Shipley Donuts Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$503,461 - $1,024,946
Franchise Fee
$40,000
Total US Locations
366
Business Summary
Shipley Do-Nuts operates retail shops that specialize in selling donuts, kolaches, coffee, specialty drinks, and other related products. These items are prepared on-site at locations typically found in high-traffic areas such as strip mall complexes, lifestyle centers, and free-standing buildings. Shipley Do-Nuts franchisees offer these products and services to the general public for both on-site and off-site consumption.
Corporate History
The Shipley Do-Nuts system began with licensing operators in 1957 through Shipley Do-Nut Flour and Supply Co., Inc. This licensing arrangement continued until 1987, when Shipley Franchise Company, a Texas S corporation, formally began offering Shipley Do-Nuts franchises. In December 2020, this predecessor company converted to Shipley Franchise Company LLC, a Delaware limited liability company, which is the current franchisor. Shipley Franchise Company LLC has been offering franchises since December 2020.
Financial Overview
Investment Range
$503,461 - $1,024,946
Franchise Fee (Low)
$40,000
Franchise Fee (High)
$40,000
Royalty %
5%
Marketing %
1%
Equipment Costs (Low)
$352,839
Equipment Costs (High)
$741,224
Working Capital
$32,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Shipley Franchise Company LLC's audited financial statements for the years ended December 31, 2024 and 2023 received an unqualified opinion from the independent auditor, indicating that the financial position is presented fairly in all material respects. The company reports no substantial doubt about its ability to continue as a going concern. It maintains healthy accounts receivable with minimal allowance for expected losses and has uninsured cash balances of $773,000 and $666,000 for 2024 and 2023 respectively.
Financing Details
Shipley Franchise Company LLC does not offer any direct or indirect financing to its franchisees. The company also does not guarantee any franchisee notes, leases, or other obligations.
Performance Metrics
Total US Locations
366
Franchised Units
355
Corporate Units
11
Avg Square Footage
1,700
Franchising Since
1987
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
8
Litigation Summary
Shipley Franchise Company LLC has been involved in several litigation cases, with eight cases noted. Seven of these cases are currently pending, all initiated by Shipley Franchise Company LLC and Shipley Do-Nut Flour and Supply Co LLC against former franchisees in Arkansas. These lawsuits, filed in 2022, assert claims for trademark infringement, unfair competition, deceptive trade practices, and breach of contract. The former franchisees have filed counterclaims, including allegations of wrongful termination and violations of the Arkansas Franchise Practices Act, which Shipley believes are without merit. Some of the franchisees' counterclaims have been dismissed, and one defendant has filed for Chapter 7 bankruptcy, pausing their case. Discovery is ongoing for many of these matters. Additionally, in 2024, Shipley Franchise Company LLC was named as a defendant in a civil action brought by a landlord in Georgia, alleging breach of contract due to a franchisee's lease non-compliance. Shipley has filed cross-claims against the franchisee and its affiliates in this case, and the franchisee has also filed counterclaims against Shipley. Separately, Shipley Franchise Company LLC initiated a lawsuit in 2024 against another franchisee for breach of the franchise agreement.
Bankruptcy History
Shipley Franchise Company LLC reports no bankruptcy history for itself or its executives.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, Shipley Do-Nuts franchisees must notify the franchisor in writing between six and nine months before the initial term expires. They must be in continuous compliance with all material obligations of the franchise agreement and other agreements, and be current on all payments owed to the franchisor, its affiliates, their landlord, and suppliers. Franchisees are required to refurbish, redesign, or remodel their shop to meet current brand standards and complete any mandatory training programs for themselves, their Operating Principal, and other designated staff at their own expense. A renewal fee, equivalent to 25% of the franchisor's then-current Initial Franchise Fee, must be paid. Franchisees must also be able to renew their existing lease or secure an approved new shop location without interrupting business, and sign the franchisor's then-current form of General Release. Finally, they must execute and return the new renewal franchise agreement within 15 to 25 days of receiving the renewal package.
Training & Support Program
Franchisor Assistance
Before opening, Shipley Franchise Company LLC assists with site approval and reviewing/approving lease or purchase agreements, as well as final plans and specifications for the shop. The franchisor specifies accounting formats, provides access to the confidential operating manual, furnishes product specifications, and sells certain required products. It also approves advertising materials and may provide pricing assistance. Initial training is provided for the Operating Principal and Shop Manager of the first shop at no charge, lasting approximately six weeks for management. Shipley Do-Nuts also offers between five and fifteen days of on-site opening training for the first shop. After opening, ongoing support includes field support services, supervision, and assistance through various communication methods. Franchisees can consult with headquarters for guidance. The franchisor approves advertising and promotional materials and continues to furnish product specifications and sell certain products. Shipley Franchise Company LLC may also develop and require attendance at additional training programs for a fee and may hold annual franchisee meetings, also for a fee.
Initial Training Hours
240
Training Location
Existing Shipley Do-Nuts Shop in Houston, Texas or other designated location
Ongoing Support
After opening, Shipley Do-Nuts franchisees receive ongoing field support, supervision, and assistance, which may include on-site visits, off-site sessions, and communication via telephone or electronic means. Franchisees can contact the franchisor's headquarters for consultation and guidance on shop operation and management. Shipley Do-Nuts may also develop additional mandatory training programs, requiring the franchisee, Operating Principal, and other designated staff to attend, typically at a cost of $2,000 per trainee per week plus expenses. Additionally, the franchisor may hold annual franchisee meetings (regional, national, or international) to provide further training, introduce new products, or discuss System changes. Attendance at these meetings may be mandatory, with an attendance fee of $1,500 per person, plus travel, lodging, meals, and wages.
Franchise Requirements
Ideal Candidate Profile
Shipley Franchise Company LLC seeks franchisees who will personally supervise their shop's operations or designate an Operating Principal with complete decision-making authority. If the franchisee is an individual, they must serve as the Operating Principal. If the franchisee is a business entity, an owner must be designated as the Operating Principal. This individual must have their background, experience, and credentials approved by the franchisor and must successfully complete the Initial Training Program. A Shop Manager, responsible for daily operations, is also required, who must also attend the Initial Training Program.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Hands-On
Territory Type
Limited
Territory Size Requirements
Shipley Do-Nuts grants franchisees a protected territory equal to a one-mile radius around their approved shop location. However, this territory is not exclusive, as Shipley Franchise Company LLC and its affiliates retain the right to operate other types of businesses, offer products through alternative distribution channels, and establish non-traditional locations, even within the franchisee's territory.
Staffing Notes
Shipley Franchise Company LLC requires franchisees to maintain a competent, conscientious, and trained staff in sufficient numbers to promptly, efficiently, and effectively serve customers. Franchisees must ensure their employees maintain good customer relations and refrain from profane, abusive, or threatening behavior. Specific job roles mentioned include an Operating Principal, who has complete decision-making authority and acts on the franchisee's behalf, and a Shop Manager, responsible for day-to-day operations. Both the Operating Principal and Shop Manager must complete the Initial Training Program. Franchisees are responsible for maintaining the required minimum number of certified trainers within their organization and for the overall training of their shop employees.