Dairy Queen Franchise Review

Dairy Queen, New Brighton, MN
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Dairy Queen, often referred to as “DQ”, is a chain of soft-serve ice cream and fast food restaurants that began operating its first store in Joliet, Illinois in 1940. The Dairy Queen System has developed over 6,600 locations in the United States and Canada, including over 2,200 locations in 22 countries. The company has retained two locations as corporate stores. It has seen slow but steady growth in the number of total locations over the past eight years, with over 300 units added in the past three years.

Background and Benefits

John Fremont McCullough was born in Douds, Iowa, in 1871, and married in 1893 after attended college in Oswego, N.Y. before ultimately moving to Davenport, Iowa in 1911. In 1938, McCullough is credited with developing the first soft-serve formula used by the brand, along with his son Bradley. McCullough is also credited with originating the Dairy Queen concept and retiring in 1950 with “4000 stands in operation.”

According to the DQ website, the megabrand's story begins with a 10-cent sale of this “then unnamed product” in 1938, in Kankakee, Illinois. A friend of McCullough’s by the name of Sherb Noble agreed to sell the new frozen dairy product in his ice-cream shop. As the legend goes, Noble went on to sell over 1600 servings in the next two hours. Not the kind of man to pass up a good opportunity, Mr. Noble managed to gain operation of the first Dairy Queen Restaurant, which opened for business on June 22, 1940.

From there, the brand used franchising to expand rapidly and ultimately achieve a global reach. Dairy Queen was an early pioneer in franchising, growing from 10 locations in 1941 to 100 locations in 1947, to almost 1,500 locations by 1950, and over 2,600 locations by 1955. In 1998, International Dairy Queen, Inc.

became a wholly-owned subsidiary of Berkshire Hathaway, Inc., and it currently owns over 280 Orange Julius stores and 26 Karmelkorn Shoppes.

How Much Does a Dairy Queen Franchise Cost?

If you want to purchase a DQ franchise, you will have to first identify the concept in which you are interested. The choices are DQ Grill & Chill, or the DQ Orange Julius Treat Center. Choose your location area and then submit a request. Dairy Queen requires a franchisee to have $400,000 in liquid assets with $300,000 as cash equity, and a minimum net worth of $750,000. It will cost $895,000 to $1,195,000 for a 2,048 sq. ft. building that seats 48, and $1,080,000 to $1,370,000 for a 2,709 sq. ft. building that seats 78. Check out the website to see available states.

What We Like

With all the focus on fun and delicious frozen treats, it seems fitting that Dairy Queen supports the Children's Miracle Network and has done so since 1984. To date, DQ has raised more than $44 million for the cause. Dairy Queen also provides financial support to various “Minnesota-based 501(C)3 organizations” that exist to help challenged families suffering from sickness, disabilities, and divorce. DQ also offers no-sugar-added treats for diet conscious patrons who do not want to be left out of the fun.

These include the DQ Fudge Bar, the DQ Vanilla Orange Bar, and the Chocolate Dilly Bar.

Pros

  • Many Choices - DQ is all about choices, offering two franchise options with varying building sizes and types.

Cons

  • Significant Investment - Mega Brand franchises are getting harder to get. DQ may be one of the best choices in franchising, but it is also one of the most expensive.

Dairy Queen Franchise Fast Facts

  • Business Established: 1940
  • Franchising Since: 1944
  • Franchise Fee: $35,000-Grill & Chill/ $25,000-Orange Julius
  • Total Investment: $895,000 to 1,370,000 Grill & Chill/$290,000 to $635,000-Orange Julius
  • Royalty: 5% - Grill & Chill/ 4% Orange Julius
  • Ad Fund: 6% - Grill & Chill/ 3% Orange Julius