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Caribou Coffee Franchise Cost & Fees

Date of Incorporation: 1992

Franchising Since: 2004

Headquarters: Minneapolis, Minnesota

 

Business Description: Caribou Coffee Development Company, Inc., the franchisor, offers franchises for the operation of Caribou Coffee coffeehouses that sell coffees, teas, baked goods, sandwiches, and other beverage and food products from kiosk style locations within a host facility, such as shopping malls, strip shopping centers, public transportation facilities, convention centers, grocery stores, university food courts, movie theaters, health clubs, hospitals and similar venues.

 

Franchise Offer: A typical Coffeehouse offered has a kiosk style, meaning that four walls do not surround its retail premises and it is normally located within a business or a public venue or depends on one main business or organization as its primary host facility and customer traffic generator, such as shopping malls, strip shopping centers, public transportation facilities (like airports), convention centers, grocery stores, university food courts, movie theaters, health clubs, hospitals and similar venues. The typical kiosk style Coffeehouse will provide limited access to the general public except via the host facility. Some Coffeehouses will not operate as a typical kiosk style Coffeehouse but instead will operate as a stand-alone Coffeehouse.

 

Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee a franchisee’s note, lease, or obligation.

 

Training and Assistance: Franchisees must hire one on-site manager responsible for the day to day operations of the Coffeehouse and at least 2 shift supervisors who will be trained as Managers-On-Duty for the Coffeehouse, all of whom must attend and successfully complete training either (i) at a certified training store of the franchisor’s choice (at the World Headquarters Training Center in Minneapolis, Minnesota or at an operating Coffeehouse) or(ii) at a training program operated by a Certified Trainer at a designated Coffeehouse. The Store Manager and each Manager-on-Duty must devote the time necessary to operate the Coffeehouse properly and supervise other Coffeehouse personnel. In addition, the Store Manager and each Manager-on-Duty must attend and successfully complete such additional ongoing training programs. If franchisees or their affiliates) already operate a minimum of 4 Coffeehouses, they may designate a Store Manager or Manager-on-Duty to complete the “Certified Trainer” certification program. The franchisor may require the Operating Principal, Store Manager, and Managers-On-Duty to attend and successfully complete various training courses that it periodically choose to provide at the reasonable times and locations that it designates and franchisees will pay the then applicable charges, including reimbursement for the franchisor’s personnel’s wages, per diem charges, and travel, hotel, and living expenses.

 

Territory: If franchisees will operate a kiosk style Coffeehouse, their location must be located within a Host facility that the franchisor approves, and the franchisor must approve the specific site of the Coffeehouse within the Host facility. If franchisees operate a Stand-Alone Coffeehouse and are complying with the License Agreement, neither the franchisor nor its affiliates will directly operate, or license or franchise other persons to operate, any other Coffeehouse within a 1/4 mile radius of the Coffeehouse License Agreement. This Protected Territory restriction for the Stand-Alone Coffeehouse does not apply to (and the franchisor may operate or license a third party to operate) any kiosk style Coffeehouse in a Host facility or any Coffeehouse in a Captive Market Location, which is located fully or partially within the geographic boundaries of the Protected Territory.

 

Term of Agreement and Renewal: The length of the initial franchise term is 5 years unless terminated sooner. Two additional 5-year license renewal terms are available, if all obligations for a successor License Agreement are met.

 

Obligations and Restrictions: The franchisor must approve the Operating Principal, and the Operating Principal must successfully complete our initial training program and all mandatory follow-up training programs. At all times, the Operating Principal must oversee the operation of the Coffeehouse, which will be under the day-to-day, on-site supervision of the Store Manager or Manager-On-Duty. The term “Operating Principal” means the designated individual responsible for overseeing the operation of the Coffeehouse, including the management of the Store Manager and the Managers-On-Duty. The term “Principal Owner” means any person or entity who directly or indirectly owns a 10% or greater interest in the franchise. If any corporation or other entity other than a partnership is a Principal Owner, a “Principal Owner" also will mean each shareholder or owner of a 10% or greater interest in such corporation or other entity. Franchisees must offer and sell all Products and perform all services the franchisor periodically requires for Coffeehouses. Franchisees may not offer or sell any products or perform any services the franchisor has not authorized.

