Franchises can give you an edge because they have some name recognition and support but think it through before getting the sales pitch and going the franchise route. Of course, make your own decision but as a franchisee, you are pretty much land-locked into the franchisor’s way of operating.

You are looking for name recognition and branding. In the coffee industry, franchising is still in its infancy.

I say this because there aren’t many specialty coffee franchises even though there is plenty of interest in the concept. Well, at least not as many as there are food franchises but surely not many recognizable ones at that. Most coffee franchises are regional but you may recognize names like Seeker’s, PJ’s, Beaner’s, It’s A Grind Unwind, Arabica, Cuppy’s and Scooter’s. Contrary to popular belief, Starbucks is not a franchise.

Name recognition will not tremendously help a franchisee succeed however, with such limited recognizable names, but that can be debated and best left for another day! What you most likely have here is the potential to succeed more so from an operational and experience standpoint. Hopefully your prospective franchisor’s management has a lot of practical experience to assist you.

You will usually get better pricing on supply products because of the franchisor’s buying volume. You also will normally get better pricing on equipment because of the franchisor’s volume and usage of such.

The commitment of the franchisor’s support in planning stages like site selection, lease negotiation and build out is a plus to franchisees. Also, the ongoing support in marketing and operations after you open. Of course, this is usually not free! (see below)

As a franchisee, you will most likely be mandated to use proprietary supplies and ingredients, coffee, equipment, etc. You have less leeway for freedom to use products that you want to use, and maybe even something you feel is better tasting. If your franchisor uses bad or cheap coffee, you are not going to do well in the long run. I know of three franchises that have absolutely awful tasting coffee, of course names withheld! This is not a good thing though.

You will also have an upfront franchise fee, sometimes as high as $100,000 before you actually start anything. This is just to use the name! You will also have ongoing royalties that have to be paid monthly, usually 3-7% of your GROSS sales. Suppose you do $30,000 per month; that is $900-2100 per month just to use someone else’s name! That is a lot of YOUR salary! Before when I said that ongoing support is not free, this is what I meant.

Also, the franchise agreement is usually for a set period of time, like from 5-10 years. When it is over, it is usually renewable or you can go your own way but you normally have to drop the use of their name so now you would have to start marketing your name change.

You also will most likely have ongoing marketing fees of about 3-7% per month. That is taken from your monthly GROSS as well! That is a lot more of YOUR salary! Though this is comforting to know someone has your back for marketing, marketing is not this expensive for a specialty coffee retailer. In fact, if you are spending 3-7% or your gross sales per month for marketing you are spending too much! But that’s a whole other article.

After you add up all the ongoing fees every month, that is somewhere between $1800-4200. EVERY MONTH just to use someone else’s name! Your volume has to be very high to support this. Can you achieve it without using someone else’s name? With the right location you bet you can!

Another thing to consider is the fairly high personal net worth that is usually needed of all owners. Again, this is not something that is a bad thing to have when going into business. However, the franchisor usually looks for a personal net worth in the neighborhood of $100,000-500,000, with anywhere between $50,000 -300,000 of that to be liquid assets, depending on the franchisor.

Those are high numbers to achieve for the average new entrepreneur. However, just because you have money or a high ‘paper’ net worth does not mean you know how to or have what it takes to run a business. You definitely need passion, commitment and will.

Quite honestly, I do not know of one specialty coffee franchise that I can justify making the initial investment in for the name and branding that you’d be paying for. In other words, if you were looking for a food franchise you are virtually guaranteed success with McDonald’s or Subway provided you follow the franchisor’s lead because of the name and image. That I would recommend. But it IS the name and the company’s image you are essentially paying a lot of money for so keep that in mind.

One last thing to be sure of is your right and ability to sell or close your business for whatever reason. It is actually a multi faceted question: Can you sell your remaining time on the franchise? Can you break your agreement at all? If so, is there a penalty and how much is it? Does the buyer have to buy the franchise? Does selling or closing nullify your agreement? You will need answers to all of these questions before you sign anything and write out any checks!

So if you can stomach the large outlay of cash and justify the ongoing fees for buying a franchise maybe that method will work for you. There is nothing wrong with that. However if you take the time to network, do great research on this industry, learn how to run a business and craft an awesome coffee shop business plan you will be on the road to success as an independent specialty coffee shop, on your own for a lot less money and may be better off for it. Whatever you choose to do, good luck to you!

