Pricing and Costs of Coffee Franchise Opportunities

Research the initial and ongoing costs of coffee franchise opportunities

The pricing and costs of coffee franchise opportunities vary widely from company to company, and the start-up costs can reach as high as $600,000. There are franchise fees that can range anywhere from $5,000 to $50,000, as well as royalty fees that can be as high as 10 percent. By creating a budget up front, you'll have a working guideline for how much you can spend on a coffee franchise business. How much you can spend will determine what type of coffee franchise opportunity you can consider.

Once you have established a budget, you need to consider what type of coffee company franchise you can purchase and whether or not the franchise agreement is acceptable. When making your decision, consider the following:

1. Find lenders that work well with small businesses and franchise owners.

2. Compare the costs for each coffee shop franchise you are considering. Think about the initial investment as well as additional or hidden fees.

3. Consult an accountant and know the cost of running a franchise before making your purchase. Track ongoing costs so that you can stay on top of your business spending and profits.

 

Learn what type of financing coffee franchising requires

You need to be prepared for an initial franchise fee, which usually start around $5,000 and go up. This fee is paid up-front and is non-refundable. Also, after putting 30% to 35% of your own money down as an initial investment, you will still need financing. Franchises need a location, equipment and supplies, and you need to find financial companies that will work with you to make your plans a reality.
Try: Specialty Coffee Finance is a unique company that helps coffee shop owners and prospective owners get financing for equipment and supplies and offers an online application. Start a relationship with a lender that understands the franchise business, such as Irwin Franchise Capital, and one that will work with you on financing real estate and equipment for your business.

Compare the price of different style coffee franchises

An initial investment for new coffee franchise opportunities can cost as low as $15,000 and as high as $600,000 or more, depending on the type of franchise you purchase. If you are looking for atmosphere, you will probably pay top dollar, but if you are looking to offer convenience to your customers, you should consider drive-thru franchises as well.
Try: Franchise Gator allows you to search possible coffee shop franchise opportunities. Look for companies that are within your price range, but pay attention to whether or not they offer training, hiring assistance or help finding a location for your coffee shop. Consider companies, like Bear Creek Coffee or Cuppy's Coffee, that offer drive-thru store opportunities that eliminate some of the on-going costs of larger, sit-down type coffee franchises.

Get expert analysis before buying and track your expenses after buying a coffee franchise

When you enter into a franchise agreement, you need to make sure you have an expert look at the agreement before you sign your name. A franchise attorney is going to run you between $1,000 and $3,000 dollars, but it is a small price to pay to make sure your hard-earned money is being spent wisely. Once you determine your franchise of choice is a good choice, be prepared to track your expenses and income carefully.
Try: Visit Franchising Attorney to search for legal advice in your area on franchise agreements, real estate and other areas of franchising. PlanMagic Corporation offers software specifically designed for the coffee industry to help with financial planning and give an accurate analysis of how much you spend on salaries, fees, equipment and supplies.

 

• When you are buying an existing coffee franchise business, find out why the owner is selling. If the price is too good to be true, do some investigating. Look at competitors in the area, talk to the customers and research the company's reputation and earnings. If you see any red flags, walk away from the deal.

Copyright © 2011 Business.com, Inc. All Rights Reserved.

---