Have you ever thought about owning and operating your own tea shop? Junbi is a tea franchise that serves handcrafted beverages such as matcha, tea, coffee and snacks. Junbi allows you to open and run one of their shops. Keep reading to learn about the Junbi franchise and what it takes to open up your own Junbi store.
Junbi was founded by two couples who are best friends (Dan Tran, June Quan, Anna Wang and Jeremy Tu) and they wanted to “create a movement that draws on the strength of the earth.” They hope to deliver energy and goodness through matcha and to motivate people to create their own path.
There isn’t a clear CEO and CFO of Junbi but there are four major roles in which the founders hold. They all have been in their roles since September 2019, which is when the business formed. Dan Tran is the Director of Operations. June Quan is the director of marketing and legal. Anna Wang is the director of human resources. Lastly, Jeremy Tu is the director of business development.
The initial investment to open up a Junbi tea franchise is $30,000. In addition to this, you will be required to pay $19,100 for inventory which includes matcha, teas, uniforms,equipment and supplies. There is also a developmental fee of $15,000 for each additional shop you build.
|Initial Franchise Fee||$30,000|
|Plans and Construction||$100,000 – $195,000|
|Furniture, Fixtures, and Equipment||$50,000 – $100,000|
|Signs||$5,000 – $15,000|
|Computer, Software, Point of Sale Systems||$6,250 – $15,000|
|Initial Inventory||$12,250 – $19,500|
|Prepaid Rent and Lease Deposits||$8,000 – $12,000|
|Utility Deposits||$500 – $1,000|
|Insurance Deposit||$500 – $2,500|
|Travel for Initial Training||$2,500 – $5,500|
|Grand Opening Marketing Expense||$10,000|
|Professional Fees||$2,500 – $5,000|
|Architectural Fees||$10,000 – $20,000|
|Business Licenses||$500 – $5,000|
|Miscellaneous Expenses||$500 – $5,000|
|Printing, Stationary, and Office Supplies||$750|
|Additional Funds – Initial Period of 3 mos||$25,000 – $50,000|
|Total Estimates||$263,750 – $486,250|
As shown in the charts, the cost to open up a Junbi can be anywhere from $263,750 to $486,250. This wide range of initial investment depends on the size of your shop, the economy, competition, geography, wage and even your business experience. Some of the high costs are the plans/construction of the building, which can be anywhere between $100,000 to $195,000. Also, the furniture and equipment ranges from $50,000 to $100,000. This is common in most franchises, where the equipment and building is the majority of the investment. At Junbi there is specific furniture and equipment you need to buy so there isn’t much flexibility for design or choosing how much it costs.
The Royalty fee is 6% of your gross sales.
There are a lot of unclear ongoing costs and this can make it difficult to decide whether to invest in opening up this franchise. But the ones that are specifically listed are quite costly. There is $1,000 per day for the product and supplier which can add up easily and if you don’t pay up, Junbi will charge an additional cost. Also if you request additional training for employees through the company, it will cost $300 per day. The brand development fee is up to 2% of your gross sales and this is due weekly. There are many costs that seem reasonable at first but when looking at how often it needs to be paid it can add up.
|Royalty||6% of gross sales|
|Brand Development Fund||Up to 2% of gross sales|
|Local Marketing||Minimum of 2% of monthly gross sales|
|Technology||Not exceeding $200 per month|
|Local and Regional Advertising Cooperatives||Established by cooperative members|
|Initial Training for Additional Employees||Then current training fee, plus expenses|
|Supplemental On-Site Training||Then current rate per trainer, plus expenses|
|Royalty Payment Late Charges||The lesser of 5% per month of any late royalty payment or $50|
|Royalty Reporting Charge||$50 per occurrence|
|Financial Reporting Late Charge||$100 per occurrence|
|Interest Charges||The lesser of 18% per annum or the maximum legal rate allowed by the state|
|Review and Audit||Actual Costs|
|Collection Costs and Attorney Fees||Amount incurred by us to collect unpaid royalty fees and other fees or sums due from you to us|
|NSF Check Fee of Failed Electronic Fund Transfer||5% of amount or $50, whichever is greater or maximum fee allowed by the law|
|General non-compliance||Amount of actual fees, costs, and or expenses that we incur in connection with your non-performance of your obligations under the Franchise Agreement|
|Product or Supplier Non-Compliance||$1,000 per day|
|Architectural Plan Review||$1,000 – $3,000|
|Supplier Review||Our actual costs to review a|
It is required to pay at least 2% of your gross sales towards local marketing. This is a monthly fee and is an ongoing fee for the franchise. Junbi will provide ideas for marketing displays, promotions and campaigns. Any marking efforts has to be pre-approved by Junbi in the form of writing.
Junbi does not provide financial information on the performances of their existing franchise. The information will be provided when the franchisor is seriously considering buying a unit and has evidence to prove this. According to their FDD, Junbi does not make predictions on how a franchise will perform and instead provides actual records of that outlet.
|Outlet type||Year||Outlets at the Start of the Year||Outlets at the End of the Year||Net Change|
|State||Franchise Agreement Signed But Not Yet Opened||Outlets at the Start of the Year||Outlets at the End of the Year||Net Change|
Based on the chart above, there are no current franchised businesses of Junbi. The net change is positive for the company owned, with one Junbi opened in 2017 and another in 2018. There are a total of two Junbi outlets, which is small but sensible considering the fact that Junbi recently opened. Junbi is fairly new so it hasn’t had much time to grow but in the second chart it does say it is opening up six franchised outlets in 2020. Their newest FDD has not yet been released, but nevertheless, the projected number of franchise openings is a big step for the company and a possible indicator that their franchise is growing rapidly.
|Net Income||$ (1,500)|
|Adjustments to Reconcile Income to Net Cash Provided|
|Increase / (Decrease) State Tax Payable||$ 800|
|Net Cash Used in Operating Activities||$ (700)||$ 585,031|
|Cash Flow from Financing Activities||$23,249|
|Net Cash Provided by Financing Activities||$ 122,000||$ 123,655|
|Net Increase in Cash and Cash Equivalents||$121,300||$ 15,690|
|Cash and Cash Equivalents – Sep 9, 2019||—-|
|Cash and Cash Equivalents – Dec 31, 2019||$ 121,300||$ (233,806)|
Junbi has a total of $121,300 worth of cash on hand. Their net income is $1,500, which is very low compared to the average franchise and it shows that the company is relying heavily on the member’s investments. However, it is important to take into consideration the fact that Junbi is a new business concept. Most businesses can take years to earn back the money they invested when starting their company. The money they used in operating expenses is very low and it shows that Junbi does not have abnormally high operating costs.
Owning a franchise is a significant risk and doing your research is the important first step to mitigate this risk. Junbi is not just a cafe to the founders, but a movement where they can have a positive impact on people’s lives. If this sounds interesting to you, you might be the right fit for this establishment.
At the same time, one thing to be wary of is the lack of data Junbi provides on how much franchisors make. This can come off as sketchy but it could also be due to Junbi being so new and not being able to determine the franchisor’s earnings since there haven’t been previous examples. According to their data, Junbi has five upcoming franchises and they might have more financial details in the next year because of this. It’s crucial to closely examine these new cafes and see if they are doing well and what they could have done better.
Are you thinking about investing in a Junbi franchise, or interested in exploring more options? Make sure to check out Vetted Biz’s website for listings of other similar franchises in the Food and Beverage industry.
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