Bottom line
- Total investment $623K – $2.8M including a $25K franchise fee, 4.0% ongoing royalty.
- Average unit revenue of $1.6M/year (median $1.5M).
- Rated MODERATE with a risk score of 57/100. SBA loan default rate of 0.0% across 1750 loans (below the industry average).
- 12 litigation matters disclosed in Item 3 — higher than typical. Review the summary for patterns (franchisor-initiated vs. franchisee-initiated).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Dairy Queen unit return on the cash you put in?
Unlevered ROIC · per unit
13%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Dairy Queen units return on equity?
Equity IRR · 5-yr
38.1%
5.02× MOIC
Year-1 DSCR
2.19×
EBITDA ÷ debt service
Equity required
$4.0M
on $12.9M purchase
Total debt
$8.9M
SBA $5.0M + senior + seller note
Overview
About
Franchisees operate quick-service restaurants serving soft-serve ice cream, blended beverages, and casual food items (Grill & Chill locations). Day-to-day operations include inventory management, staffing, POS systems, food preparation, customer service, and compliance with Dairy Queen brand standards and operational protocols.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 4 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Dairy Queen presents caution-level risk due to negligible unit growth, undisclosed profitability metrics, significant franchisor litigation, and unprotected territories that expose franchisees to encroachment and margin compression.
Score breakdown · what drove the 57 / 100 rating
- 01MINORStagnant unit growth of only 1.4% YoY indicates system contraction and poor franchisee recruitment/retention
- 02MINORNo Item 19 (Average Net Income) disclosure prevents validation of $1.62M average revenue translating to actual profitability
- 03HIGHMultiple litigation categories (contract disputes, trademark infringement, encroachment claims) suggest franchisor credibility and operational governance issues
- 04MINORUnprotected territory creates direct competition risk and commoditizes franchisee investments within the same market
- 05MINORHigh investment range ($623K-$2.78M) combined with 4-5% royalties on gross sales offers poor downside protection if revenues underperform
- 06HIGHOfficer litigation history from previous franchise employment raises governance and compliance risk concerns
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
97 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Dairy Queen · FDD (2026) PDF