Krispy Kreme Franchise : How TO Open, Cost & More

Krispy Kreme donuts are one of man’s greatest inventions. They satisfy sugar cravings at any time of the day, and this wonderful franchise always sells coffee and other beverages that pair perfectly with these sweet and fried balls of dough. In addition to being the perfect snack, the Krispy Kreme brand has allowed many entrepreneurs to open their own businesses by purchasing a franchise and living out their dreams of owning their own business.   

However, have you ever wondered about how much a Krispy Kreme franchise costs and what the process is like to open your own franchise? 

Well, in this article, we’ll take you through the history of the Krispy Kreme franchise. We’ll also walk you through how much the franchise costs, the overall cost breakdown, and how to open your own franchise! We’ll also share a list of franchise alternatives and answer some frequently asked questions. 

Let’s get right into it. 

Krispy Kreme Franchise – History

Krispy Kreme
Source

Donuts have been around for several decades, but Krispy Kreme donuts only came on the scene back in 1937. 

Vernon Rudolph founded the Krispy Kreme Corporation after he bought the company’s secret yeasted donut recipe from a French baker in New Orleans. After the baker developed this highly sought-after recipe, Vernon went ahead and rented a factory in Winston-Salem, or Old Salem, as it was known back then, in North Carolina. 

Once Vernon had set up his factory, he wasted no time supplying the town’s grocery stores with donuts. Once the 1940s and 1950s hit came around, Krispy Kreme had developed their recipe further and made it better. Their larger funds and improved equipment meant that their donuts tasted even better! 

In the two decades that followed, Krispy Kreme had started to sell their donuts to other parts of the country in the Southeastern region. When Vernon died in 1973, Krispy Kreme franchises were still up and running. 

In the mid and late 1970s, Krispy Kreme was sold to another company that sold donuts alongside ice cream and soup. After a bit of digging, we learned that Krispy Kreme’s original franchisees didn’t seem to approve of this decision, which is why they repurchased the company in 1982. 

In the years that followed, Krispy Kreme eventually returned to being a company that sold only donuts. Finally, by the time the year 2000 rolled around, the company became publicly known as Krispy Kreme Doughnuts Inc. However, they did not offer entrepreneurs the opportunity to purchase a franchise until 2007. 

Of course, this has since changed, because they opened their first international store 20 years ago, in December 2001, in Canada. Now, Krispy Kreme is one of the most successful and easily recognizable franchises in the world, with stores in countries such as India, Mexico, and Australia, as well as in the Middle East and South America! 

How Much Does a Krispy Kreme Franchise Cost?

As you can probably imagine, a franchise like Krispy Kreme isn’t an easy one to purchase and get into because the costs are pretty high. If you’re a franchisee, don’t be alarmed if you’re asked to pay any amount of money from around $440,000 to $4 million, and these are only in investment fees. You must remember that the store format you choose has a significant impact on the amount you pay in investment fees.  

Once you’ve paid the investment fees, you must also consider the net royalties that you owe per week. These are usually about 4.5% that is collected.   

There are three options to choose from when it comes to the kind of franchise that Krispy Kreme offers. They are: 

A Commissary Facility

A commissary facility means that you do not operate and run a Krispy Kreme store, but rather a manufacturing facility that makes donuts and other products to supply Fresh Shops or Tunnel Oven Shops, which are the two different types of franchises that Krispy Kreme offers. 

A Tunnel Oven Shop 

A Tunnel Oven Shop is a retail sales space that can’t produce large amounts of donuts. However, it contains an impinger oven, and it will generally receive its donut supply from the Commissary Facility or a Factory Store.

A Factory Store

A factory store makes fresh donuts that will be supplied to Tunnel Oven Shops or Commissary Facilities. 

A Fresh Shop

A Fresh Shop also receives freshly made donuts from a factory store or commissary facility. These stores can’t manufacture large quantities of donuts. 

When you’re budgeting to open a Krispy Kreme franchise, remember that you will need the following amounts of money for the different franchise types: 

  • For a factory store, you will need anywhere from $1.28 million to $2.75 million 
  • For a tunnel oven shop, you will need about $550,000 to $1.5 million
  • For a fresh shop, you will need anywhere from $440,000 to $1.2 million 
  • For a commissary facility, you will need around $1.6 million to $4.12 million 

Krispy Kreme Franchise Cost Breakdown

The table below shows the average costs to open your own Krispy Kreme franchise. We’ve broken down the costs according to the different types of franchises that you can open. 

