Want to Own a Dunkin' Donuts Franchise? Know This First

Tickers in this article: DNKN KKD SBUX THI

I saw on the website about some special incentives that are being offered. Can you talk about those?

Benson: Particularly as we go into newer markets, because there is a ramp-up period and it can take a little bit of time to get the full marketing voice that we would want, and you may be dealing with newer franchisees who have some learning to do in the business, it's not unusual for us to offer reductions in the royalties, the percent of the sales that are paid to us as the franchisor. We tend to discount those in some of our newer markets on a sliding scale.

Another thing that we offer is a support of a local marketing side. Dunkin' will provide franchisees some matching funds in order for them to build their business locally in certain markets, and certain newer markets.

Do you provide financing for franchisees?

Benson: We do not. We work very closely with franchisees in preparing business plans and educating their banks. We'll provide banks information necessary for them to better understand the business and we do have some programs that we work with national lenders, but it's not a situation where anybody who comes into the system, Dunkin' is going to loan them the money to open the store. In fact, we've got fairly rigorous requirements for both liquidity and net worth that are one of the preliminary requirements that we look at when someone would reach out to the brand. That varies based on size.

We've set those standards to such a level that when they come in and they prove to us that they've got that much liquidity and net worth, it should be sufficient to be able to go to a local lender or even one of our national lenders, if necessary, and get the financing.

How is the recruiting going in California? Can you share any anecdotes on who is looking to buy or about the demand in general?

Benson: The demand is huge. We started a major franchising push back in 2006 and although we were not franchising in a lot of markets in the country, we did allow people to express interest and to kind of get on the waiting list, if you will. When the market would open, we checked with those people and see if they were still interested. California had always been the market with the longest line, if you will, since we started building that list. Now, that doesn't mean they had three dollars to their name, but there were people that had reached out and had said, 'Hey, I'd be interested in knowing more about this opportunity when you guys decide to come.'