DUNN BROTHERS COFFEE

Item 7 lays out the financial entry: initial investment spans $455,600 to $798,960, including a $40,000 franchise fee, build-out for drive-thru shops, and equipment for daily roasting. Ongoing fees include 5% royalty (escalating to 6% for non-compliance), 3% brand/ad fund, and $300-$540 monthly tech fees—positioning total ongoing costs around 8-9% of sales. Item 19 provides a clearer earnings picture: average gross revenue hit $600,081 across units, with median at $569,993, suggesting solid top-line potential from coffee, sandwiches, and delivery in high-traffic spots. However, without disclosed expenses or profits, operators must factor in labor, food costs (likely 30-35% in coffee), and rent to gauge true viability—potentially netting 10-15% EBITDA if managed tightly.

System health metrics from Items 20 and 21 reveal strain: franchise locations dropped 10% from 49 to 44 in 2024, with 4 corporate stores and only 2 projected new units signaling limited expansion appetite. Terminations totaled 4 amid 3 transfers, hinting at operator churn, while 37 SBA loans averaging $306,146 carried a concerning 16.2% default rate—far above industry norms and underscoring financing risks in a small system franchising since 2001. For investors eyeing coffee's premium niche, the revenue draw is real, but shrinkage and defaults demand scrutiny of local market fit and support from Plano HQ before committing.