Risk Score
Pending analysis
Investment Range
$242,800 - $609,600
Franchise Fee
$35,000
Total US Locations
3
Business Summary
Arwa Coffee operates specialty coffee shops that provide a premium dine-in and carry-out experience. Arwa Coffee's menu features signature coffee prepared in the Yemeni tradition, alongside a variety of espressos, cappuccinos, lattes, and teas infused with custom spices. In addition to beverages, Arwa Coffee shops offer pastries, baked goods, branded merchandise, and whole bean coffee products, all presented in a welcoming café-style atmosphere with distinctive interior design elements.
Corporate History
Arwa Coffee Franchising LLC was formed in Texas in November 2023 and began offering Arwa Coffee franchises on February 14, 2024. The franchisor does not directly operate coffee shops, but its affiliate, Arwa Coffee LLC, formed in February 2022, has operated one corporate-owned location since December 2022 and plans to open a second in July 2025. Another affiliate, Arwa Coffee Irving, LLC, formed in February 2024, is developing a location anticipated to open in Spring 2025. Arwa Distributors LLC, established in December 2023, supplies proprietary goods and merchandise to both franchisees and corporate locations. Arwa Coffee IP Holdings LLC, also formed in December 2023, owns and licenses the trademarks for the Arwa Coffee brand.
Financial Overview
Investment Range
$242,800 - $609,600
Franchise Fee (Low)
$35,000
Franchise Fee (High)
$35,000
Royalty %
4%
Marketing %
1%
Equipment Costs (Low)
$147,000
Equipment Costs (High)
$467,000
Working Capital
$22,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Arwa Coffee Franchising LLC's financial health, as disclosed in its FDD, raises some concerns for potential franchisees. The FDD itself, in its 'Special Risks to Consider About This Franchise' section, directly states that the franchisor's financial condition 'calls into question the franchisor's financial ability to provide services and support to you.' Looking at the financial statements for the year ended December 31, 2024, Arwa Coffee Franchising LLC has negative members' equity of $(30,125) and reported a net loss of $(47,732) for the year. This means the company's liabilities exceed its assets, and it lost money during its most recent fiscal year. While the company did have positive net cash flow from operating activities, the overall financial picture indicates a challenging position. The auditors did not include a going concern qualification in their report, but the FDD's own highlighted risk emphasizes the financial situation for the franchisor.
Financing Details
Arwa Coffee Franchising LLC does not offer any direct or indirect financing options to its franchisees. This means that Arwa Coffee will not lend money for the initial franchise fee, equipment, or any other operational costs. They also do not guarantee any notes, leases, or other obligations that a franchisee might incur from third-party lenders.
Performance Metrics
Total US Locations
3
Franchised Units
1
Corporate Units
2
Avg Square Footage
2,400
Franchising Since
2024
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Arwa Coffee Franchising LLC states that there is no litigation required to be disclosed in Item 3 of its Franchise Disclosure Document. This means that Arwa Coffee Franchising LLC, along with its executives and affiliates, has no pending or past material lawsuits, arbitration proceedings, or other legal actions that would need to be reported to potential franchisees.
Bankruptcy History
Arwa Coffee Franchising LLC has no bankruptcy history to report in this Item.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, Arwa Coffee franchisees must have fully complied with the Franchise Agreement and any other agreements with Arwa Coffee Franchising LLC or its affiliates. They must update, remodel, and refurbish their Coffee Shop signage and equipment to meet current standards for new franchisees. All monetary obligations to Arwa Coffee Franchising LLC and its affiliates must be satisfied, including timely payment of a renewal fee equal to 50% of the then-current initial franchise fee. Franchisees must not be in default of any agreement. They are required to give written notice of their intent to renew between 90 and 180 days before the current term expires. Arwa Coffee franchisees must also sign the franchisor's then-current franchise agreement, which may have materially different terms and conditions (including higher royalty and brand development/marketing fees), comply with current franchisee qualifications and any new training requirements, and execute a general release of all claims against Arwa Coffee Franchising LLC and its affiliates.