 

Estimated Number of Units: 605

 

Investment Tables:

Initial Investment

Typical Kiosk Style Coffeehouse

Name of Fee Low High
Initial License Fee $23,000 $23,000
Real Estate/Rent (Including CAM) $10,000 $30,000
Leasehold Improvements $173,000 $225,000
Furniture, Fixtures, Interior Signage and Equipment $39,000 $80,000
Architect/Design Work $11,000 $19,000
Signage (Exterior) $1,000 $12,000
Office/POS Equipment?Security Equipment $11,665 $13,995
Prepared Expenses and Deposits $6,740 $17,000
Opening Inventory and Supplies $9,000 $17,000
Opening Campaign $7,000 $9,000
Miscellaneous Opening Costs $1,000 $12,000
Initial and Additional Training Expenses (Unless Trained by a Certified Trainer) $1,500 $6,000
Cost of Trainers' Travel, Hotel, and Living Expenses during 2-Week in-Store Training & Grand Opening Process $3,500 $6,500
Additional Funds - 3 Months $50,000 $90,000
Estimated Total $347,405 $560,495

 

Stand-Alone Coffeehouse

Name of Fee Low High
Initial License Fee $25,000 $25,000
Real Estate/Rent (Including CAM) $12,000 $36,000
Leasehold Improvements $270,000 $430,000
Furniture, Fixtures, Interior Signage and Equipment $98,000 $137,000
Architect/Design Work $10,000 $40,000
Signage (Exterior) $5,000 $50,000
Office/POS Equipment?Security Equipment $21,165 $39,295
Prepared Expenses and Deposits $4,400 $13,200
Opening Inventory and Supplies $11,000 $19,000
Opening Campaign $18,000 $20,000
Miscellaneous Opening Costs $600 $42,000
Initial and Additional Training Expenses (Unless Trained by a Certified Trainer) $1,500 $6,000
Cost of Trainers' Travel, Hotel, and Living Expenses during 2-Week in-Store Training & Grand Opening Process $3,500 $6,500
Additional Funds - 3 Months $50,000 $90,000
Estimated Total $530,165 $953,995

 

Other Fees

Type of Fee Amount
Royalty Fee 6% of Coffeehouse’s monthly Gross Sales.
Marketing Fund Contributions 2% of Gross Sales.
Opening Campaign (Advertising and Marketing) $7,000 (or $18,000 for a Stand-Alone Coffeehouse).
Local Advertising Fee At least 2% of your Gross Sales per year.
Certification for a Certified Trainer The then-current fee, currently $0 for the first employee certified as a Certified Trainer and $2,500 per person for any additional or replacement Certified Trainer.
Opening Assistance The then-current fee, currently $1,500 per trainer, and each trainer's travel, hotel and living expenses.
Computer Systems, Maintenance and Support Cost of services.
Re-inspection Fee $1,500
Examination/ Audit If Gross Sales are understated by 2% or more, the franchisee pays the franchisor’s audit costs, plus interest on understated amounts.
Transfer Fee 50% of the then-current standard initial license fee applicable to new franchised Coffeehouses.
Renewal Fee The greater of 25% of the then-current initial license fee for new Coffeehouses or $5,000 (or for a Stand-Alone Coffeehouse, the greater of 25% of the then-current initial license fee for a new Stand-Alone Coffeehouse or $10,000)
Late Fees or Interest on Late Payments Lesser of 15% per year or maximum rate permitted by law, plus any bank charges.
Insurance The annual premium, plus administrative fee of 5% of the insurance premium.
Additional Required Ongoing Training The then-current fee, currently $350 per day, plus reimbursement to the franchisor for personnel's wages, per diem charges, and travel, hotel and living expenses.
Indemnification Expenses All costs associated with the franchisee’s obligation to indemnify.
Additional Assistance or Guidance Varies, currently $1,500 per day.
Income and Sales Taxes The franchisor may collect from the franchisee the cost of all taxes arising from the franchisor’s licensing of intellectual property to the franchisee in the state where the Coffeehouse is located, as well as any assessment on fees and any other income the franchisor receives from the franchisee.
Annual Meeting $500/day for each attendee.
Operations Manual Replacement Then applicable charge; currently $250
Management Services Reasonable cost of management services plus an administrative fee (currently 15% of costs we incur).
Purchase of Caribou Trade Secret Products and Caribou Branded Products Applicable charge for such Products purchased from the franchisor, Caribou Coffee Company or its affiliates.

The above information has been compiled from the FDD of Caribou Coffee. Year of FDD: 2015

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