5 Things You Must Know Before Investing In A Coffee Franchise
WARNING: This could be the most important information you read today! Turn your Coffee investment into a raging success!
Congratulations, you’ve just got your hands one of the most important resources you can read before investing in any kind of coffee franchise.
In the following pages you’ll discover:
- The advantages and disadvantages of buying into a franchise…
- How much a coffee franchise will really cost you…
- Who actually owns your business?
- Is there an alternative to a franchise?
- 3 Insider tips on building a booming coffee business…
- And much more…
Before we get started, let me briefly tell you a little about who we are. After all, I want you to be sure our
advice is worth listening to!
We’re Kickstart Coffee Shop, one of Australia’s only independent coffee start-up consultants. From helping pioneer mobile and cart coffee in Australia to establishing a national coffee brand, we’ve been involved in some pretty awesome coffee success stories.
Using our deep knowledge of the industry and our endless passion for coffee, we’ve compiled this information using the experience we’ve gained through our successes and failures over many years starting, running and growing coffee businesses all over Australia and NOW the USA.
That’s enough about us for now. Let’s get started. Remember, if you have any questions about the content of this report, our training and support packages or you’d like us to help you with a personalised Coffee Kickstart plan, book in your FREE 30-minute Consultation today. Simply click here.
Until then, I hope you find this report useful.
To your dreams,
Simon O’Brien & Mike Foster
Founders, Kickstart Coffee Shop
The Advantages And Disadvantages
Of Buying Into A Franchise
There’s no question that people love coffee. In fact, we love coffee so much that the café and coffee shop industry brings in a staggering $8.2 billion in revenue every year. And according to IBIS World it’s expected to grow another 7% this year. Keep in mind these figures don’t even include takeaway food services, restaurants,catering services or bars!
In other words, there’s a huge opportunity out there for anyone who wants to enter the coffee industry. Whether you’re a coffee lover who wants to turn your passion into a business, or simply a savvy business person who wants to start up a high growth business –the coffee industry offers incredible potential. The question is, how do you get started... and more importantly, how do you succeed in this increasingly competitive industry? Well that’s where this report comes in.
The f irst big question is, should you buy into a franchise or go independent? Well let’s look at some of the advantages and disadvantages of buying a franchise.
DISADVANTAGES:
Cost – Most franchises will charge you anywhere from tens to hundreds of thousands of dollars over the lifetime of the business. That’s a huge amount of money to have to risk on top of all the costs you have to pay for the location, overheads, equipment, fit out and so on. Not to mention that if you want to expand your business, you’ll have to pay all those fees again.
Control – As a franchisee you have little say in the interior design of your space, branding, pricing, sometimes even advertising. If the franchise wants you to do something, all you can do is say yes.
Commitment – Best defined as a commercial marriage, franchising is a serious long term commitment. If for whatever reason you wanted out of a 5-10 year agreement the reality is you would have to pay the franchisor a sum of all their lost earning potential!
ADVANTAGES:
Plug and Play – There are much fewer decisions you need to make when going through a franchise. They tell you what to do and you simple follow through. This process, though costly, can make things much simpler as you don’t need to figure out each step yourself.
Brand Recognition – People will already know the brand, which could give you an advantage as customers already feel comfortable buying coffee from the brand. This can sometime however be a disadvantage as Australian research by IBIS World is proving what we already know; customers are increasingly choosing quality of coffee and brand over chain stores.
How Much Will A Coffee Franchise REALLY Cost You?
Let’s say despite the disadvantages you decide to buy into a coffee franchise. So, what will it cost you?Unfortunately, this is never really clear when you’re looking through their slick brochures and talking to their highly trained salesmen.
Let me break it down for you:
Franchise Fee – This is the initial fee paid to a franchisor, usually due at the signing of the contract, for the right to use the franchisor's name, trademark and business system. This price of this can vary wildly, but usually the more famous the brand, the more you’ll be paying.
Royalty – This is an ongoing payment made by you to the franchisor, usually a percentage of gross sales, made throughout the term of the franchise agreement. In other words, you need to pass on a set percentage of your revenue (before tax, costs and so on) as long as you’re part of their brand.
Advertising/Marketing Fee – This is an ongoing fee paid by you (usually a percentage of gross revenues) enabling franchisors to develop and purchase national advertising. Not all franchises have this, but those that do usually charge it on top of the royalty fee. Combine the royalty and advertising / marketing fee and you could be looking at a hefty chunk of money being taken out of your business each month before you even start paying your bills for just running the business.
Set up costs and overhead costs – Set up costs are things like buying furniture and kitchen equipment or paying for workers to fit out your shop. Overhead costs are the costs of simply running the business, utilities, rent, wages and so on. These two costs aren’t specific to a franchise. You’ll have to pay these regardless of whether you’re buying a franchise or going independent. The difference is, as an independent you have much more control over where to spend money, and where to save money. Want to spend less on the fit out? You’re free to do it yourself, get a friend to help or source goods on the second-hand market.
Who Actually Owns Your Business?
