The Coffee Shop Franchise

Franchising is basically buying, lock stock and barrel, a concept that someone else created rather than creating your own. It is purchasing someone else’s business idea, their operational expertise, and the use of their name.

Generally, companies that offer coffee shop franchises have successfully opened and operated multiple units. You can be reassured that at least their idea has worked consistently in numerous markets, and that the systems they have developed created profitability, however, the average purchase price for many of the coffee shop franchise packages we have looked at range about $25,000. This will usually only include the use of their name, access to their vendors, operational systems, and usually some form of ongoing support. Twenty five thousand dollars is certainly not the turnkey price for these types of operations. You may still have to locate a space, pay for the remodel, buy the equipment, purchase the inventory, make your monthly lease payment, and pay a percentage of your monthly gross sales as a franchise fee.

Example–Recently at a trade show in California, two women came to our booth and asked to see some of our consulting information. They looked it over and then spent quite a bit of time talking to us, asking a lot of questions. At the end of 20 minutes or so, one woman turned to the other and said, Helen, why couldn’t we have met this company 3 years ago?

We asked, What does that mean? You already own a coffee shop business?

She answered, Yes we do. We bought an XYZ coffee shop franchise.

XYZ (not the real name) happens to be a franchise we know well, and is one that we considered to be one of the better coffee shop franchises.

We asked, You haven’t been happy with your decision? Was it the size of the upfront fee?

Her response was that the upfront fee was not the problem, but a number of issues were.

We went into a mall and there were 2 size shops that were available. One was around 1,000 square feet, and one was about 1,800 square feet. The franchiser convinced us that we needed 1,800 square feet for the shop. We now know that the smaller space would have been much better.

Secondly, the franchiser insisted that they carry a large line of the franchiser’s retail items. She told us,

Many of those retail items don’t sell well, but we’re locked in and we have to stock them. We’ve wanted to cut back on this retail space and put in more seating, but they wouldn’t allow us to do that. We really don’t feel that we have any control over any decisions with this franchise.

On top of everything else, the franchise takes 6% off her bottom line!!

We are not suggesting that everyone who buys a coffee shop franchise is unhappy. Other people can certainly give you success stories and will tell you how happy they are with their coffee shop franchise. However, whether you decide to buy a coffee shop franchise or open a coffee shop business of your own, the important point is that you need to carefully investigate all the advantages and disadvantages of each, before making your decision.

Home