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Financing

Dunkin’ is giving franchisees royalty relief

The company is extending royalty and ad fund payments to help operators conserve cash.
Photograph courtesy of Dunkin'

Dunkin’ Brands on Thursday said it is giving operators extensions on royalty and ad fund payments as it works to help them make it through the next couple of months.

In a federal securities filing Thursday, the Canton, Mass.-based operator of Dunkin’ and Baskin-Robbins said it will temporarily extend payment terms on royalties and ad-fund payments.

That, the company said, will give operators “more financial flexibility to enable them to support their employees and guests as a result of the impact of the COVID-19 health crisis.”

Dunkin’ said it does not expect the relief to hurt its ability to meet its cash needs or comply with its financial requirement in its lending agreement.

“The status of the COVID-19 health crisis is changing every day,” the company said in its filing. “At this time, neither the duration nor scope of the business disruption can be predicted.”

Dunkin’, like most chains at this point, is eliminating in-store dining, promoting delivery, encouraging mobile ordering and reducing hours of operation. Operators also have the option to temporarily close.

Numerous franchisors have started offering operators some form of relief on royalty, ad fund or rent payments to keep them afloat.

Franchisees, facing the prospect of losing much or all of their sales, face a major cash crunch over the next couple of months. McDonald’s has said it may defer operators’ rent payments. Subway is providing a package of relief, while MTY Group quickly offered a month’s worth of royalty breaks.

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