy got into trouble for an accounting scandal, the stock plummeted from a high of $50 to $4 due to slumping sales and problems growing their franchise chain.To address the slumping sales executives at Krispy used some sleight of hand, meaning they fibbed about the numbers to inflate the stock prices. They got caught and were taken to task by the SEC,. They got a slap on the wrist, three former executives paid a total of $150,000 in fines and $632,919 in ill-gotten gains and interest.
Krispy Kreme was sued in 2016 for 5 million dollars by a customer who claims to have suffered economic harm. Irina Agajanyan commenced a class-action suit against the company for using words such as “blueberry” and “maple” in the names of doughnuts when the doughnuts do not actually contain these ingredients.
The case asked for $1,000 in damages for anyone who had to suffer paying for a doughnut and not actually getting any blueberry or maple. That case was voluntarily dismissed without prejudice which means it could be refiled at a future date.
To open a Krispy Kreme location will cost you $1,287,500 to $2,750,000 for a Factory Store; $558,500 to $1,500,000 for a Tunnel Oven Shop; $440,500 to $1,200,000 for a Fresh Shop; $200,500 to $453,000 for a Box Shop; and $1,617,500 to $4,115,000 for a Commissary Facility. If you are wondering what those are and are interested in investing in a Franchise give franchise city a call.
Royalties are low at 4.5% but keep in mind this is paid on net sales, not gross. You will also pay up to a 2% brand fund, up to a 1% ad placement fund, a minimum of 2.5% on local advertising, and up to 3% for regional or national advertising. That can end up being as high as 13% right off the top of your net sales.
Keep in mind as a Krispy Kreme owner you will not receive territory protection. The FDD states you will not have exclusive territory so you could face competition from corporate stores or other franchisees if they open nearby.
How much can a Krispy Kreme franchise owner earn? Well franchises have the ability to list revenues in what is called the Item 19 of their disclosure documents. They don’t have to but when they do it’s a positive sign they have nothing to hide. Krispy Kreme does not list any financial data in their item 19. This is a bit iof a red flag. Another concern is that Krispy Kreme indicates a net closure of 13 franchises last year. We counted a total of 27 franchisees who were either re-acquired by the company or had to close their doors.
So is Krispy Kreme a good investment? That will be for you to decide. if you need help researching the best franchise our service is free to qualified buyers you can learn more here.

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