DQ Grill & Chill Franchise

Financing Details

Dairy Queen generally does not offer direct financing to its franchisees. This means that American Dairy Queen Corporation and its affiliates will not finance any part of the initial franchise fee or provide loans for site acquisition, equipment, or leasehold improvements. However, Dairy Queen may help franchisees by connecting them with third-party finance companies or banks that offer financing programs. These arrangements typically involve American Dairy Queen Corporation merely facilitating contact with financing sources, rather than setting the loan amounts, terms, interest rates, or durations. Dairy Queen does not receive any payments for these referrals. Franchisees are solely responsible for securing their own financing through these external sources.

Litigation Summary

Dairy Queen has been involved in a total of eight litigation cases disclosed in Item 3. Four cases are currently pending, all filed between October 2021 and February 2025. These pending cases include disputes with franchisees over territory rights and the requirement to sign new agreements, allegations of zero-tolerance public health and safety violations (such as the use of rerun soft-serve mix or unapproved supplies) leading to termination attempts, and claims of breach of contract related to transfer processes. Four cases were concluded between 2017 and 2020, involving issues such as alleged encroachment, franchisee defaults, and marketing fund disputes, all of which were resolved through settlement agreements.

Renewal Conditions

To renew their DQ Treat franchise, franchisees must notify American Dairy Queen Corporation in writing 3 to 6 months before their agreement expires. They must be in good standing, meaning they have paid all their fees on time and have no history of significant violations of the franchise agreement. Franchisees also need to ensure their restaurant facility has been modernized according to current standards and that they have the right to occupy the premises for the entire renewal period. A non-refundable renewal fee, calculated as $1,000 per year of the renewal term up to a maximum of $10,000, must be paid. Finally, the franchisee and all principal owners must sign a general legal release, and American Dairy Queen Corporation must approve the restaurant's location for the renewed term. Franchisees should be aware that the new renewal agreement may have different terms and potentially higher fees.

Staffing Notes

For a DQ Treat franchise, American Dairy Queen Corporation requires that the restaurant be operated under active and continuous supervision. Each first-time franchisee must have a Designated Manager and one Assistant Manager who have completed American Dairy Queen Corporation's required training before starting their management duties. For franchisees opening additional locations, only a Designated Manager is required. These managers are expected to dedicate their full time and attention to the day-to-day operations of the restaurant. Franchisees are solely responsible for hiring all other restaurant employees, determining their terms of employment, compensation, scheduling, benefits, and disciplinary actions, without influence from American Dairy Queen Corporation. Franchisees must ensure all employees wear approved uniforms and implement an employee training program that meets American Dairy Queen Corporation's standards. The overall staff must be sufficient to operate the restaurant in compliance with the company's standards at all times.