Tony DiCorpo is a coffee shop owner, operator, barista and entrepreneur. He is also a coffee shop business consultant. He has authored many articles on the specialty coffee business and a business plan package that can be found at http://www.tonys-coffee-shop-business-plan.com

Large coffee shops don’t necessarily make more money than smaller ones. They have to pay more for supplies, electricity, the building, employees, and other overhead expenses. They also have to spend a great deal of money to advertise. After all they can’t have that large facility being empty – it has to be full of customers.

Customers have other criteria that they are concerned with than the size of the location. People even go to drive up ones if they offer the right elements. They include fast service that is friendly, delicious coffee products, good prices, and a nice atmosphere. All of these things can be found at a small independent coffee shop or a large chain business.

In fact, you will find there are plenty of customers out there that prefer the atmosphere at a small coffee shop. They feel like they get more personal service there. It is often a sense of loyalty as well. They may have been going to that particular location for years. They aren’t going to abandon ship just because a bigger coffee shop has opened up around the corner.

Many of the large coffee shops are able to succeed due to being a chain. They are already known in the eyes of consumers as a great place to get coffee. There is also a stigma that comes with visiting such a location for some people. They still have to work to meet the needs of the customers though or they will lose business rapidly.

One disadvantage that small coffee shops have is not offering enough room during peak times. People don’t want to feel like they don’t have enough room to relax and enjoy their coffee. You may need to look at some options to take care of this issue if it becomes a problem. Sometimes just rearranging can give you more room than you thought you had.

You need to be confident no matter how large or small your coffee shop is. The fact that consumers aren’t placing their orders based on this information is good news. It means you have the chance to prove what you can do for customers on your own merit. You can focus on meeting their various needs instead of playing the size game.

There are small coffee shops that continue to grow in the number of customers. They may decide to expand in order to better serve them. This is an individual business decision that could prove to be a good move. However, if your business is already struggling, making the coffee shop bigger isn’t going to solve your problems.

Karyn Lewis writes about the ups and downs of the coffee shop business. Avoid the rookie mistakes many new operators make when they buy a coffee shop and read more coffee related articles at her site.

As with many kinds of businesses, of course, the difficulty lies in the execution, and it is vital for anyone considering such a move to create a detailed and complete coffee shop business plan.

Using Your Coffee Shop Business Plan To Help Get Your Business Off Of The Ground

A coffee shop business plan will help the new business owner get the business off the ground by attracting the startup funding that will be needed to purchase or rent a piece of property, stock the kitchen, buy all the coffee makers and cappuccino machines and hire staff.

The coffee shop business plan will no doubt be the first document any lender wants to see, so it is important to put as much care into its creation as into the brewing of a perfect cup of coffee.

The Business Plan Will Detail How To Overcome Problems

The coffee shop business plan should include important information such as where the new coffee shop will be located, statistics on vehicular and foot traffic past the site, the cost of the monthly rent, and the cost of supplies.

In addition, it is important that the coffee shop business plan include information on how the business owner plans to attract and retain qualified employees.

Hiring enough qualified and customer service focused staff members can be a challenge for many businesses, and it is important for the business plan to provide details on how this common problem will be overcome.

The Measures to Take To Keep Cost Under control

It is also important that the coffee shop business plan include a section which details the cost of basic supplies, such as raw coffee beans, creamers, sugar, cups, stirrers, plates, etc.

These consumables will represent a significant cost, and it is important that the coffee shop business plan address the measures taken by the business owner to keep these costs under control.

Listing Your Competitive Advantage

It is important as well for the coffee shop business plan to include a section on current level of competition in the market, including competition from large chain coffee shops.

This section of the coffee shop business plan should also include information on the factors that will make this new coffee shop unique in the marketplace.

Many owners of small coffee shops have added additional amenities designed to attract a loyal clientele, and it is important for the coffee shop business plan to list these important competitive advantages.

Shaunta Pleasant is a professional web writer and editor on business plan topics. Visit my site to learn more about writing a business plan at http://www.business-plan-made-easy.com/coffee-shop-business-plan.html To download a copy of Business Plan Work Shop at http://www.business-plan-made-easy.com/business-plan-work-shop.html