Franchisor Stories
Desert Donuts offers a profitable opportunity for entrepreneurs with a sweet tooth, featuring fully customizable desserts, strong unit-level economics, and a proven, community-driven model.
Desert Donuts is a family-owned dessert franchise where customers can design their own hot, made-to-order donuts from scratch. Founded in Arizona and expanding through franchising, the brand is known for its playful, creative environment and one-of-a-kind menu offerings that include donut cereal shakes, donut ice cream pies and more. With a strong emphasis on community, family and fun, Desert Donuts is bringing “Arizona sunshine” and customizable sweets to neighborhoods across the United States.
Desert Donuts was founded in 2013 in Phoenix, Arizona by Michael Gallegos and his daughter Gracee. Created to bring joy and creativity to the dessert space, the brand puts customers in control of their treats — letting them choose from dozens of glazes, toppings and drizzles to create their perfect donut or dessert. The brand has since grown into a local favorite and is now expanding nationally through franchising.
Mission: To make people happy, one donut at a time. Desert Donuts exists to foster joy, creativity and community through a delicious and interactive dessert experience.
Vision: To bring Arizona sunshine and happiness to communities across the country through made-to-order treats, strong local partnerships and a fun, family-friendly culture.
Unique Selling Points (USPs)
Desert Donuts is currently expanding in Colorado (with 25 locations planned) and is seeking franchise partners in Arizona and beyond. Click here to explore opportunities.
Initial Costs: The estimated initial investment required to begin operation of a Desert Donuts franchise ranges from $637,300 to $846,20. The 2025 Franchise Disclosure Document (FDD) breaks these costs down as follows:
| Type of Expenditure | Min | Max |
| Initial Franchise Fee | $60,000 | $60,000 |
| Construction and Leasehold Improvements | $230,000 | $307,000 |
| Lease Deposits and Rent (3 Months) | $20,000 | $38,000 |
| Furniture, Fixtures and Equipment | $140,000 | $170,000 |
| Signage | $12,000 | $16,000 |
| Mural, Artwork and Design Display | $1,000 | $2,000 |
| Computer, Software and POS System | $8,000 | $16,000 |
| Grand Opening Marketing | $25,000 | $25,000 |
| Initial Inventory | $45,000 | $60,000 |
| Utility Deposits | $900 | $1,200 |
| Insurance Deposits (3 Months) | $2,400 | $4,000 |
| Travel for Initial Training | $2,000 | $7,000 |
| Professional Fees | $18,000 | $35,000 |
| General Licenses and Permits | $3,000 | $15,000 |
| Additional Funds (3 Months) | $70,000 | $90,000 |
Initial Franchise Fee: When you sign a franchise agreement with Desert Donuts, you are required to pay a non-refundable initial franchise fee of $60,000. This fee is considered fully earned by Desert Donuts upon payment and is calculated using a uniform method for all franchisees as outlined in the FDD.
Qualified individuals who have been honorably discharged from any branch of the United States Military are eligible for a $5,000 discount on the Initial Franchise Fee for their first franchise location.
Ongoing Fees: According to the 2025 FDD, Desert Donuts franchisees are responsible for the following ongoing payments and fees:
| Type of Fee | Amount |
| Royalty | 7.48% of gross sales, except that during the first 12 months of operating a Shop the Royalty Fee is 6.48% of gross sales/weekly |
| Brand Development Fund | Up to $1,000 per month, currently $500 per month |
| Franchisee Directed Local Marketing | 1% of gross sales/monthly as incurred by you |
| Technology | Up to $500 per month, currently $300 per month |
| Email Account | Up to $20 per month |
| Local and Regional Advertising Cooperatives | Established by cooperative members, but not exceeding 1% of Gross Sales, currently not assessed |
| Annual Conference Attendance Fee | Then current conference fee, not greater than $1,500 per attendee |
ROI Potential: During the 2024 calendar year, the company-owned outlet in Phoenix, Arizona, saw gross sales of $292,346 and direct gross profit of $123,501.
Desert Donuts provides a comprehensive initial training program designed to prepare franchisees for successfully operating a shop. This training must be completed at least 45 days before the shop opens and is held at their training facility in Highlands Ranch, Colorado. It spans approximately three weeks and is mandatory for the franchisee (or Managing Owner) and one designated general manager. Additional attendees may be allowed for an extra fee. While the training itself is provided at no extra charge for the first two attendees, franchisees are responsible for all associated travel and lodging costs. Supplemental training may also be required at the franchisor’s discretion, including on-site sessions that incur additional daily fees.
Desert Donuts supports its franchisees by offering guidance and approval during the site selection process, including providing site selection criteria and evaluating proposed locations. They supply access to a 242-page Operations Manual covering key topics such as setup, marketing, and business operations. Franchisees are also provided with approved vendor lists, branding standards, signage guidelines, and marketing approval processes. Desert Donuts may coordinate an annual system-wide conference and administer brand marketing funds. However, franchisees are responsible for employee hiring and training, as well as ensuring staff meet uniform and operational standards.
Franchisees must use the point-of-sale and business management systems designated by Desert Donuts — currently Toast POS. They are required to purchase and maintain at least two POS terminals and an on-site computer system. Franchisees are also responsible for maintaining, repairing and updating their technology, with estimated annual maintenance costs ranging from $1,000 to $5,000. Additionally, franchisees must grant Desert Donuts access to data collected through these systems.
Desert Donuts does not set forth specific financial qualifications in its FDD.
Desert Donuts requires substantial operational involvement:
Desert Donuts does not offer direct or indirect financing.
The global doughnuts market was valued at $11.22 billion in 2024 and is projected to grow to $15.12 billion by 2032, with a CAGR of 3.83%.
Desert Donuts stands out with its made-to-order donuts, customizable desserts and unique offerings like donut ice cream shakes and pies. Its fresh, on-demand approach and award-winning recipes provide a premium alternative to traditional donut chains.
Desert Donuts’ primary competitors include Dunkin’, Krispy Kreme, Duck Donuts, LaMar’s Donuts and Five Daughters Bakery.
Want to learn more about franchise opportunities on 1851 Franchise? Be sure to visit our Power Rankings to read more on brands making moves.
Every great franchisee had help buying a franchise. Want to learn more about how 1851 helps franchisees find the right franchise opportunity? Visit www.1851growthclub.com and start your journey.
Disclaimer: This content is for information only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on this site constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.
All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial advice, nor does any information in the email constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.
Sign up for the 1851 Franchise newsletter to get our biggest stories before everyone else
By signing up, you agree to our user agreement (including class action waiver and arbitration provisions), and acknowledge our privacy policy.
