How Much Does a DQ Treat Franchise Cost?

A new U.S. DQ Treat store has two distinct 2026 investment ranges: $548,700 to $1,049,350 for a Captive-venue location and $848,700 to $1,595,350 for a Street location. These are American Dairy Queen Corporation’s Item 7 estimates for a single store, not the amount of cash a lender will necessarily require and not the same as the $25,000 Initial Franchise Fee.

The disclosed total answers what the franchisor estimates is needed to establish one store under stated assumptions. It does not answer how much must be held in a bank account on the day of application. Part of the project may be financed, some payments may be refundable under third-party contracts, and local lenders may demand equity, collateral, or guarantees. A sound reading therefore keeps four questions separate: the full project range, the amount paid directly to the franchisor, the cash needed before opening, and the reserves needed after opening. Combining those concepts can either overstate the immediate cash need or understate the full obligation.

That distinction matters during planning because invoices do not arrive at one moment. Early commitments may be relatively small but nonrefundable, while later construction and supplier invoices can require much larger draws. A lender may reimburse approved costs after documentation rather than advance every dollar before work begins. The applicant therefore needs a month-by-month sources-and-uses schedule that shows deposits, expected loan draws, owner contributions, and reserves without changing the official total. This is a cash-flow timing exercise, not a replacement estimate, and it should reconcile to executed contracts rather than assumptions borrowed from another restaurant concept.

Capital snapshot

The Street range is higher because ADQ assumes a larger store and substantially higher building, construction, leasehold-improvement, and equipment obligations. The disclosure describes a Captive-venue store as approximately 600–1,400 square feet, ordinarily leased inside a larger structure; a Street store is approximately 1,000–1,800 square feet and ordinarily owned. Source: 2026 disclosure, Item 7, pp. 20–21.

The overlap between the two ranges does not mean the formats are interchangeable. A smaller project can still land near the upper end because of labor, landlord requirements, site condition, code compliance, or supplier pricing. A larger project can fall below its maximum when the building and lease allocation are favorable. The correct comparison begins with the approved premises and the contract structure, then tests actual bids against the matching disclosure column. Selecting whichever endpoint appears cheaper without confirming the format would produce a misleading capital plan.

The endpoints should also not be converted into a midpoint and labeled ordinary. A midpoint would hide how the premises agreement allocates work between the tenant and landlord, whether a shell already exists, and which improvements must be replaced rather than reused. The practical use of the range is to test whether each signed quote remains inside the disclosed boundary and to identify which assumptions have changed. When a quote falls outside that boundary, the response is not to force it back into the table; it is to document the reason, update the funding plan, and determine whether approval or revised plans are required.

Item 7 includes the franchise fee, training, premises work, plans, equipment, inventories, deposits, professional fees, and three months of Additional Funds. It does not convert those categories into a “typical” budget; each low and high amount remains format-specific.

Premises, plans, and equipment

Equipment may be paid as a lump sum or with a financed balance; financing is not provided by ADQ.

Franchise, training, inventory, and working capital

Source for both tables: 2026 disclosure, Item 7, pp. 18–22. Additional Funds are already included in the official total and must not be added a second time.

The cash requirement develops in stages: the application deposit comes first, the remaining franchise fee follows approval, then training, design, construction, equipment, inventory, and working-capital payments occur before opening and during the first three operating months.

The sequence also creates commitment risk. A payment made before final site, lease, construction, or financing conditions are satisfied may be difficult to recover even when another payment is refundable. The buyer should map each invoice to the contract that controls it, identify cancellation terms, and note whether payment is due on signing, ordering, delivery, installation, completion, or opening. This prevents a refundable franchisor balance from being confused with nonrefundable architect, contractor, landlord, travel, or supplier expenditures. It also shows how a delay can increase carrying costs even when the underlying scope has not changed.

1. Application: $10,000 nonrefundable deposit. The first portion of the Initial Franchise Fee is due with the franchise application.
2. Approval: $15,000 balance. Item 7 states that the balance is due within 10 days after application approval; Item 5 ties it to ADQ’s approval and written consent letter.
3. Training and professional work. Training fees are paid before training; travel is paid as incurred; construction consultation is paid before consultation; plans and legal fees are paid as incurred.
4. Premises and equipment commitments. Buildout costs arise before opening. Equipment is usually paid when ordered, either in full or through a down payment with a financed balance obtained from a third party.
5. Opening and first three months. Deposits, licenses, Training Inventory, Opening Inventory, and the pre-opening portion of Additional Funds are paid before opening; the balance of Additional Funds is used as incurred during the initial operating period.

Sources: 2026 disclosure, Item 5, pp. 12–13; Item 7, pp. 18–22; Item 11, p. 37. ADQ states that a typical period from franchise-agreement acceptance to opening is approximately four to eight months, subject to financing, site, plans, permits, construction, and training.

The principal continuing charges are the 5% Continuing License Fee, the Sales Promotion Program Fee, lease-imposed marketing obligations, payment-processing and technology charges, and the Gift Card Program Fee. Percentage charges must be read with their exact FDD basis; they are not disclosed annual dollar amounts.

A percentage charge rises and falls with the contractually defined sales base. The disclosure does not provide an annual dollar forecast, and no annual amount should be inferred without a supported sales figure. Fixed monthly services behave differently: they continue even during a slow month and may change when vendors revise schedules or required systems are upgraded. Lease obligations add a third layer because a landlord may impose promotional or common-area charges that are separate from the franchisor’s program.

For budgeting, these obligations should be grouped by behavior rather than placed in one undifferentiated expense line. Variable charges require the exact contractual base and exclusions. Fixed subscriptions require the current vendor schedule and the number of terminals, devices, or services actually required. Event-driven charges need a trigger, such as a late report, proposed ownership change, failed compliance review, or facility update. This structure makes it easier to see which obligations continue automatically, which can change with activity, and which arise only after a specific decision or problem.

