No Royalty Coffee Franchise? I Doubt it!
The Human Bean, an Oregon-based specialty coffee drive-thru franchise, recently announced in a company press release “it is expanding with 28 stores now open and area development agreements for another 110 drive-thrus in the U.S.”
The Human Bean claims they are offering an attractive franchise concept that is almost unheard of in the industry: no royalty fees!!!
I’m sure that is sweet music to some ears, but I suggest buyer beware. Sounds too good to be true, doesn’t it? What’s the catch?
A quick look at the FAQ off the Human Bean Website reveals:
Q: What are the ongoing royalty fees?
A: We do not collect a royalty fee on sales. We earn revenues from bulk sales of coffee beans, cups, lids and other supplies to our franchisees.
Sounds like a “Tie-Buying Clause” some say the most dreaded clause in franchising. The press release goes on to say: “Not having to pay franchise royalty fees each month means more money in the pockets of the franchisees.” Not necessarily; if the cost of the beans, cups, lids and other supplies are above market prices, then more money may not be left in franchisees pocket.
I’m not passing judgment on the Human Bean, I don’t know all the details, the stores look pretty cool, Medford, Oregon is a beautiful place to be from, and I believe in “fair trade” coffee but if it sounds too good to be true it probably is!
Jim Coen, Mr. Franchise
I have learned franchising from the ground up. I’ve been a franchisee for a bad franchisor. I’ve worked for good franchisors and I’ve worked for marginal franchisors. I’ve helped many franchisees succeed.
I provide a consulting process that saves you time and money in your franchise search and provides you with the tools to make the right choice for you and your family.
Call: 617-469-3002
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