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Caribou Coffee Franchise Cost & Fees

Date of Incorporation: 2004

Franchising Since: 2006

Minneapolis, Minnesota. 

Business and Description: Caribou Coffee Development Company Inc. was incorporated on October 21, 2004, although they did not commence business until August 2006. Caribou Coffee Development Company Inc. has a parent company Caribou Coffee Company Inc. Caribou Coffee Development Company Inc offers to franchise a Caribou Coffee store which sells coffees, teas, baked goods, sandwiches and other beverage and food products for on-premises and off-premises consumption.

Franchise Offer: Caribou Coffee Development Company Inc. is offering a Development Rights Agreement. All franchisees must commit to developing more then one Caribou Coffee. An individual franchise agreement is only available under certain circumstances. The main exception is if the franchisee was to develop a Caribou Coffee Coffeehouse at a ‘non-traditional’ location, such as an airport or university.

Financial Assistance: Caribou Coffee Development Company Inc. does not offer direct of indirect financing and do not guarantee any lease, notes or obligations.

Training and Assistance: The training programme consists of 4 – 8 weeks on classroom and on the job training. The Operator, Store Manager and Shift Supervisor must all complete the training to a satisfactory level and the training must be completed 8 – 10 weeks before the anticipated opening date. The Store manager and the Shift supervisor must train all the hourly employees (the train the trainer concept).

Territory: Except in the case of no-traditional locations, the developer will be given the right to develop in a certain area, with one exception. If, during the Development Rights Agreement’s term, Caribou Coffee Development Company Inc learns from unaffiliated third parties of one or more opportunities to establish and operate more Caribou Coffee Coffeehouse at locations within the development area, the franchisee will be notified and will have 10 days to notify Caribou Coffee Development Company Inc of any interest in pursing the opportunity. The initial expression does not bind the franchisee. If the franchisee does not respond or are not interested, Caribou Coffee Development Company Inc may pursue the opportunity. The size of the area depends on how many Caribou Coffee coffeehouses are agreed to be developed. A Caribou Coffee Coffeehouse occupies approximately 200 to 2,000 square feet of space depending on the location.

Renewal and Termination: The term of the Development Rights Agreement is 10 years or when the lease expires. After this time if the franchisee is in material compliance they may acquire one successor licence on Caribou Coffee Development Company Inc. The term for the renewal or extension is for less then 10 years or shorter then the lease term. There is no renewal or extension of the Development Rights Agreement.

Obligations and Restrictions: Under the Development Rights Agreement, the developer must appoint a shareholder, member, or partner to be the “Managing Owner” responsible for overseeing the development of Caribou Coffee Coffeehouses. The developer must also appoint an “Operator” to be a dedicated full-time supervisor of the development. The managing Owner and the operator may be the same person. Each Caribou Coffee Coffeehouse must offer and sell all services and products of Caribou Coffee Coffeehouse and can not sell any products or perform any services that are not authorised.

Total Number of Franchised Units for 2006: 7
Total Number of Franchised Units Closed for 2006: 2
Total Number of Franchised Units Opened for 2006:3

Investment Table:

Estimated Initial Investment for Single Franchise:

Name of Fee Low High
Initial License Fee $25,000 $25,000
Real Estate/Rent As incurred depending on location  
Security Deposit As incurred depending on location  
Leasehold Improvements $150,000 $300,000
Furniture, Fixtures, and Equipment $90,000 $200,000
Architect $7,000 $15,000
Signage (interior and exterior) $15,000 $40,000
Office Equipment $700 $2,000
Utility Deposits $100 $4,000
Opening Inventory and Supplies $10,000    $20,000
Grand Opening Marketing $ 10,000 $25,000
Training Expenses to attend training program $6,000 $6,000
Cost for Opening Team at Coffeehouse during 2-week grand opening process $10,000 $10,000
Insurance $200 $500
Miscellaneous Opening Costs $200 $2,000
Additional Funds $7,000 $25,000
Total Initial Investment $331,200 $674,500

Ongoing Costs for Single Franchise:

Name of Fee Amount
Royalty 5%
Advertising and Marketing 2%
Successor License Difference between  then current initial license fee and the initial license fee  paid
Additional Training or Assistance $1,000 per day plus expenses
Transfer $5,000
Examination/ Audit Cost of examination/ audit (amount of which depends on circumstances and the extent of  non-compliance)
Late Fee 10% of original amount due but not paid on time (plus bank charges)
Operations Manual $1,000
Costs and Attorneys' Fees Will vary under circumstances
Indemnification Will vary under circumstances

The above information has been taken from the UFOC/FDD of Caribou Coffee Development Company Inc.

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