COFFEE REPUBLIC - about to boil in 2006?

Isn't that the case with all franchises tho? Like why does someone buy a Dominos Pizza franchise and not open their own Pizza Shop? Why does anyone franchise? If everyone thought they would just open their own store rather than buy a franchise no franchise would exist. But franchised businesses are some of the most successful in the world.

I don't think they are paying £125K to CFE either, the basic payment is 10% of sales. Stores are expected to generate around £600K revenues on average.

These stores are not all losing money, most are profitable. If they are turning over £500K and making say £20K profit the 30% sales gain from moving to deli format increases sales to around £650K and profits probably in excess of £100K. If the franchise deli's increase turnover further through being run better than company owned delis then £200K profit per store could easily be achieved before giving CFE their 10% cut. deduct £75K for CFE and the store owner's profit is £125K.

12 franchises created from existing stores this year would on average bring in around £1.5m from the sale of the stores to franchisees if each store goes for about £120K. There wouldn't be much costs coming out of that fore CFE - 20% say. So an additional £1.2m profit this year before any monthly revenue take from the new stores. They lost £1.4m last year.

Then there's in royalties. Lets say 7.5% clear after they have paid out advertising and marketing group wide. 12 stores = turnover of £7.2m on an average of £600K sales per store. £540K pure profit.

I reckon they need 10 franchises to be in profit - they have 4 already in 3 months.

Sell a few territory franchises (rumours that a large spanish terrirory franchises has been done and a UK area) and the profits could really start to flow imo.

People buy franchises - fact of life imo.

CR