Coco Fresh Franchise in 2024: Costs, Fee & FDD
Explore the potential of investing in a Coco Fresh Tea & Juice franchise, a global leader in the bubble tea industry. Learn about costs, market growth, and the comprehensive support system that helps franchisees thrive.
Table of Contents:
Coco Fresh Tea & Juice, more commonly known as Coco Fresh, is a global bubble tea franchise that has made a significant mark in the beverage industry. Founded in 1997 by Tommy Hung in Tamsui, Taiwan, the brand quickly became a pioneer in the bubble tea world. With a strong commitment to quality and innovation, Coco Fresh expanded its offerings beyond traditional bubble tea to include a variety of fresh juices, teas, and specialty drinks, catering to a wide range of tastes. The franchise is known for its modern and vibrant stores that create a welcoming atmosphere for customers, making it a popular hangout spot for all ages.
At the heart of Coco Fresh’s success are its core products: bubble tea with chewy tapioca pearls, fresh fruit teas, and milk-based drinks. They offer an array of flavors that appeal to both the adventurous and the classic tea drinker. Ancillary products include snacks and seasonal specialties that keep the menu fresh and exciting. Coco Fresh’s target market primarily includes young adults and teens who are drawn to trendy, customizable drinks, but it also serves families and office workers looking for a refreshing treat. The brand’s focus on high-quality ingredients and innovative recipes has helped it maintain a loyal customer base globally.
Coco Fresh has grown into a global franchise with over 4,000 locations spread across more than 20 countries, including major markets in Asia, North America, and Europe. The brand serves millions of customers daily, making it one of the largest bubble tea franchises in the world. This expansive reach is a testament to the franchise’s adaptability and the universal appeal of its products. In the U.S. alone, Coco Fresh has rapidly expanded, with locations in key cities, tapping into the growing bubble tea trend.
As a franchisee, you’ll be supported by Coco Fresh’s comprehensive franchise system, which includes extensive training programs, marketing support, and operational guidance. Franchisees receive hands-on training in product preparation, customer service, and store management to ensure consistency across all locations. Additionally, Coco Fresh offers ongoing support in areas like supply chain management and promotional campaigns, helping franchisees stay competitive in their local markets. This robust support system, combined with the brand’s global reputation, makes Coco Fresh an attractive option for those looking to enter the thriving bubble tea industry.
Coco Fresh Franchise Insights
- Coco Fresh’s impressive 67% year-over-year growth rate significantly outpaces the industry average of 1%, highlighting its strong market demand and potential for high returns. This rapid expansion reflects the brand’s ability to attract and retain customers, making it a promising opportunity for prospective franchisees.
- The bubble tea market is projected to grow by 7.5% annually, and Coco Fresh’s diverse menu caters to this rising demand, offering franchisees a solid footing in a thriving industry.
- Compared to other franchises in the food and beverage industry, Coco Fresh offers relatively lower initial investment costs, making it an accessible opportunity for new and experienced franchisees alike.
- Coco Fresh constantly innovates with seasonal drinks and limited-time offers, keeping the brand fresh and exciting, which not only attracts new customers but also encourages frequent visits from regular patrons.
Coco Fresh Franchise Key indicators
Growth YOY (%)
67%
vs industry 1%
Total U.S. Franchised Units
10
3-Year Failure Rate
10%
vs industry 11%
Total Investment
$221K-$454K
How much does it cost to open a Coco Fresh franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Coco Fresh franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Coco Fresh franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a Coco Fresh below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $40,000 | $40,000 |
| Legal Processing Fee | $2,000 | $2,000 |
| Security Deposit | $5,000 | $5,000 |
| Initial On-Site Assistance | $2,400 | $6,000 |
| Opening Inventory | $40,000 | $50,000 |
| Leasehold Improvements | $50,000 | $80,000 |
| Furniture and Fixtures | $27,000 | $44,000 |
| Interior and Exterior Signage | $500 | $100,000 |
| Initial Rental Payments and Deposits | $7,000 | $40,000 |
| Utility Deposit and Fees | $500 | $2,000 |
| Other Initial Inventory and Opening Supplies | $8,000 | $15,000 |
| Insurance | $8,000 | $12,000 |
| Training: Living and Travel Expenses | $3,500 | $6,000 |
| Professional Fees | $2,000 | $5,000 |
| Grand Opening Advertising | $5,000 | $5,000 |
| Business License and Permits | $400 | $2,000 |
| Additional Funds - 3 months | $20,000 | $40,000 |
| Total Estimated Initial Investment | $221,300 | $454,000 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
To open a Coco Fresh franchise, the required capital involves both the initial investment costs and certain financial qualifications set by the franchise. Let’s take a closer look below:
- Initial Investment The total estimated initial investment for a Coco Fresh franchise typically ranges from $221,000 to $454,000. This estimate includes startup costs such as the franchise fee, real estate, store construction, equipment, initial inventory, and working capital for the first few months of operation. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment. Please note that these figures are ranges and can vary based on location and specific store requirements.
