Dunn Brothers Coffee Franchise Costs, Fees & Owner Salary (2023)

INVESTMENT

$536,000

-

$809,000

LOCATIONS

56

Emily

Updated

April 11, 2024

Is

Dunn Brothers Coffee

a franchise?

Yes,
Dunn Brothers Coffee
currently
accepts
franchise
applications

Dunn Brothers Coffee was founded in 1987 by Ed and Dan Dunn, who brought their roastery experiences from Portland, Oregon, to the Twin Cities with a mission to roast in small batches, serve the freshest brew possible, and foster a sense of community around their coffee shops. The company is headquartered in the Twin Cities, Minnesota, which remains central to its identity and operations.

From its inception, Dunn Brothers Coffee differentiated itself by roasting coffee in-store, ensuring that the coffee served is exceptionally fresh, a practice that continues to distinguish it from competitors.The franchise model for Dunn Brothers Coffee, although not explicitly stated in the provided sources, likely began sometime after the original establishment in 1987, as part of the company's expansion strategy.

This model has allowed for the growth of the brand beyond its initial location, with a focus on maintaining the quality and community-focused ethos that the Dunn brothers originally envisioned.Dunn Brothers Coffee places a strong emphasis on quality and community, with the majority of its shops being independently owned by local community members.

This structure not only supports local entrepreneurship but also ensures that each Dunn Brothers Coffee shop retains a unique character that reflects its local environment. The company's commitment to the community is further evidenced by its engagement in local initiatives and partnerships, aiming to give back to the communities that have supported the brand since its early days.

How many

Dunn Brothers Coffee

franchises

are there?

In 2022, there were
56
outlets in
the United
States, of which
53
are franchises, and
3
are corporate-owned.

What are the

Dunn Brothers Coffee

franchise

fees?

Advertising fee

4.00%

Initial Franchise Fee

The initial franchise fee is $40,000, paid in a lump sum when signing the Franchise Agreement.

Launch Fee

A launch fee of $10,000 is required, paid in a lump sum at the signing of the Franchise Agreement.

Transfer Fee

For transferring the franchise or development rights, the fee is 50% of the then-current or last initial franchise fee for a new Shop or $5,000 for transferring development rights.

Management Fees

In cases where the franchisor assumes management of the shop, the management fee is 10% of Gross Sales plus costs and expenses.

Advertising Fee

The advertising fee is up to 3% of the franchisee's gross sales per year. This fee is recognized as revenue when the food items are delivered to or carried out by customers, and payments are generally due and collected within the same timeframe​​.

Royalty Fee

The royalty fee is up to 5% of franchisee's gross sales per year. This fee is recognized as revenue by the franchisor when the food items are delivered to or carried out by customers. Payments for these royalties are generally due and collected within seven days of the month-end​​.

Note: The fees presented here can be found in the Item 5 of the Franchise Disclosure Document. For a complete list of all the fees borne by the franchisee, please consult the Franchise Disclosure Document.

How much does

it cost

to start a

Dunn Brothers Coffee

franchise?

It costs between
$536,000
and
$809,000
to start a
Dunn Brothers Coffee
franchise.
Type of Expenditure Amount
Initial Franchise Fee $40,000
Launch Fee $10,000
Architecture Design, Approval and Permit Fees $5,000 to $26,000
Leasehold Improvements $187,500 to $300,200
Sewer and Water Access Charge $0 to $10,000
Prepaid Rent, Deposit, Business Licenses and Attorney Fees $5,000 to $16,000
Furniture, Fixtures and Equipment $224,500 to $292,560
Roaster and Associated Leasehold Improvements for Venting $27,100
Travel Expenses While Training $500 to $4,400
Opening Inventory $9,000 to $12,000
Grand Opening Expenses $10,000
Insurance Premiums $2,800 to $6,700
Additional Funds - 3 Months $14,500 to $54,000
Total Estimated Initial Investment $535,900 to $808,960

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Does

Dunn Brothers Coffee

provide

training

to its

franchisees?

Yes,
Dunn Brothers Coffee
provides
training

The franchisor provides comprehensive training for franchisees, which includes:

  • Initial Training Program: Before the opening of the shop, the franchisee (or its Managing Owner) and the Designated Manager are required to attend and successfully complete the franchisor's training program. This program is held at designated places by the franchisor and must be completed to the franchisor's satisfaction. The franchisor does not bear any expenses for representatives attending this training program.
  • Mandatory Completion: Management of the shop on a regular basis must be done by individuals who have successfully completed the franchisor's training program. In certain cases, with franchisor's approval, a person who has not completed the training program may manage the shop, provided they have other existing shops as of the Effective Date of the agreement. However, the franchisor reserves the right to require such individuals to successfully complete the training program.
  • Additional Training: The franchisor may require additional training, at the franchisee's expense, if it determines that any member of the franchisee's staff is not appropriately trained. This could include training from third parties in areas such as computer operations or accounting, which the franchisee would also be required to attend at their own cost.
  • Meetings and Conferences: The franchisee or its Managing Owner and the Shop's Designated Manager must attend all meetings and conferences held by the franchisor for owners and employees of Shops, at the franchisee's expense, including applicable tuition.
  • Training Program Details: The initial training program typically involves 10 to 15 days of operational training at the franchisor's corporate support center or another location determined by the franchisor. The franchisor has the discretion to lengthen, shorten, or restructure the contents of this program and offers it on an as-needed basis throughout the year.

Does

Dunn Brothers Coffee

provides

territory

protection?

The franchisor offers designated territories to franchisees, with the size and scope varying based on factors such as location, population density, market demographics, and economic conditions. Within these territories, franchisees have the right to operate their shop without direct competition from the franchisor or new franchised shops in the same area, as long as they are not in default under the Franchise Agreement.

However, this territorial protection does not extend to captive market locations within the territory, such as airports, malls, or college campuses, where the franchisor reserves the right to operate or allow others to operate shops.

Furthermore, the franchisor maintains the right to operate and grant others the permission to operate different types of coffee shops or businesses that may offer similar products and services under different trademarks, both within and outside the franchisee's designated territory.

This means that while franchisees have some level of territorial protection, it does not completely exclude the possibility of competition from the franchisor through different brands or in specific types of locations within their territory.

Can a

Dunn Brothers Coffee

franchise

be run as

a passive

investment?

The franchisor expects franchisees to be actively involved in the day-to-day operations and management of their franchises. Franchisees are obligated to actively and continuously supervise their shop, ensuring operations adhere to the standards and requirements set by the franchisor. This includes operating the shop at the authorized location only and offering and selling approved products and services​​.

Franchisees, or their designated managers, are responsible for the overall management of the shop, including hiring, training, and supervising staff. Franchisees are expected to have at least two trained coffee roasters on staff at all times​​​​.

The franchisee must follow the franchisor's specified standards, procedures, techniques, and specifications as described in the Operations Manual. This includes maintaining the shop's appearance, equipment, and ensuring products meet the franchisor's quality standards​​​​.

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