Bad Ass Coffee Of Hawaii Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$526,100 - $992,400
Franchise Fee
$30,000
Total US Locations
33
Business Summary
Bad Ass Coffee of Hawaii operates retail coffee shops that feature a nostalgic Hawaiian atmosphere. The shops offer customers a full menu of coffee, espresso, and tea beverages, various food items, and unique branded merchandise, including coffee beans, mugs, and apparel. The brand focuses on providing authentic Hawaiian coffee, along with other premium international blends, in a relaxed setting for walk-in and drive-up customers. These shops are typically located in retail spaces within shopping centers, ranging from 1,500 to 1,800 square feet, and are designed to seat approximately 16 to 24 customers, often including amenities like Wi-Fi.
Corporate History
Royal Aloha Franchise Company, LLC was formed as a Colorado limited liability company in June 2019. In July 2019, Royal Aloha Franchise Company, LLC began offering franchises for Bad Ass Coffee of Hawaii shops. The company acquired most of its assets from two entities: Bad Ass Coffee Company of Hawaii, Inc. and Bad Ass Coffee Distributors, Inc. The predecessor franchisor, Bad Ass Coffee Company of Hawaii, Inc., had been offering franchises for coffee shops under the Bad Ass Coffee of Hawaii mark since February 1998 until July 2019.
Financial Overview
Investment Range
$526,100 - $992,400
Franchise Fee (Low)
$30,000
Franchise Fee (High)
$40,000
Royalty %
5%
Marketing %
2%
Equipment Costs (Low)
$332,200
Equipment Costs (High)
$779,500
Working Capital
$30,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
Bad Ass Coffee of Hawaii has experienced recurring losses and relies on contributions from its parent company, Royal Aloha Coffee Company, LLC (RACC), to fund its operations. The company is actively working to develop its brand name through marketing and advertising initiatives and by securing new franchise agreements, with the aim of improving its cash flow and overall operations. While the company believes it has enough cash and capital commitments to meet its funding needs for the next year, there is no guarantee that its plan will be successful or that additional funding will be available as required.
Financing Details
Bad Ass Coffee of Hawaii does not offer any direct or indirect financing options to its franchisees. Additionally, the franchisor does not guarantee any notes, leases, or other financial obligations that franchisees may incur. Franchisees are solely responsible for securing their own financing through third-party lenders or other sources.
Performance Metrics
Total US Locations
33
Franchised Units
32
Corporate Units
1
Avg Square Footage
1,650
Franchising Since
2019
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Count
2
Litigation Summary
Bad Ass Coffee of Hawaii's predecessor company has been involved in two litigation cases. The first case, Naughty Donkey Enterprises, LLC v. Bad Ass Coffee Company of Hawaii, Inc., was filed in June 2009 by an area developer claiming payments were due on a promissory note. The court granted summary judgment against the predecessor franchisor for $162,066, which was affirmed on appeal. This dispute was settled in September 2019 with the full payment of the judgment plus interest. The second case, Bad Ass Coffee Company of Hawaii, Inc. v. Royal Aloha International, LLC, was a declaratory action brought by the predecessor franchisor in September 2013 to invalidate a license agreement. The court found the license agreement enforceable, and a jury awarded the defendant $100,000 for breach of contract. This case was settled in March 2021 with a payment of $75,000 to the defendant.
Bankruptcy History
Bad Ass Coffee of Hawaii reports no bankruptcy history for itself or its key management personnel.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their Bad Ass Coffee of Hawaii franchise, franchisees must notify the franchisor in writing at least 180 days before their current agreement expires. They must have substantially complied with all terms of their franchise agreement, including timely payment of all fees, and cannot have received more than three written notices of breach. Franchisees are also required to upgrade or remodel their shop and its operations to meet the franchisor's then-current image and standards as outlined in the Operations Manual. Additionally, they must execute a general release of claims against the franchisor and its affiliates and pay a successor franchise fee of $5,000. Upon meeting these conditions, Bad Ass Coffee of Hawaii franchisees will sign the then-current form of franchise agreement, which may have materially different terms.
Training & Support Program
Franchisor Assistance
Bad Ass Coffee of Hawaii provides franchisees with comprehensive support, starting before their shop opens. This pre-opening assistance includes helping with site location by providing criteria and data, connecting them with a real estate and construction partner, and approving their chosen site and lease. The franchisor also offers design plans, specifications for equipment and décor, and guidance on approved suppliers. New franchisees and their principal managers undergo an initial training program that combines classroom instruction at the corporate headquarters in Centennial, CO, with hands-on training at a designated operating shop. For grand openings of the first shop, the franchisor provides up to five days of on-site assistance. Ongoing support includes access to advertising and promotional materials, telephone and email consultations on operations and management, and various seminars or webinars on new methods, products, and marketing techniques. Franchisees also receive updates on the Bad Ass Coffee of Hawaii concept and Licensed Methods. Training for replacement or additional managers is available, though a tuition fee applies. The franchisor also conducts regular, sometimes unannounced, inspections of shops to ensure compliance with brand standards and administers a National Marketing Fund for system-wide advertising.
Initial Training Hours
80
Training Location
Corporate headquarters in Centennial, CO, and Denver, CO area Shops
Ongoing Support
After opening, Bad Ass Coffee of Hawaii franchisees receive ongoing support through various channels. They gain access to advertising and promotional materials developed by the franchisor. Consultation via telephone or email is available upon reasonable request for continued operation and management, including advice on menu items, roasted coffee, customer relations, and product purchasing. The franchisor offers additional seminars, online webinars, or programs on new methods, services, products, marketing techniques, and equipment, which may include a mandatory annual meeting. Franchisees also receive regular updates on the shop concept, the coffee industry, and Licensed Methods, such as new menu offerings and coffee shop trends. The initial training program is available to replacement or additional Principal Managers and District Managers, for a fee, with franchisees responsible for travel and living expenses. Bad Ass Coffee of Hawaii also provides updates to the Operations Manual and conducts regular, sometimes unannounced, inspections of shops to ensure compliance with brand standards. The franchisor administers a National Marketing Fund for system-wide advertising and reviews any advertising proposed by franchisees. There is a franchisee advisory council that provides advice on marketing matters.
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
Hands-On
Territory Type
Protected
Territory Size Requirements
Bad Ass Coffee of Hawaii grants franchisees a protected territory typically defined as an approximate one-mile radius around their approved shop location. The exact size of this territory depends on the demographics of the area and can be delineated by county lines, zip code boundaries, street boundaries, natural landmarks, or similar designations. There is no specified minimum area for a protected territory, as its placement and size are determined by various market conditions including population density, neighborhood characteristics, pedestrian traffic, competition levels, site availability, parking, and growth potential.
Staffing Notes
Bad Ass Coffee of Hawaii requires franchisees to be solely responsible for the conduct and control of their employees and employment practices, including hiring, firing, training, and compensation. Franchisees must ensure their employees comply with all operational standards, laws, and regulations affecting shop operations. Any employee who does not satisfactorily complete the franchisee's training is not permitted to work in the shop. All franchisees and their employees must maintain a professional appearance, as prescribed in the Operations Manual, and provide courteous service. A designated Principal Manager who has completed the franchisor's initial training program must be responsible for the direct on-premises supervision of each shop at all times during operating hours. If a Development Agreement is signed for multiple shops, a District Manager must be appointed within 30 days of signing the third Franchise Agreement and must also complete initial training.