COFFEE REPUBLIC - 2007 Liberated! It’s all about the brand !

mitti 1000

I think a number of the stores that have been franchised are loss making or stores that don't make much profit at all. I believe some of the stores franchised off that performed like this have been done at a discount to get them away. It's better to get next to no initial net profit from the move to franchise if the store was loss making as that means losses are illiminated.

The need to get these away was probably more important than making much of a gain on them but reducing the losses in CFE's current situation.

The deal on new franchise stores is approx £200K up front and the cost of fitting it out borne by CFE but that has now changed in that it's probably more like £150K now and the franchisee fits it out.

The stores opened after the half year I can't account for. They may have been via a regional development franchise. In these cases CFE have already had 250K up front from the Regional Development Franchisee so some of the fees may be in that £600K the company talks about.

I cannot give you an exact explanation but that's my estimate. Instead why not give Steve Bartlett (Barty) a call and ask him? He likes to talk to shareholders and after all, he was just a bb poster here a few months ago.

I think more revealing is the £600K net that is coming in just from the first 3 months in H2 just from RFD's and the Bulgarian Master Franchise. It's easy to see this rate being stepped up and they will start bringing in the regular income in the future. As it all builds it just gets stronger and stronger. Barty and Peter Breech have only been in the job two months - you'd never have seen these RDF's and the international franchise under Hashemi imo.

CR