In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for The Human Bean franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for The Human Bean franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned The Human Bean outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2024 FDD

Section IV – News updates on The Human Bean franchise opportunity

Section V – Presentation and analysis of The Human Bean’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2024 FDD, including information on the:

• 2023 average sales, loyalty and promotional discounts, net sales, cost of goods sold, gross profit, advertising, amortization expense, automobile expense, bank service charges, computer expense, contributions, depreciation expense, dues and subscriptions, employee benefits, insurance, interest expense, landscape maintenance, linens, licenses and permits, maintenance, office supplies, operating supplies, payroll expenses, payroll taxes, postage and delivery, printing and reproduction, professional fees, rent, repairs, security, taxes – personal property, taxes – real property, telephone, travel and entertainment, utilities, total expenses, and net income for the 12 affiliate-owned The Human Bean drive-thru stores that were in operation for the entire 12-month period ending December 31, 2023

• 2023 average and median sales for the 124 franchised The Human Bean drive-thru stores that were in operation for the entire 12-month period ending December 31, 2023

• 2023 franchisee adjusted net income, coffee and other products/supplies differential, shipping differential, and total cost of goods differential (in dollars and as a percentage of average sales), based on The Human Bean’s estimate of the cost differentials between affiliate-owned and franchised stores

Section VI – Key ratios, comparables, computations, and analyses for The Human Bean franchise opportunity (exclusive content for Platinum subscribers)

Section I – The Human Bean Franchise Costs

• Site Analysis Fee:  $5,000
• Initial Franchise Fee:  $30,000
• Optional Area Development Fee:  $10,000 per additional location
• Training Expenses:  $8,700 to $24,348
• Real Property (purchased or leased):  $4,500 to $15,000 (lease payment)
• Equipment, Fixtures, Other Fixed Assets, Construction, Remodeling, Leasehold Improvements, and Decorating Costs, Whether Purchased or Leased:  $460,000 to $1,095,000
• Inventory:  $23,000 to $26,000
• POS & Delivery Integration Software:  $375 to $523
• Digital Menu Board Management System:  $15 to $60
• Security Deposits, Utility Deposits, Business Licenses, and Other Prepaid Expenses:  $5,500 to $10,000
• Working Capital:  $5,000 to $20,000
• Advertising and Promotion:  $10,000 to $15,000
• Additional Funds for Initial 90-Day Period:  $15,000 to $50,000
• Total Estimated The Human Bean Franchise Costs (not including Area Development):  $562,390 to $1,290,931

Section II – The Human Bean’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Initial Franchise Fee:  $30,000 (includes a non-refundable Site Analysis Fee of $5,000)
• Brand Fee:  1% of gross revenue excluding taxes, promotional discounts, and delivery fees (may increase up to 2%)

Section III – Number of Franchised and Company-Owned The Human Bean Outlets

Franchised

2021

• Outlets at the Start of the Year:  100
• Outlets at the End of the Year:  116
• Net Change:  +16

2022

• Outlets at the Start of the Year:  116
• Outlets at the End of the Year:  133
• Net Change:  +17

2023

• Outlets at the Start of the Year:  133
• Outlets at the End of the Year:  146
• Net Change:  +13

Company-Owned

2021

• Outlets at the Start of the Year:  13
• Outlets at the End of the Year:  13
• Net Change:  0

2022

• Outlets at the Start of the Year:  13
• Outlets at the End of the Year:  12
• Net Change:  -1

2023

• Outlets at the Start of the Year:  12
• Outlets at the End of the Year:  12
• Net Change:  0

Section IV – News Updates on The Human Bean Franchise

Section V – Financial Performance Representations (Average Revenues and/or Profits) for The Human Bean Franchise (Item 19, 2024 FDD)

Part 1 – Affiliate Financial Performance

• Part 1 provides historical financial performance data based on the unaudited financial statements of 12 affiliate-owned stores for the 12-month period ending December 31, 2023.

• Net income means net sales (gross sales less promotional discounts), less expenses and cost of goods.

• During the fiscal year ending December 31, 2023, a total of 136 outlets were in operation. Of those, 12 were affiliate-owned outlets and 124 were franchised outlets.

• The Human Bean presents total costs and average net profits exclusive of owner income and owner expenses, meaning owner travel expenses and owner use of a company car. The Human Bean does not treat these as expenses a franchisee should expect to incur for purposes of this Item 19.

• Expenses for bookkeeping, payroll, and accounting are likewise excluded. As a franchisee, you will choose how you treat owner expenses (if any) and how to account for and pay any tax on owner income from your outlet.

• Some outlets have sold or earned this amount. Your individual results may differ. There is no assurance you’ll sell or earn as much.

2023 Average

Sales:  $940.510.15 (100.0%)

• Less: Loyalty and Promotional Discounts:  $83,661.36 (-8.9%)

Net Sales:  $856,848.79 (91.1%)

• Less: Cost of Goods Sold:  $310,652.17 (33.0%)

Gross Profit:  $546,196.62 (58.1%)

