Dunn Brothers Coffee Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$539,600 - $808,960
Franchise Fee
$35,000
Total US Locations
52
Business Summary
DUNN BROTHERS COFFEE® operates branded shops that specialize in coffee roasted daily using state-of-the-art micro-roasting techniques. The shops also sell fresh bakery items, including breads, pastries, breakfast and lunch sandwiches, wraps, desserts, and other similar food and beverages. Many locations feature a drive-thru, and services include eat-in, take-out, and delivery options for customers. Franchisees may also sell certain products wholesale to approved retail accounts.
Corporate History
Dunn Bros Franchising, LLC was formed as a Delaware limited liability company on June 6, 2022. It is a wholly-owned subsidiary of Dunn Bros Parent, LLC, which is ultimately owned by Gala Family, LP. The current franchisor entity began offering franchises for DUNN BROTHERS COFFEE® shops on November 2, 2022. However, the DUNN BROTHERS COFFEE® brand has a longer history, as the predecessor company, Dunn Bros Coffee Franchising, Inc., sold franchises for shops from April 2001 until April 30, 2022. In June 2022, GCP DBC, an affiliate, acquired substantially all assets of the franchise system from the predecessor, and these assets, including existing franchise agreements, were then assigned to Dunn Bros Franchising, LLC on December 31, 2022. The current franchisor's sole business is offering and selling franchises for DUNN BROTHERS COFFEE® shops and managing the franchise system. Its affiliates also operate some shops.
Financial Overview
Investment Range
$539,600 - $808,960
Franchise Fee (Low)
$35,000
Franchise Fee (High)
$40,000
Royalty %
5%
Marketing %
3%
Equipment Costs (Low)
$439,100
Equipment Costs (High)
$619,860
Working Capital
$34,250
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The financial statements for Dunn Bros Franchising, LLC show a net loss of $491,796 for the year ended December 31, 2023, compared to a net income of $25,721 for the period from June 9, 2022, to December 31, 2022. As of December 31, 2023, the company has negative working capital, with current assets of $434,664 and current liabilities of $572,822, resulting in a deficit of $138,158. The advertising fund also shows a negative accumulated balance, indicating that marketing expenses exceeded contributions. Despite these financial indicators, the independent auditors issued an unqualified opinion, stating that the financial statements present fairly, in all material respects, the financial position of Dunn Bros Franchising, LLC. The auditors did not express substantial doubt about the company's ability to continue as a going concern.
Financing Details
DUNN BROTHERS COFFEE® does not offer any direct or indirect financing to its franchisees. The franchisor also does not guarantee any loans, leases, or other obligations for its franchisees, nor does it receive any payments or consideration for placing financing.
Performance Metrics
Total US Locations
52
Franchised Units
49
Corporate Units
3
Avg Square Footage
1,700
Franchising Since
2001
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
DUNN BROTHERS COFFEE® has no litigation to report, as no litigation is required to be disclosed in Item 3 of its FDD.
Bankruptcy History
DUNN BROTHERS COFFEE® has no bankruptcy history to report, as no bankruptcies are required to be disclosed in Item 4 of its FDD.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their DUNN BROTHERS COFFEE® franchise, franchisees must notify the franchisor in writing between 6 months and 1 year before the current term ends. They must be in substantial compliance with the franchise agreement, not having received more than five default notices during the term or more than two in a single 12-month period. Franchisees and their owners must meet the franchisor's current managerial, financial, and business standards for new and renewing franchises and provide proof of their ability to maintain possession of their shop's approved location throughout the successor term. Any additional training requirements must be satisfied, and a successor franchise fee, equal to 25% of the then-current initial franchise fee for a new shop (increasing by $5,000 if documents and fees are not submitted before the current agreement expires), must be paid. Franchisees must also complete all required modernization and reimaging of the shop premises at their own cost within 90 days of signing the successor agreement. Finally, they must execute the franchisor's then-current form of franchise agreement (which may have materially different terms) and a general release of claims against the franchisor and its related parties.
Training & Support Program
Franchisor Assistance
DUNN BROTHERS COFFEE® provides franchisees with various forms of support. Before a shop opens, the franchisor reviews and approves the proposed lease, space plans, and drawings. It offers initial training to the franchisee's Managing Owner and Designated Manager, and reviews and approves the grand opening marketing plan. Franchisees also receive a list of approved operating assets and designated suppliers, and access to the confidential Operations Manual. During operation, ongoing support includes continued access to the Operations Manual and System Standards, an updated list of authorized vendors, and initial training for any replacement Managing Owner or Designated Manager. The franchisor may also provide guidance on maximum and minimum prices for products and services.
Initial Training Hours
280
Training Location
Minneapolis, Minnesota and franchisee's shop
Ongoing Support
DUNN BROTHERS COFFEE® provides ongoing support through continued access to its confidential Operations Manual and System Standards, as well as an updated list of authorized vendors and suppliers. Franchisees must contribute 3% of their gross sales to a National Marketing Fund, which is used for market research, advertising, public relations, customer service training, loyalty programs, and mobile payment platforms. The franchisor or its designee administers this fund. Additionally, franchisees are required to spend 1% of their monthly gross sales on local marketing activities approved by the franchisor. If a franchisee fails to meet this local spending requirement, the difference must be paid to the National Marketing Fund. The franchisor has established a Franchise Advisory Committee to advise on system strategies, including marketing. Franchisees also receive software and technology support, including amounts paid on their behalf to third-party providers for components of the Computer System, with an estimated annual cost of $3,600 to $6,480 for maintenance, updates, and support contracts. Initial training is also provided for replacement Managing Owners or Designated Managers, for which a fee of $500 per day per trainer may apply.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Supervisory
Territory Type
Limited
Staffing Notes
DUNN BROTHERS COFFEE® requires that each shop operate under the full-time supervision and management of either the franchisee's approved Managing Owner or a Designated Manager. While the Managing Owner does not necessarily have to be involved in day-to-day operations, the Designated Manager must complete initial training and, if not an owner, sign a confidentiality and non-competition agreement. Franchisees are solely responsible for all hiring, scheduling, supervision, compensation, and discipline of their employees, without franchisor influence. They must also implement a training program for their staff that complies with franchisor requirements. A minimum of two trained coffee roasters must be on staff at all times.