Independent owners operate 81 Donut Connection stores in 14 states. The owners pay no franchise royalty fees, but they do pay a percentage of their purchases through a buying cooperative to Donut Connection Cooperative Corp., the franchising agent, to cover its operating costs.
Donut Connection provides no financing for its members. Store owners must purchase five shares of capital stock in the company at a total value of $500 and purchase signage for their stores at a cost of between $1,770 and $17,893. New owners pay $3,000 for training if they have at least one year of experience in the business, $10,000 if they have less than a years experience. They contribute a fee based on their purchases through the cooperative to cover corporate overhead and $500 a year for advertising materials.
The primary targets of Donut Connection are existing independent shops and franchised operations such as Dunkin Donuts. Richard Beazley, general manager, makes the rounds in markets he visits to meet with prospective new owners, explaining how Donut Connection works.
Beazley expects 100 stores in the Donut Connection group by the end of the year, and the company has attracted the attention of a developer who plans 20 locations in Spain. With Dunkin Donuts operating 4,700 units in 43 states and 20 countries and planning to open another 1,000 over the next three years, the market for such stores is considerable.