Dunkin' doesn't own a single one of its own locations — and that's good right now
America runs on Dunkin'... but Dunkin' runs on a 100% franchised biz model — that's coming in pretty sweet during the corona-conomy. Dunkin's 21K stores are 100% owned by independent people. Dunkin' sells the rights to use its brand and open up shop — as long as the Boston Kremes are kremy and the Caramel Iced Coffees are extra-syrupy, no one will care who owns it. Dunkin' cashes in on franchises in 3 way:
- Selling rights to operate the brand: Dunkin' gets to expand its empire, while the owner gets to cash in on Dunkin's brand fame, recipes and loyal customers (for a "franchise fee").
- Selling stuff to operate the brand: The franchise owner is obligated to purchase Dunkies essentials — like ingredients, uniforms, and plastic furniture — straight from corporate.
- Share of sales: Owners must pay Dunkin a percentage of the franchise's sales and an upfront fee for the privilege.
Franchising is the democratization of fast-food fortunes... By paying regular fees to franchisors like Domino's or McDonald's, entrepreneurial franchisees get a share of Big Fast Food's profits. You've heard of landlords — Dunkin' is the franchisee's brand-lord.
Franchising means lower risk, but also lower potential reward... for corporate. The franchise owner (not Dunkin') pays for the building, the employees, and all the biz expenses — so it's this franchisee who loses out most when the biz is closed. Dunkin' has limited investment, so the only thing it's losing when sales are down is a cut of those sales. But franchise owners reap a greater percentage of profits when business booms.