Types of Costs/Type of StoreFresh Shop Commissary Facility Tunnel Oven Shop Factory Store 
Development fees $12,500$25,000$12,500$25,000
Fees for Construction$250,000 to $850,000$1.2 to $2.5 million $350,000 to $990,000$600,000-$1.6 million 
Initial Franchise fees $12,500 to $25,000$25,000$12,500$25,000
Renovations, Improvements, and Real Estate $8,000 to $25,000$10,000 to $25,000$9,000 to $25,000$11,000 to $25,000
Equipment, Furniture, and Other Implements$90,000 to $230,000 $100,000 to $250,000$90,000 to $230,000 $90,000 to $265,000 
Inventory $30,000 to $50,000$30,000 to $50,000$30,000 to $50,000$30,000 to $50,000
Trucks$50,000$50,000$50,000$50,000
Equipment for Production $380,000$380,000$380,000$380,000
Marketing Program for Shop Launch $25,000 to $45,000$25,000 to $45,000$25,000 to $45,000$25,000 to $45,000
Training costs$16,000 to $50,000$16,000 to $50,000$16,000 to $50,000$16,000 to $50,000
Deposits (security, other) $2,500 to $20,000$2,500 to $20,000$2,500 to $20,000$2,500 to $20,000
Miscellaneous funds$27,000 to $250,000$27,000 to $250,000$27,000 to $250,000$27,000 to $250,000

We understand that you might have your doubts about opening a Krispy Kreme franchise, but you can rest assured that your business is likely to be successful, thanks to the large number of people who love and enjoy Krispy Kreme donuts. It’s also a globally recognized brand that is committed to providing people with delicious snacks. Krispy Kreme is also known for its innovative and exciting flavors. 

How to open a Krispy Kreme franchise?

Opening your franchise is an exciting journey for anyone with a passion for business. However, opening a franchise has its challenges, which is why you need to make sure that you know what you’re doing before you fully commit to opening your own business. 

Here are the steps to opening a Krispy Kreme franchise that is crucial to the success of your business in the future: 

Make sure that you have a solid amount of capital before you get started. 

If you don’t have enough funds to pay the initial fees, you won’t be able to open the franchise at all. This is why you need to have an average net worth of about $250,000 to $275,000. 

Take into account that there are many costs needed to invest in a franchise. 

You must remember that there are several costs necessary to open a franchise. These include real estate and building fees, insurance, training costs,  costs for various licenses and permits, as well as the cost for uniforms for your staff. Please remember that you will also need to consider the cost of wages. 

Assess your skills as an entrepreneur and business owner 

Before diving headfirst into purchasing and running a franchise, remember that you must sit down and assess your skills, strengths, and weaknesses as an entrepreneur. You must also assess your strengths and weaknesses in the field of business. Will your past experiences help you run this business in the way that you want to? Will you be able to run the business successfully? 

Evaluate the market 

Before you submit the application to open your franchise, evaluate the market for Krispy Kreme franchises and figure out whether there are enough available markets in the location of your choice. If there aren’t, you need to figure out an alternative plan so that you can reassess the costs of your business and make a decision from there.

Submit your franchise application 

Once you’ve filled in and submitted your application, you must wait for it to be reviewed by the team at Krispy Kreme. You will receive a confirmation receipt after you’ve received a notification stating that your application was successful and approved. Then, you will receive the contact details of the necessary people to call, and your journey to run a franchise will be well on its way to getting started. 

Get acceptance to open the franchise. 

Now that your application has been successfully approved, background and financial checks will be performed. Once those have been verified, you will receive franchise approval. 

Krispy Kreme Franchise Alternatives

If, for whatever reason, a Krispy Kreme franchise does not work out the way you want it to, you could always consider opening a franchise under one of the following companies: 

  • Dunkin’ Donuts
  • Biggby Coffee
  • Duck Donuts
  • Honey Dew Donuts 
  • Scooter’s
  • PJ’s Coffee 

Final Words 

In this article, we took you through the process of opening a Krispy Kreme franchise. After walking you through the costs of opening a franchise, we walked you through the steps of opening a franchise as well, followed by a list of alternative donut franchise options that you could consider if Krispy Kreme doesn’t work out! 

Frequently Asked Questions 

Is a Krispy Kreme franchise a good investment? 

Yes, a Krispy Kreme franchise is a good investment. This is because of how loyal people are to the brand and how instantly recognizable the brand is! 

How much does a Krispy Kreme franchise owner make?

The average Krispy Kreme franchise owner can make anywhere from $50,000 to $70,000 per week! This means that their average annual income is around $3 million. 

How many Krispy Kreme locations are there in 2021?

There are around 360 Krispy Kreme locations in the United States in 2021. 

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.