Expenses

• Advertising:  $6,782.44 (0.7%)
• Amortization Expense:  $25.50 (0.0%)
• Automobile Expense:  $0 (0.0%)
• Bank Service Charges:  $21,954.78 (2.3%)
• Brand Fund Expense:  $8,517.55 (0.9%)
• Computer Expense:  $5,646.69 (0.6%)
• Contributions:  $4,574.52 (0.5%)
• Depreciation Expense:  $15,631.84 (1.7%)
• Dues and Subscriptions:  $160.83 (0.0%)
• Employee Benefits:  $588.18 (0.1%)
• Insurance:  $4,295.37 (0.5%)
• Interest Expense:  $2,279.24 (0.2%)
• Landscape Maintenance:  $2,242.58 (0.2%)
• Linens:  $5,333.93 (0.6%)
• Licenses and Permits:  $1,018.67 (0.1%)
• Maintenance:  $18,242.17 (1.9%)
• Office Supplies:  $9,935.50 (1.1%)
• Operating Supplies:  $809.98 (0.1%)
• Payroll Expenses:  $247,649.32 (26.3%)
• Payroll Taxes:  $23,707.03 (2.5%)
• Postage and Delivery:  $97.79 (0.0%)
• Printing and Reproduction:  $204.73 (0.0%)
• Professional Fees:  $2,466.55 (0.3%)
• Rent:  $35,397.95 (3.8%)
• Repairs:  $115.19 (0.0%)
• Security:  $356.84 (0.0%)
• Taxes – Personal Property:  $794.40 (0.1%)
• Taxes – Real Property:  $4,289.99 (0.5%)
• Telephone:  $2,124.88 (0.2%)
• Travel and Entertainment:  $198.91 (0.0%)
• Utilities:  $18,141.20 (1.9%)
• Total Expenses:  $443,584.55 (47.2%)

Expenses + Cost of Goods Sold:  $754,236.72 (80.2%)

Net Income:  $102,612.07 (10.9%)

• The 12 affiliate-owned The Human Bean drive-thru locations used for Part 1 were in operation for the entire 12-month period ending December 31, 2023.

• Among these 12 affiliate-owned The Human Bean drive-thru locations, the most successful store had total sales of $1,276,167 and net income (excluding owner income and owner expenses) of $244,369. The least successful store had total sales of $628,789 and net income (excluding owner income and owner expenses) of $16,596.

• The criterion for most and least successful store is net income (loss) exclusive of owner income and expenses, not total sales. Total sales means gross sales, before promotional discounts and loyalty rewards.

• All of the 12 stores had positive net income (excluding owner income and owner expenses) during the 12-month period ending December 31, 2023.

• Five of the 12 (42%) stores had cost of goods higher than the average, and the other seven (58%) stores had cost of goods lower than the average.

• Six of the 12 (50%) stores had total sales higher than the average, and the other six (50%) stores had total sales lower than the average.

• Six (50%) of the stores had total expenses (excluding owner income and owner expenses) higher than the average, and the other six (50%) stores had total expenses (excluding owner income and owner expenses) lower than the average.

• Six (50%) of the stores had net income (excluding owner income and owner expenses) higher than the average, and the other six (50%) stores had net income (excluding owner income and owner expenses) lower than the average.

Part 2 – Franchisee Sales Performance

• Part 2 provides historical financial performance data based on the sales of 124 franchised stores for the 12-month period ending December 31, 2023.

• 2023 Average Franchisee Sales:  $876,244
• 2023 Median Franchisee Sales:  $837,097
• 2023 Average Systemwide Sales:  $881,875
• 2023 Median Systemwide Sales:  $842,115

• The 124 franchised The Human Bean drive-thru locations used for Part 2 were those in operation for the entire 12-month period ending December 31, 2023.

• Among these 124 franchised The Human Bean drive-thru locations, the most successful store had total sales of $1,667,842. The least successful store had total sales of $425,956. The criterion for most and least successful franchised stores is total sales.

• 43%, or 53 of the 124 franchised stores had total sales higher than the average, and the other 57%, or 71 stores had total sales lower than the average.

Part 3 – Franchisee Adjusted Net Income and Cost Differential

• Part 3 provides adjusted average net income for franchised units, based on The Human Bean’s estimate of the cost differentials between affiliate-owned and franchised stores.

2023 Franchisee Adjusted

• Net Income:  $84,597.19
• Total Cost of Goods Differential as a % of Average Sales:  1.92%
• Coffee and Other Products/Supplies Differential:  $16,358.27
• Shipping Differential:  $1,656.62
• Total Cost of Goods Differential:  $18,014.88

2023 Affiliate Average

• Net Income:  $102,612.07
• Total Cost of Goods Differential as a % of Average Sales:  0.0%
• Coffee and Other Products/Supplies Differential:  $0
• Shipping Differential:  $0
• Total Cost of Goods Differential:  $0

• *The figure for Adjusted Net Income in Part 3 for the franchisees’ Adjusted Net Income is The Human Bean’s estimate based on the average net income for the affiliate-owned stores, less the estimated average cost differential for franchisees. The first section of Part 3 shows the estimated cost differential for franchisees by category.

• The cost differential is based on three factors: coffee products, non-coffee products/supplies, and shipping costs.

• Franchisees currently pay approximately 30% more than affiliates for coffee products, and approximately 20% of the franchisee’s total cost of goods will be for coffee products. This price differential may be increased in the future up to 35%.

• Most franchisees pay the same price for non-coffee products/supplies as the affiliate-owned stores, but in certain regions there is a differential, and The Human Bean averaged the differential across all the franchised outlets.

• Franchisees receive free shipping for coffee products on orders over the minimum size, so The Human Bean did not calculate any differential for shipping costs on coffee products.

• A few other supplies, namely branded coffee mugs, apparel, and temporary point-of-sale marketing materials, are sold by The Human Bean to the affiliate-owned stores for less than the price paid by the franchisees. The effect of this fourth differential on the Adjusted Net Income figure was insubstantial.

• The payroll expense figures in Part 1 include an hourly rate and bonus for a manager. You or your manager should expect to work full-time in areas such as general administration, bill paying, staffing, scheduling, general errands, and supply pick-up and delivery.

• If you do not delegate these functions to a manager, your payroll expenses will be lowered by the amount of that manager’s wages and bonus, payroll taxes on those wages, and any other employee-related expenses.

• Each of the 12 affiliate-owned outlets employed a manager other than the owners.

Section VI – The Human Bean Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️