- Liquid Assets Requirement Coco Fresh generally requires franchisees to have a minimum of $100,000 to $150,000 in liquid assets. This ensures that the franchisee has sufficient funds to manage the day-to-day operations and any unforeseen expenses during the initial period.
- Net Worth Requirement The overall net worth required to open a Coco Fresh franchise is typically recommended to be around $500,000 or more. This includes the value of assets such as real estate, investments, and personal property, minus any liabilities, ensuring the financial stability of the franchisee.
How much does a Coco Fresh franchise owner make?
Calculating the salary of a Coco Fresh franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Coco Fresh franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Coco Fresh Revenue & Gross Sales
While specific revenue figures for Coco Fresh franchises are not publicly disclosed, the franchise is renowned for its strong financial performance, driven by the global popularity of bubble tea and its innovative menu offerings. Generally, beverage franchises like Coco Fresh can achieve impressive sales figures when strategically located in high-traffic areas and operated with a focus on customer service and product quality. By capitalizing on the brand’s well-established reputation and growing consumer demand, franchise owners have the potential to generate significant revenue and enjoy lucrative returns on their investment.
Which key factors impact the average revenue performance of Coco Fresh franchisees?
The median gross sales revenue performance of U.S. Coco Fresh franchisees is likely influenced by several key factors. First, the increasing popularity of bubble tea in the U.S. market has created a strong demand for Coco Fresh’s products. Second, the brand’s focus on quality ingredients and innovative menu offerings helps attract and retain customers, leading to consistent sales. Location also plays a crucial role; stores situated in high-traffic areas, such as shopping centers or near college campuses, tend to perform better due to higher foot traffic. Additionally, effective local marketing strategies and strong franchisee support from the brand contribute to optimizing operations and maximizing revenue potential.
Coco Fresh Franchise Operational Costs
When opening a Coco Fresh franchise, it’s important to be aware of the primary ongoing operational costs to effectively manage your business and maintain profitability. These costs can vary depending on the location and size of your franchise, but here are some of the key expenses you should consider:
- Rent/Lease Payments Depending on your location, this could be a significant portion of your monthly expenses, especially if you’re in a high-traffic or prime area.
- Employee Wages Salaries for your staff, including baristas, managers, and any part-time employees, will be a regular ongoing cost.
- Inventory Costs This includes the cost of tea, milk, toppings, and other ingredients necessary to prepare your menu items, as well as packaging and promotional materials.
- Utilities Regular expenses such as electricity, water, gas, and internet are necessary to keep your store operational.
- Franchise Royalty Fees Coco Fresh typically requires franchisees to pay a percentage of their gross sales as an ongoing royalty fee.
- Marketing and Advertising Both local and national marketing initiatives require ongoing investment to attract and retain customers.
- Maintenance and Repairs Regular upkeep of equipment and the store premises to ensure smooth operations and a welcoming environment for customers.
Being mindful of these operational costs will help you better plan your budget and ensure the long-term success of your Coco Fresh franchise.
Coco Fresh Franchise Fees
When considering the ongoing fees associated with operating a Coco Fresh franchise, it’s crucial to understand the various charges that you’ll encounter on a regular basis. Below are some of the key ongoing fees you should be aware of:
- Royalty Fee 6% of your Net Sales from the preceding month, due monthly. You will need to pay this fee within 7 days of receiving the invoice, which contributes to the ongoing support and brand recognition provided by the franchisor.
- Security Deposit Replenishment Amount applied to past due balance, as incurred. If any portion of your Security Deposit is used to cover past due amounts, you are required to replenish it so that the balance is never less than $5,000 per store.
- Marketing Fund Contribution Not currently charged (subject to change, up to 2% of your Net Sales from the preceding month), due monthly. Although not currently required, if a Marketing Fund is established, you may be asked to contribute a percentage of your Net Sales to support broader marketing initiatives.
- Additional Fees There might be other additional fees depending on specific franchise agreements or changes in operational policies.
Understanding these fees and budgeting accordingly will help you manage your financial obligations and maintain the profitability of your franchise.