One of the great things about owning and running your own business is the incredible freedom it gives you. You get to choose how it’s run, and more importantly you can steer it in the direction you want.
Is your goal to set up a self-sustaining business so you can leave your employees to get on with the job while you spend more time with the family, going on holiday and enjoying all that life has to offer? Owning your own successful business let’s you do that.
So how about a franchise? Well the easiest way to think about a franchise is like renting a house over owning one. Yes, you get to live in the house, you can make some small changes to it, but at the end of the day you need to get approval for most things, keep paying rent, and at the end of the day the owner is free to kick you out if they wish.
When you buy a franchise you’re ‘renting’ the name, trademark and operating system of a franchise company. They dictate the terms of the contract, and you have to follow them. Often they’ll even decide where you can operate. If you want to do something differently, maybe change the design of your shop or use a different type of cutlery you’ll have to get permission. And in my experience, you’re unlikely to get it.
If you’re like me and you want to get into the coffee game to break free from the 9-5 slog, have the freedom to carry out the vision in your heart and do things the way you want, a franchise makes it really tough.
That said, starting up your own coffee business is tough. There are a LOT of hurdles you’ll have to jump and there are many, many mistakes to make and learn from along the way. Trust me, after 20 years setting up and running multiple coffee businesses, and mentoring many others on setting up their own, we know how hard it can be.
But the great news is, now there’s a way you can achieve your coffee dreams without having to buy a franchise, and without having to navigate all the pitfalls yourself. How? Keep reading.
The Alternative To Buying A Franchise
If you want to be the founder of your own brand and have all the freedoms that come with owning your own business, I have great news for you.
At Kickstart Coffee Shop, we’re offering you our 15 years of experience setting up and running successful coffee businesses around Australia. This is not a franchise. We’re independent coffee start-up consultants. We put your needs first and treat your start-up plans as if they were our own.
That means no ongoing payments, no royalties, no profit sharing, no signing exhaustive franchise agreements and other legally binding franchise documents. Just our full support, training, tools and extensive knowledge and experience.
Whether you want to start a café, kiosk, cart, van, ute, trailer, trike or container, we can help you every step of the way from dream to reality. You’ll get all the guidance, plans and training you need, but the brand and business are always yours, and you’re always the one in charge.
You get to pick the coffee and machines (we have some great recommendations if you’re not sure what you want). You get to pick the location, though we can help you with this as well, we have proven benchmark criteria we use to vet potential sites, and we can even help you negotiate the best deal for the location. In fact, we can even negotiate cash incentives to be paid directly into your pocket for signing a lease. The most we’ve achieved so far is $50,000. That’s a huge benefit that can help offset the cost of your fit out.
You’ll even get access to our proprietary modeling which takes into account key variables like COG’s,rent, staffing costs and operating efficiencies. Basically ,this means we can help set up your business model and finances so you can get real, bankable results instead of hoping and praying that things work out.
But the most valuable thing you’ll get out of Kickstart coffee are the many insider tips and tricks of the coffee trade that you only get to know after spending years in the industry (and learning from many costly mistakes).
To give you an idea of what I’m talking about, I’ve compiled 3 Simple Insider Tips that will help any start up coffee business.
3 Insider Tips On Building A Booming Coffee Business
#1 – Cash Incentive!
Did you know that landlords will typically pay a cash incentive straight into your back pocket for signing a new lease agreement? Many new start-ups don't, and they miss out on potentially 10's of thousands of dollars. But how much can I ask for? Well this depends on a number of contributing factors. The most I have achieved for a client is 50k. Other times we'll request the landlord cover the entire fit-out cost and or a lengthy rent free period. A cash incentive is a great start to building a booming coffee business however, Lease negotiation is an art and science and you need to have all the processes and rules figured out or you will only isolate yourself from an opportunity.
#2 – Have an Identity
Know your business identity and your Target Market! In a highly competitive industry you don’t want to have a business identity crisis . So know who you are and what target market you want to reach. For instance and on a more general level, I see many fast food outlets, pizza bars, chicken houses, Thai restaurants all trying to sell coffee as well as their core food offering however rarely ever do these shops do both well . I am not saying You can’t do coffee and food but make sure they compliment each other and are suitable to your target audience. This will have a flow on effect in determining your; coffee / food offer, audience and Style of shop
#3 – Develop Excellent Barista Skills
The First and most important instigator for growth is to consistently deliver quality coffee.
A good coffee is decided by 3 main factors:
i. Barista Skill 60%
ii. Equipment 20%
iii. Beans 20%
Good Barista skills are the foundation for any good coffee shop wishing to grow or even compete in today’s coffee industry. The acquired skills learned during your training and following the proper systems will deliver predictably high results.
Hopefully you’ve found these insider tips helpful. There are so many more I want to share with you, but we’ve already covered a lot in this report.
If this report was valuable to you, we actually have an offer you’ll probably like even more. we are offering free 30 minute Consultations. This is not a a sales pitch and will be completely no pressure. We will discuss your plans in detail, and you will benefit from some great free advice and maybe help you further.
Book your Free Consultation HERE