Training & Support Program
Franchisor Assistance
Arwa Coffee Franchising LLC provides its franchisees with comprehensive support both before and after opening. Before opening, Arwa Coffee assists with reviewing and advising on potential site locations, provides standard building plans and specifications, and offers lists of approved suppliers for necessary equipment, signs, fixtures, and initial inventory. Arwa Coffee franchisees receive access to the confidential Operations Manual and participate in an initial training program. The franchisor also offers advice for grand opening marketing plans and provides one of its representatives for on-site (or virtual) opening support to familiarize staff with Arwa Coffee techniques. After opening, Arwa Coffee provides suggested staffing levels, hiring guidelines, and operational instructions through its manual. It administers the Brand Development Fees and provides an unaudited annual financial statement of these fees upon written request. Optionally, Arwa Coffee may review business plans, offer advice by phone or electronically on improving operations, provide recommended pricing, and suggest administrative, bookkeeping, accounting, and inventory control procedures. Arwa Coffee Franchising LLC may also maintain a brand website that includes franchisee business information.
Initial Training Hours
80
Training Location
Arwa Coffee's headquarters in Carrollton, Texas, its offices and business location in Richardson, Texas, or the franchisee's franchised business location, or another location designated by Arwa Coffee.
Ongoing Support
Arwa Coffee Franchising LLC provides its franchisees with ongoing support after their business opens. This includes suggested staffing levels, hiring guidelines, and operational instructions via the Operations Manual, which can be used for new employee training. Arwa Coffee administers the Brand Development Fees and will provide an annual unaudited financial statement of these contributions and expenditures upon written request. Arwa Coffee may also offer advice by telephone or electronic communication regarding business improvement, development, and problem resolution, and can provide in-person support for a daily fee plus expenses if requested. The franchisor may provide recommended prices for products and services and can offer recommended procedures for administration, bookkeeping, accounting, and inventory control. Arwa Coffee may maintain a brand website that includes franchisee business information. Additionally, Arwa Coffee may require franchisees to send their Designated Manager and other employees to additional courses, seminars, and training programs, including regional meetings or an annual conference. While attendance at the annual conference may incur a fee (up to $1,000 per person), franchisees are responsible for all related travel, lodging, and food costs. On-site remedial training is available, if requested or deemed necessary, for a fee plus expenses.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
absentee-allowed
Territory Type
limited
Territory Size Requirements
Arwa Coffee franchisees operate their coffee shop from an approved commercial retail space measuring 1,800 to 3,000 square feet. The Designated Area, which is a protected territory once the location is identified, is generally a geographic circle with a 3-mile radius around the coffee shop's front door. However, in densely populated urban areas, this Designated Area may be smaller, potentially as compact as an office or retail building. This protected territory excludes certain "Reserved Areas" where Arwa Coffee retains the right to operate or license others to operate, such as shopping malls, airports, or campuses.
Staffing Notes
Arwa Coffee franchisees are not required to personally participate in the direct operation of their business, but they must designate a "Designated Manager." This manager is primarily responsible for the business, holds decision-making authority, and must devote full-time efforts to the coffee shop's management and operation. The Designated Manager must successfully complete Arwa Coffee's initial training program, as well as any future post-opening training and required meetings. If the Designated Manager does not dedicate full-time efforts, franchisees must appoint a General Manager who has completed the training and will devote full-time attention to the coffee shop. All hiring decisions, rates of pay, discipline, and employment conditions are the sole responsibility of the franchisee. Arwa Coffee does not prohibit franchisees from soliciting or hiring employees from other franchisees or company-owned outlets within the system; however, if a franchisee hires an employee who attended Arwa Coffee's training program within the past year from another franchisee, the hiring franchisee must reimburse the original franchisee for the training fees and costs. Arwa Coffee may require the General Manager and all employees to sign confidentiality agreements.