Review of the Dippin Dots Franchise Opp and Startup Costs

It’s the ice cream of the future! It’s also one of the top performing dessert-related franchises right now as Dippin’ Dots is preferred almost 2 to 1 in several key purchasing demographics compared to a traditional ice cream franchise. If you’re in your 30′s, then you’ve grown up with Dippin’ Dots around somewhere during your childhood and the idea of running an attractive storefront or kiosk could be both profitable and bring back great memories!

So what is Dippin’ Dots? Founded by Curt Jones, who is a research biotechnologist, the product that you are selling is really beaded ice cream. It’s been cryogenically frozen and because of the flash-freezing process, the ice cream turns into the beads. What makes them unique, however, is that they can still melt.

How Much Does It Cost To Start a Dippin’ Dots Franchise?

The initial franchise fee to join Dippin’ Dots is $15,000. Because of the low franchise fee, it is common for someone to own more than one franchise. 90% of the owners, in fact, have 2 or more franchises in operation. The one issue that some owners may face is that absentee ownership is absolutely not allowed. Every franchisee must be an owner-operator and be directly involved in the day-to-day operations of the storefront.

Beyond the franchise fee, however, it is difficult to judge what the actual cost of a franchise would be because each application is reviewed on an individualized basis from the organization’s Paducah, KY, headquarters. The royalties owed are variable, as are the costs for marketing and development. Based on released averages, however, you can expect to pay a 4% royalty on your gross sales and a 2% royalty toward marketing and advertising on a national level. You’ll also pay a maximum of a 2% toward a regional advertising fund as well.

You do need to have a net worth of at least $250,000 and $80,000 of that net worth must be in liquid capital. The total investment required to start a franchise averages out to about $160,000, but could be as high as $250,000.

How Much Training Is Available For New Franchisees?

Unlike other franchise opportunities, there aren’t many training opportunities with a Dippin’ Dots franchise. You’ll receive two to five days of direct training at the organization’s headquarters if you upon becoming a franchisee, as well as at least 1 day of training at your storefront. The organization will assist with your grand opening as well, help you make sure everything runs smoothly, and then let you run your business based on the variable agreement that you signed.

In some agreements, Dippin’ Dots has made it mandatory to pass a written test that covers managerial skills and the basics of how to run a business. This occurs after the training period has concluded and if you fail to pass the test, it is considered grounds for the organization to terminate your franchise agreement, keeping your franchise fee in the process.

Are There Licensee Requirements As Well?

One of the unique aspects of the franchise agreement that is offered by Dippin’ Dots is that the organization retains control over the products that you sell. You’re required to carry all products that are currently offered by the organization and introduce new products as the organization introduces them. A franchised business must also remain open for a certain amount of time every day and must meet the open hour quotas weekly in order to maintain the franchise agreement.

A franchise agreement is valid for 5 years. Renewals with Dippin’ Dots are not unlimited as business owners can renew for two additional 5 year periods before the franchise agreement is terminated. You’ll be given a protected territory and exclusive selling rights, although today the most common place to find a Dippin’ Dots franchise is at a public venue, like a sports stadium. This territory given is generally about a 5 mile radius in total, but in large metropolitan areas this territory could be smaller.

Is the Dippin’ Dots Franchise Viable?

In 2007, there were over 450 Dippin’ Dots franchises worldwide. Today that number is just above 100 franchise locations. Part of this is likely due to the upgrades that the organization has recently undergone within the last decade to improve their image and product lines. Franchisees are responsible under the agreement for the changes in logo and inventory investment for new products, and with consistent changes comes added costs that must be paid by the franchisee. Over time that can add up to a lot of forced cost!

Because of the agreement that a franchisee must sell certain products, some franchises may also be put into a difficult situation. For a Dippin’ Dots location in a mall, for example, you may not be allowed to sell coffee because of an agreement that an another organization has that gives them exclusive product rights for selling on that territory. That means you can’t sell the product or you’ll risk losing your lease… but if you don’t sell the product, you’ll risk losing your franchise. That would be a difficult situation!

Is a Dippin’ Dots Franchise Right For You?

If you have a local public venue that receives high traffic and is focused on public entertainment in some way, then you’ve got a good chance to start a Dippin’ Dots franchise. It may be more of a seasonal franchise than other businesses, but the product is still unique and still provides joy to those who enjoy a spoonful of these colorful dots. If carefully managed in all aspects, there could be the potential for great success with this franchise!

If you meet the net worth and cash liquidity requirements and have management experience in the past, then you may wish to speak with Dippin’ Dots about a potential opportunity. Applying for the franchise is free – just make sure you read the entire agreement in its entirety before signing anything or handing over a check for the franchise fee.

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