COFFEE REPUBLIC - about to boil in 2006?

CR
re jtjh's question,

for me, the main reason why CFE is franchising is a problem of cash: the company desparately needs to invest in its stores but it has no money.

CFE could get funding from:

1. operations (NO, underinvestment in old CF bars makes them cash flow negative)
2. banks (no, gearing high enough)
3. shareholders (really the last option)
tam tam tam:
4. franchising (franchisees will buy the location, pay for the new clean store, and pay fees on sales)

So franchising is the way forward. It is true that franchised bars have several pros: owners are more motivated, etc.
However, it's not correct to say that franchising is the best way per se: head office has less control on what happens at the shops etc. And Caffe nero etc have been very very profitable without any franchising!

So for CFE franchising is just a clever way to get funding for their 'new and improved' stores investment plan, and it seems to be working!