Dairy Queen

The franchise fee is $25,000 — and uniquely, it is refundable if your restaurant isn't open within the term of the development agreement. That's a meaningful buyer protection; most QSR franchisors keep the franchise fee regardless of what happens to the project. The initial training fee is $10,800 for three trainees, plus $600 for ServSafe courses and $600 for the Management Training Readiness Assessment (MTRA).

The total investment range of $1.65M to $2.78M is primarily driven by construction ($880K–$1.54M) and equipment ($605K–$770K). Those equipment costs are high relative to revenue — they reflect DQ's dual-mission format (frozen treats plus grill-and-chill hot food), which requires both soft-serve equipment and a full kitchen line. This is genuinely more capital-intensive per revenue dollar than single-format QSR.

Ongoing fees are notably low: 4% royalty on gross sales. The advertising fund rate wasn't captured with a specific percentage — buyers should confirm this, but industry comps suggest it's in the 1–3% range for regional ADQ sub-licensees. Transfer fee is $6,000, renewal is $4,000. These are among the lowest exit/renewal costs in the comparison set.

DQ Montana/North Dakota discloses Item 19 data based on 40 franchised restaurants. Average annual gross revenue is $1,615,815; median is $1,534,470. For a regional sub-franchise covering just two states, a 40-unit sample captures a large portion of the operating base.

At median revenue of $1.53M and a 4% royalty (conservatively assuming 5% total fee burden including ad fund), you're paying approximately $76,700 per year to the franchisor — one of the lowest fee extractions in this comparison set. The challenge is the investment-to-revenue ratio: at $1.65M minimum investment and $1.53M median revenue, you're near 1:1 investment-to-annual-revenue. QSR benchmarks suggest 12–18% operating margin on this revenue level, giving $184K–$276K in operating income before debt service. Payback at the midpoint investment ($2.2M) runs 8–12 years.

The 74-unit system size means your Item 19 data is limited to Montana and North Dakota performance — rural and small-market performance patterns that don't translate to urban or Sunbelt markets. Buyers outside these states should be cautious about applying these figures to other Dairy Queen FDD filings (American Dairy Queen has separate national FDDs with much larger sample sizes).

DQ Montana/North Dakota has grown from 71 units in 2022 to 74 in 2024 — three net new locations in two years with zero closures in the most recent year. That's genuinely clean performance: a small system, but one where every unit stays open.

The absence of closures reflects two things: Dairy Queen's format durability (the soft-serve treat business has proven recession-resistant across economic cycles) and the limited competitive landscape in Montana and North Dakota, where the brand faces fewer national competitors than in coastal markets.

Dairy Queen globally is owned by Berkshire Hathaway, which acquired ADQ in 1998. The Berkshire ownership provides deep financial stability and a long-term, non-PE-driven ownership structure. This is meaningful context: franchisors under private equity pressure often accelerate franchise sales, push fee increases, and pursue system changes that harm franchisees. Berkshire's ownership model is the opposite — slow and steady, with no artificial growth targets.

The regional sub-franchise structure means you're dealing with DQ Montana/North Dakota, Inc. as your direct franchisor — not American Dairy Queen Corporation. Your rights, territory protections, and renewal terms are with this regional entity. Buyers should understand what happens to their franchise if DQ Montana/North Dakota is acquired, dissolved, or restructured. The ADQ parent company's oversight of sub-franchise agreements should be clarified.

The modernization requirement ('Modernization Expenses — as required') is a standard FDD placeholder that can translate to significant capital demands. Dairy Queen has been rolling out updated restaurant designs, digital ordering integration, and new equipment requirements across the system. Buyers should ask: what renovation requirements are currently active, and what's the projected timeline for the next mandatory remodel cycle? Given the $605K–$770K equipment cost at buildout, a major equipment refresh 10 years in could require $200K–$400K.

The small system size (74 units) means the advertising fund pool is modest. Regional marketing effectiveness depends on how efficiently that pool is deployed — and in two-state territory with scattered population centers, national advertising efficiency is limited. Franchisees in this system are funding brand presence in markets where the dollars stretch differently than a 1,000-unit national system.