How does the Coffee News franchisee's obligations regarding pre-opening purchases (Item 9) relate to the potential postponement of the opening date and associated fees (Item 7)?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
ITEM 5**
INITIAL FRANCHISE FEE
You must pay an initial franchise fee of $9,900.00 for the first franchise that is due upon signing the initial franchise agreement, $500.00 of which must be paid to us for document preparation including without limitation draft of the franchise agreement. The $500.00 shall be deducted from $9,900.00 upon signing the initial franchise agreement. For this, you will receive weekly copy within 14 days of signing the agreement with additional copy mailed in 8-week increments (no later than 5 business days prior to the end of the following 8-week period) which effectively represents reimbursement for weekly copy during the initial 3-month period of the agreement. Agreements may include up to the maximum 20 franchises permitted per publisher. A fee of $7,000.00 for each additional franchise is due at the time of signing the agreement for additional franchise(s). Upon our sole discretion, we may offer short term sales promotions to existing Publishers who wish to purchase additional franchise unit(s) from time to time. In the event that you notify us that you wish to revise the start date of business and postpone it by one month or more subsequent to your receipt of the initially executed franchise agreement, you need to pay for additional $1,000.00 to us to obtain such extension and hold your proposed licensed area for such one or more months before you pay the full amount due under the agreement. All fees are non-refundable.
What This Means (2025 FDD)
According to the 2025 Coffee News Franchise Disclosure Document, Item 9 generally covers the franchisee's obligations and restrictions regarding approved suppliers and purchasing requirements. However, the provided excerpts do not contain specific details about pre-opening purchases required under Item 9. Therefore, it's not possible to directly link Item 9 obligations to the postponement fees described in Item 5. Item 5 does state that if a Coffee News franchisee wishes to revise the start date of their business and postpone it by one month or more after receiving the initially executed franchise agreement, they must pay Coffee News an additional $1,000.00. This fee secures the extension and holds the franchisee's proposed licensed area for the extended period before the full amount due under the agreement is paid. All fees are non-refundable.
Item 23 states that all initial fees and payments are due upon Coffee News's completion of all pre-opening obligations. This implies that the $1,000 postponement fee would likely need to be paid before Coffee News completes its pre-opening obligations if the franchisee chooses to delay their start date. This ensures Coffee News is compensated for holding the territory during the postponement. The FDD also mentions that the initial franchise fee is $9,900.00 for the first franchise, with $500.00 allocated for document preparation.
To fully understand the relationship between pre-opening purchases and postponement fees, a prospective Coffee News franchisee should ask the franchisor for a comprehensive list of all required pre-opening purchases, including the suppliers, estimated costs, and payment schedules. They should also clarify how postponing the opening date affects the payment schedule for these purchases and whether any of these purchases are refundable if the franchisee later decides to terminate the agreement. Understanding these details is crucial for managing the financial aspects of starting a Coffee News franchise and making informed decisions about the opening timeline.