CoCo started its humble beginnings in Tamsui, Taiwan in 1997 before expanding its footprint throughout Asia, South Pacific and North America. CoCo Fresh Tea & Juice has become a globally recognized bubble tea franchise known for its high-quality and innovative beverages. Their menu offers a diverse range of drinks, including traditional milk teas, fruit teas, and unique creations. Coco emphasizes the use of fresh tea leaves, real fruit, and natural flavors in its drinks, allowing for customization of sweetness and ice levels.
Please note, the law firm of Waldrop & Colvin has no affiliation with Coco Fresh Tea & Juice. Waldrop & Colvin is a franchise law firm and the goal of this blog post is to highlight the initial and ongoing financial demands of purchasing a CoCo franchise. You can also find a copy of a publicly filed disclosure document at the end of this post.
The Cost to Open a CoCo Franchised Outlet
Interested in opening your own CoCo franchise business? Expect to invest between $241,300 to $474,000 to launch a 1-store CoCo Fresh Tea and Juice franchise. Meanwhile, if you want to open a 3-store CoCo Fresh Tea and Juice Franchise, the price ranges from $647,100 to $1,349,000.
That is what CoCo estimates it will cost you to get your location ready to open and operate for 3 months according to its 2023 franchise disclosure document (“FDD”).
The Initial Franchise Fee
As of 2023, the initial franchise fee is $60,000 for a 1-store franchise and $120,000 for a 3-store franchise. This fee goes to Infinilush Company Limited when you sign a franchise agreement.
The Startup Expenses
You will need funds sufficient to build-out a franchised location. This is broken down into amounts to be paid to Coco’s and its affiliates and amounts paid to third-parties. This includes the legal processing fee, security deposit, initial on-site assistance, opening inventory, leasehold improvements, furniture and fixtures, interior and exterior signage, approved location – initial rental payments and deposits, utility dpeosit and fees, other initial inventory and opening supplies, insurance, training expenses, professional fees, grand opening advertising, business license and permits, and certain other items.
The initial estimated expenses are laid out in Item 7 of the Coco’s Franchise Disclosure Document.
The leasehold improvements are the greatest of the estimated startup costs.
The Operating Expenses
According to the 2023 FDD, you will need $20,000 to $40,000 in cash on hand to operate a Coco 1-store franchise for the first three months or $60,000 to $120,000 for a Coco 3-store franchise. This amount includes miscellaneous supplies and equipment, payroll costs, petty cash, and other miscellaneous costs.
The Ongoing Expenses Due to CoCo
You will naturally incur ongoing operating expenses for any business. The franchise relationship typically involves ongoing support and an ongoing obligation to pay certain royalty fees. As of 2023, Coco collects 6% of Net Sales from the preceding month as ongoing royalty fee on a monthly basis. They also require a marketing expenditure into a brand fund of up to 2% of your net sales from the preceding month, and require the same to be spent on local marketing efforts. Additional fees paid to the franchisor are included in Item 6 of the FDD.
Paying ongoing royalties and fees is the cost of doing business. You pay these fees in exchange for the franchisor allowing you to take advantage of their “know how” and use their marks, systems, and processes to offer their products and services.
Does CoCo Negotiate with prospects?
Maybe.
Dr. Chester L. Karrass wrote a book entitled: In business as in life, you don’t get what you deserve, you get what you negotiate. Our experience has found this adage to be true.
You should consult with a franchise attorney about negotiating the business and legal terms of every franchise agreement.
Are There CoCo Franchise Requirements To Participate In Day-To-Day Operations?
Any restaurant requires full time attention and management. CoCo’s franchise agreement provides that the franchisee’s designated manager must devote his or her full time, attention and effort to the franchised business and provide direct and day-to-day supervision of the operation.
How Many Franchised Locations?
Franchisors disclose the total number of outlets in operation in Item 20 of the FDD. Over the past 3 years, franchised outlets have increased slightly. Overall, the franchisor has grown from 1 franchised store on January 1, 2020, to 6 franchised stores on December 31, 2022. No outlets have been terminated or reacquired in the past 3 years. Current outlets are located in California, Massachusetts, and Washington.
Where Can I Find the 2023 CoCo Franchise FDD?
Click here for the initial version of the 2023 franchise disclosure document issued on March 28, 2023 which was filed in Virginia through the NASAA electronic filing depository. Please note, disclosure document may may not be in its current form or approved in all states. We have no affiliation with CoCo and relied on publicly available information to compile this blog post. Minor changes may occur in the FDD, or the franchisor may not be authorized to offer franchises in your state. You should consult with franchise counsel and reach out to the franchisor directly if you are seriously considering a franchise opportunity. If we are retained to review an FDD for you, we will review the copy disclosed to you directly by the franchisor.
Have questions? Reach out to Derek Colvin, our law firms franchise partner. Our franchise attorneys excel at empowering clients to make informed decisions and they enjoy supporting entrepreneurs as they explore opportunities in franchising. The attorneys at Waldrop & Colvin would be honored to provide legal guidance as you explore an opportunity with any franchisor.
Meet the Author:
Christine Bontuyan is a lawyer in the Philippines and she is based in Cebu City. She earned her Juris Doctor degree in 2020. Apart from handling civil and criminal cases in the Philippines, Christine serves as a paralegal for reputable US law firms. She previously served as an elected public official in the Philippines, as the Sangguniang Kabataan Chairperson of Barangay Talamban, Cebu City from 2018 to 2023.
