How to Open a Krispy Kreme Franchise

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Krispy Kreme was founded in 1937 and started out by selling doughnuts to grocery stores. However, they soon began selling these doughnuts directly to passersby outside their Winston-Salem bakery who were attracted by the irresistible aroma wafting out of their windows. They have grown into a large American company and are most famous today for their Hot Light doughnuts.

Krispy Kreme has evolved over the years to adopt a franchising model, and they now let businesses that have both ambition and capital open their own Krispy Kreme store. Having a Krispy Kreme franchise is a lucrative business. However, the Krispy Kreme cost for starting a franchise is expensive and involves a stringent application process that ensures only the most capable and serious candidates are approved. Needless to say, not everyone who applies gets approved. If you do get approved, you should be ready to share much of the profits with the company. You will also bear much of the financial risk.

Krispy Kreme Franchise Requirements

There are some requirements for accredited investors that should be met before you can apply for a Krispy Kreme franchise.

  • Costs to open your franchise range from $275,000 to $1,911,250.
  • You are also required to have $300,000 in liquid assets.
  • The franchise fee is $25,000.
  • Your net worth must be $2 million.

Look for Franchise Opportunities Near You

For this, you will have to contact Krispy Kreme through the “Contact Us” section on their website. There, you will find their email address as well as their phone number. You can then express your interest in becoming a Krispy Kreme franchisee and find out whether there are any opportunities to do so in your area. Alternatively, you can visit their headquarters in Winston-Salem, North Carolina and communicate with them directly. As long as you meet the financial requirements, and there are opportunities in the locality in which you intend to open a franchise, you should be able to start the process.

Prepare a Proposal

You now need to prepare two things: a business plan and a proposal. They don’t need to be excessively long. The important requirement for the business plan is that it reviews the market conditions in the area where you wish to open a Krispy Kreme store. You need to have detailed estimates for the leases and equipment necessary as well as details on the experience you are bringing to the table. You can add supporting documentation regarding your financial capability. You are now ready to meet a representative of the company and discuss the business plan, including key points for the development of the franchise.

Work to Develop the Franchise Plan

You should have liquid assets of at least $300,000 before you can be granted the right to a Krispy Kreme franchise. Additionally, you should expect to pay up to 2.75 million to develop the franchise in full, including store development, equipment costs, training costs, initial inventory and so on. There is also a nonrefundable fee that buys you the rights to a specific location for 15 years. Once the 15 years are over, you can renew the contract for another 15 years based on the terms that will be existent at that time. Remember that you’re not going to get exclusive rights to the entire territory within which you are located. You could potentially be in competition with another Krispy Kreme franchise or even Krispy Kreme’s company-owned stores.

You will now be ready to develop the store. You will start by obtaining a lease on the location where you will build the store, and once your application for the franchise has been approved, you can develop the store according to Krispy Kreme’s specifications.

You can expect the Krispy Kreme Corporation to partner with your new franchise. They will take a substantial percentage of ownership in your franchise, and as a franchisee, you will also offer the corporation 4.5 percent of your net sales revenue as a royalty and up to an additional 2 percent for costs related to public relations, known as the brand fund.

References

About the Author

Nicky is a business writer with nearly two decades of hands-on and publishing experience. She's been published in several business publications, including The Employment Times and Business Idea Factory. She also studied business in college.

Photo Credits

  • Joe Raedle/Getty Images News/Getty Images