How does the Coffee News franchisee's obligations regarding pre-opening purchases (Item 9) relate to the restrictions on sources of products and services (Item 8)?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
CES OF PRODUCTS AND SERVICES**
Periodical Copy
You must purchase weekly copy, also known as content, from us as the U.S. Franchisor. The weekly copy shall be used for the Periodical, hardcopy and/or online version, which contains the format and information to be included in all sections except the "What's Happening" section, which you shall provide. Weekly fees are not a part of the initial acquisition of your franchises as explained in Item 7. Weekly fees paid by you cover the cost of the copy or content we supply to you on an ongoing basis. Please see Item 6 for the amount of weekly fees paid by you. Copy or content shall be incorporated in each edition of Coffee News you publish according to the guidelines in the franchise agreement. Additionally, you must purchase the printing service from the local commercial printer in Bangor, Maine as Coffee News Printing, LLC contracts for a minimum period of one (1) year from the date of the franchise agreement. Upon expiration of such one (1) year, you may voluntarily stay with said local commercial printer or have the option to purchase printing service from another print shop. The Coffee News Online related services, if enrolled, must be purchased from either Shadow Fox Consulting in Valdosta, GA or Chil Consulting through us. Both companies are third-party contractors hired to provide Coffee News online services.
Other than the initial franchise fees, the weekly Royalty fees for copy represents all of our revenue from required purchases or leases in North America. In 2024, revenue from all sources was $424,965 with $387,947, representing all required purchases and leases for 91.3% of total revenues. In 2024, the affiliate Coffee News Printing LLC's total revenue was $444,936 and the required revenue derived from Coffee News publishers for the fiscal year 2024 was $4,233
representing .95% of its total revenue. However, the required purchase from Coffee News Printing LLC will not occur until after you open for business.
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, Item 8 outlines specific restrictions on where franchisees must source certain products and services, while Item 23 details the franchisee's obligation to make payments for these and other fees. Specifically, franchisees are required to purchase weekly copy (content) from Coffee News as the U.S. Franchisor. Additionally, for a minimum of one year from the franchise agreement date, franchisees must use the printing services of Coffee News Printing, LLC, a local commercial printer in Bangor, Maine. After the initial year, franchisees have the option to choose a different print shop. If the franchisee enrolls in Coffee News Online related services, they must purchase these services from either Shadow Fox Consulting in Valdosta, GA, or Chil Consulting through Coffee News. These companies are third-party contractors.
Item 23 states that all initial fees and payments owed by Coffee News franchisees are due in full upon completion of all pre-opening obligations under the franchise agreement. This means that while Item 8 restricts the sources from which franchisees can purchase certain goods and services, Item 23 clarifies when the franchisee is obligated to pay for these required purchases, as well as other fees associated with setting up the franchise.
The relationship between these items is that Item 8 defines what a Coffee News franchisee is required to purchase from specific sources, while Item 23 defines when the franchisee must pay for those purchases and other fees. For example, the franchisee must purchase weekly content from Coffee News, and they must begin paying the weekly fee of $80 for the hardcopy periodical after the initial period. The franchisee must also purchase printing services from Coffee News Printing, LLC for the first year. These obligations are tied to the pre-opening requirements, meaning payment is due upon completion of those pre-opening steps.
A prospective Coffee News franchisee should carefully consider these required purchases and payment terms, as they impact the initial investment and ongoing operational costs. Understanding these obligations is crucial for financial planning and ensuring compliance with the franchise agreement.