Canada is a unique country for Classic Rock Coffee in the sense that, though we have a standard process for International stores, much of how we operate in the United States can be put into place in Canada. The biggest hurdles to overcome have to do with duty and taxes. While it would extremely easy to set up stores in Canada and ship product directly as we do with all stores in the US, the shipping costs become prohibitive from doing so. Therefore, we have a unique way to address this that proves to be very cost effective for our franchises.
Franchise Fee and Royalty
The franchise fee for a single territory is $39,000 USD and the monthly royalty is 5%.
The standard advertising fee in the US is 2%. We are currently waiving this fee for Canadian franchisees.
Shipping (non food items)
There are several categories of products that generally are shipped directly from the US. Here are the modifications that we make for Canada that help to keep costs down:
- Roasted Coffee (weekly) — There is no duty paid on roasted coffee. Franchisees pay a 5% tax coming to Canada (most provinces). Classic Rock Coffee provides free weekly shipping to your door at $8.95/lb wholesale.
- Syrups — We have distributors of our high end syrups and sauces in Canada. You will order directly from them to avoid duty and taxes.
- Frappe Powder — We have distributors of our high end syrups and sauces in Canada. You will order directly from them to avoid duty and taxes.
- Cups/Lids/Straws — There is no duty paid on branded Cups/Lids/Straws. Franchisees pay a 5% tax coming to Canada (most provinces). These must be ordered for the US HQ and shipped from here. Typically they are sent weekly, but we would recommend shipping to a Canada/US Border location 4x per year and then driving them to your store. This will reduce the franchisee shipping cost by nearly 3x and is very efficient.
- You will be required to obtain a customs broker for each shipment from the US. The fees vary, but generally are around $20-40 per shipment. You can review this process at http://www.cbsa-asfc.gc.ca/services/cb-cd/cb-cd-eng.html
The Classic Rock Coffee Franchise Disclosure Document states, “The total investment necessary to begin operation of a Classic Rock Coffee Co. franchise ranges from $320,000 to $512,000. This includes $39,000, which must be paid to the franchisor or its affiliate.”
We do not currently have a filing in all 10 provinces for the franchise. Just as we do filings for states in the US, we only file the necessary papers when we know that we have an approved applicant who is serious about moving forward. The reason for this is that every province has specific franchise filing rules and fees.
If you decide to move forward with us and we do not currently have a filing in your province, one of the things that we will do his take a deposit from you that will cover the cost of the filing fee as part of the agreement. The initial deposit is $5000 USD, which covers the fees charged by the province and the attorney fees. Inquire directly from us if a filling is already in place. This does change over time and you may not be required to pay this deposit.
If we do file this for you, we will reduce your franchise fee by that prepayment amount. In essence, there will be no extra out-of-pocket for you but also guarantees that we will have no out-of-pocket in filing for someone that is not going to ultimately get a franchisee.
- The filings have a fee of $5000 for each Province.
- We will provide a one page contract with you stating that you have been approved as a franchisee for your province and will be awarded a territory once all filings are complete with the province. The document will also state that Classic Rock Coffee will collect the filling fee of $5000 from you prior to the filing, and that the franchise fee of $39,000 will be reduced by $5000.
- We will invoice you for $5000 from Classic Rock Coffee Franchising.
- The document prep will take about 2-6 weeks to complete and file.
- Once it is filed, we will send you a new FDD (complete with Canada info). You will sign that you have received in the same way you did previously.
- At that point, we have to wait 14 days by law before signing an agreement (which we can do electronically),. The Agreement will list the franchise fee as $32,000, which you can wire to us after signing.
- Within two days you will be in touch with our real estate department (based in Atlanta), who will begin the site location work for you … and we’ll be underway.
All approved applicants will be given an opportunity to work with our Real Estate agency who will assist in finding an approve location for you. They are based in the US but can work directly with one of your local agencies. This service can be provided as part of your franchise relationship with CRCC, just as if you were in the US.
In Person Interview at CRCC
Prior to signing an agreement with us, all applicants are required to spend time in our HQ and meet with key staff. We ask that visitors stay for at least one business day and you can arrange that time directly with the franchise directly. Information getting to Springfield can be found here: http://classicrockcoffeefranchise.com/getting-to-springfield/