Coco Fresh Franchise Earnings
While specific earnings data for Coco Fresh franchises is not publicly disclosed, we can provide an informed overview based on industry trends and the franchise’s characteristics. Coco Fresh, known for its innovative bubble tea offerings and strong global brand presence, has the potential to generate substantial revenue in the fast-growing beverage sector. Factors such as location, customer demographics, and effective management are crucial in determining the financial success of a franchise.
Industry benchmarks for similar beverage franchises indicate that gross sales can vary, with well-positioned and efficiently managed franchises often achieving strong sales figures. When projecting potential earnings, it’s essential to consider the initial investment and ongoing costs, such as royalty and marketing fees. Franchises with robust support systems and comprehensive training programs, like Coco Fresh, are generally better positioned to reach profitability.
Prospective franchisees should conduct thorough market research, taking into account local competition and consumer trends in their area. By capitalizing on the brand’s popularity and following best practices, a Coco Fresh franchise has the potential to become a profitable business, aligning with the earnings potential seen in other successful beverage franchises. Consulting with current franchisees and financial advisors can also provide valuable insights into realistic earnings expectations.
How to Open a Coco Fresh Franchise
Becoming a Coco Fresh franchisee involves a structured process that ensures both the franchisee and franchisor are aligned for mutual success. This opportunity offers the chance to join a globally recognized brand in the fast-growing bubble tea industry, with strong support from the franchise team.
The full process for how to open a Coco Fresh franchise is outlined below:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Application If your initial inquiry is accepted, you will be invited to complete a more detailed application. This application will require comprehensive information about your personal and professional background, financial status, and reasons for wanting to become a Coco Fresh franchisee.
- Interview Process Following a successful application, you’ll enter a series of interviews, which may include phone interviews, in-person meetings, and discussions with Coco Fresh representatives. This stage evaluates your business acumen, understanding of the market, and alignment with Coco Fresh’s values and culture.
- Background and Financial Check A thorough background check and financial review are conducted to ensure you meet Coco Fresh’s standards for franchisees. This step is crucial for assessing your capability to operate a successful franchise.
- Evaluation The evaluation process is comprehensive, ensuring that only candidates who meet Coco Fresh’s high standards are selected. This phase may involve additional interviews and assessments to gauge your readiness to manage a franchise.
- Approval If you pass all evaluations, you will receive approval to proceed with the franchise. At this point, you’ll sign the franchise agreement, pay the initial fees, and begin the process of site selection and training.
- Site Selection and Lease Negotiation Work closely with Coco Fresh’s real estate team to choose a suitable location for your franchise. Once a location is identified, you’ll negotiate lease terms with the landlord, with Coco Fresh’s guidance to secure favorable conditions.
- Training Participate in an extensive training program provided by Coco Fresh, covering all aspects of franchise operations, from customer service to product preparation and management.
- Store Development Oversee the construction and design of your store according to Coco Fresh’s brand standards. This includes everything from layout and décor to equipment installation.
- Pre-Opening Preparation As you approach the opening date, ensure your store is fully stocked with inventory, and your staff is hired and trained. You’ll also work on marketing and promotional plans to attract customers from day one.
- Grand Opening and Start of Operations Plan and execute your grand opening with the support of Coco Fresh’s marketing team, officially launching your business. You’ll continue to receive ongoing support from the corporate team to help ensure your success.
Pros & Cons
Pros
Growing Market Demand: The popularity of bubble tea continues to rise, particularly among younger demographics, providing a strong market for Coco Fresh’s products.
Innovative Menu: The franchise regularly updates its offerings with new flavors and seasonal products, keeping the menu fresh and exciting for customers, which can drive repeat business.
Relatively Low Initial Investment: Compared to other food and beverage franchises, Coco Fresh requires a relatively lower initial investment, making it accessible to a broader range of potential franchisees.
Cons
Competitive Market: The bubble tea market is becoming increasingly saturated, with many new and existing brands competing for market share. This could make it challenging to stand out, especially in densely populated areas.
Location Dependency: The success of a Coco Fresh franchise can heavily depend on choosing the right location with high foot traffic and a demographic that aligns with the brand’s target market.
Fluctuating Consumer Preferences: While bubble tea is popular, consumer tastes can be fickle, and trends can shift quickly. Staying relevant and adapting to changing preferences is crucial but can be challenging.
Intensive Hands-On Management: Running a Coco Fresh franchise may require a significant time commitment and hands-on management, especially in the early stages, which may not suit all investors.