Source: 2026 disclosure, Item 6, pp. 14–17. “Gross Sales” excludes sales taxes and receipts from the sale of gift cards, but includes store product, service, and merchandise revenue as defined in the FDD.

Item 6 contains several charges that do not occur every month but can become material after a transfer, renewal, default, audit, late payment, training change, or enforcement action.

• Transfer Fee: $6,000. Due with the transfer application. It increases by $500 on January 1, 2030 and every five years thereafter.
• Renewal Fee: $1,000 per renewal-year, capped at $10,000. A partial year counts as a full year.
• Audit and recordkeeping costs. If an audit finds Gross Sales understated by 3% or more, the franchisee owes percentage fees on the understatement, other amounts due, and audit costs; additional audit costs can apply for two years.
• Termination Fee after default. The formula uses continuing license fees and depends on operating history and months remaining on the Franchise Agreement; it is not a fixed amount.
• Past-due charges. Interest is 18% per year or the maximum lawful contract rate, and a Late Fee may be $50 per delinquent report or payment. Late reporting or payment may also trigger weekly remittance; if ADQ pays an overdue business debt, lien, or tax, immediate reimbursement is due.
• Training-related charges. Additional Training Fees vary; Training Materials cost $150–$500; a late trainee substitution costs up to $250.
• Enforcement costs and attorneys’ fees. The franchisee must reimburse ADQ for qualifying enforcement expenses; the amount varies.
• Modernization and facility work. Item 8 requires the building, premises, equipment, signage, and grounds to meet then-current standards at renewal, in some transfers, every 10 years, or sooner when a lease requires it. The FDD does not state a fixed modernization amount. An approved relocation also requires the new premises to meet then-current construction and equipment standards, but no fixed Relocation Fee is disclosed.

Sources: 2026 disclosure, Item 6, pp. 15–17; Item 8, p. 23; Item 17, pp. 46–49.

A conversion is not simply the lower end of either Item 7 range. Existing Dairy Queen soft-serve-only or limited non-system-food stores may use a Conversion Addendum, and the cost depends on the facility’s format, condition, prior use, deferred maintenance, and required upgrades.

The conversion review should begin with a physical scope, not the fee waiver. Reusable assets may reduce purchases, but obsolete systems, code deficiencies, deferred repairs, or brand-standard changes can offset those savings. The buyer should obtain a written schedule showing what can remain, what must be replaced, who approves each item, and which work is unrelated to the brand change but will be completed at the same time. Keeping those categories separate allows the official disclosure, the construction scope, and the purchase price of an existing operation to be reconciled without treating every improvement as a franchise charge.

ADQ does not finance the Initial Franchise Fee, site acquisition, equipment, or leasehold improvements. The franchisee must arrange third-party financing, and any lender independently sets the amount, rate, duration, collateral, guarantees, and equity contribution. ADQ may introduce franchisees to lenders, but the 2026 FDD gives no assurance that financing will be available. Source: 2026 disclosure, Item 10, p. 30.

Liquidity and Net Worth measure different things. Liquidity concerns assets that can be converted to cash without relying on the new store, while Net Worth subtracts liabilities from total assets and may include property that cannot readily fund construction. Borrowed proceeds are also not the same as unencumbered cash. Because no fixed threshold is published for this format, the applicant must obtain the current qualification standard directly from the franchisor and separately confirm what the selected lender will recognize as eligible equity.

Item 7 does state that local lenders ordinarily require approximately a 20% equity position on leasehold improvements and possibly 25% on equipment. That is a lender-observation in the FDD, not a DQ Treat Liquid Capital threshold and not a promise of approval. A prospective borrower can review the SBA 7(a) loan program, but eligibility and underwriting remain lender- and borrower-specific.

The published range is a nationwide disclosure, not a site quote. The largest unresolved amounts are real estate, local construction, municipal charges, lease obligations, required technology, insurance, conversion work, and future modernization.

A complete verification file should preserve the date, scope, assumptions, exclusions, and payment terms for every quote. It should also show who approved the expense and whether a later change order superseded the original amount. This documentation helps distinguish a genuine scope change from simple price movement and makes it easier to reconcile the opening budget with invoices before commitments become irreversible.

• Confirm the unit format. Use the Captive-venue or Street range that matches the approved site; do not blend the low end of one with the high end of the other.
• Separate land from Item 7. For an owned Street site, obtain a real-property budget and financing terms outside the disclosed total.
• Reconcile buildout and equipment bids. Include approved plans, architect work, signage, EPOS hardware, installation, and lender down-payment terms without double-counting the Item 7 Equipment category.
• Read the lease cost clauses. Base rent, percentage rent, common-area maintenance, insurance charges, taxes, utilities, mall or food-court charges, and lease-required promotion may continue beyond the Item 7 deposit estimate.
• Verify municipal connection and permit exposure. Item 7 states that electrical, sewer, water, or other connection charges can exceed $100,000 in unusual jurisdictions even though the published category is lower.
• Price required insurance and supplier contracts. Liability insurance is mandatory, but Item 7 does not disclose a separate insurance line; current vendor schedules can also change.
• Confirm conversion credits and extra fees in writing. A waived Initial Franchise Fee does not necessarily waive training, design, consultation, opening assistance, maintenance, or upgrade costs.
• Model post-opening cash separately. Additional Funds cover only three months and exclude hourly labor and food costs beyond Opening Inventory.
• Review the current disclosure before signing or paying. The FTC franchise due-diligence guide explains the federal disclosure timing and why the Franchise Agreement and FDD should be reviewed together.