Coffee Bean & Tea Leaf Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$531,550 - $1,430,177
Franchise Fee
$5,000
Total US Locations
188
Business Summary
The Coffee Bean & Tea Leaf operates stores that offer premium coffee beverages, espresso drinks, roasted coffee beans and blends, premium teas, baked goods, snacks, and other food items and products. These products can also include coffee-making equipment, cups, hats, t-shirts, and other branded novelty items. The stores are categorized into "Traditional Stores" located in standard venues, and "Special Distribution Stores" found in institutional settings such as hotels, airports, colleges, hospitals, and food courts. The brand also offers Kiosk formats, which are smaller stores with limited seating.
Corporate History
The Coffee Bean & Tea Leaf business concept originated in 1963 when Herbert B. Hyman began operating The Coffee Bean & Tea Leaf Stores in California. The original company, International Coffee & Tea, Inc. (ICTI), was incorporated in California in 1968. ICTI offered franchises in Singapore and Malaysia from 1996 to 1998. Subsequently, International Coffee & Tea, LLC (ICT), an affiliate, acquired ICTI's assets in December 1998 and began offering The Coffee Bean & Tea Leaf franchises outside the United States in August 1999 and in the United States in February 2000. Another affiliate, CBTL Franchising, LLC (CBTL), offered US franchises from 2001 until March 2012, when these were transferred to ICT. The current franchisor entity, Super Magnificent Coffee Company Ireland Limited (SMCC Ireland), was organized in Ireland in August 2019. In October 2019, ICT and CBTL assigned all their existing franchises and area development agreements to SMCC Ireland, establishing it as the global master franchisor for The Coffee Bean & Tea Leaf brand. SMCC Ireland is ultimately majority-owned by Jollibee, a publicly traded Filipino corporation that controls several other fast-food and beverage franchises.
Financial Overview
Investment Range
$531,550 - $1,430,177
Franchise Fee (Low)
$5,000
Franchise Fee (High)
$25,000
Minimum Net Worth
$50,000
Royalty %
5.5%
Marketing %
2%
Equipment Costs (Low)
$435,000
Equipment Costs (High)
$1,067,177
Working Capital
$32,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Super Magnificent Coffee Company Ireland Limited (The Coffee Bean & Tea Leaf) appears to be in sound financial health, with its auditors issuing an unqualified opinion on its financial statements as of December 31, 2023 and 2022. The auditors also found no substantial doubt about the company's ability to continue as a going concern. The company primarily focuses on intellectual property holding and brand development. A notable aspect of The Coffee Bean & Tea Leaf's financial position is the concentration of its trade receivables and revenues. For instance, in 2023, two franchisees accounted for 82% of total outstanding trade receivables and 33% of total revenues, indicating a significant reliance on a small number of partners. Similarly, the company has concentrated payables with a few vendors. These concentrations introduce a degree of risk, although the overall audit opinion does not reflect immediate concerns.
Financing Details
The Coffee Bean & Tea Leaf does not offer any direct or indirect financing to its franchisees and does not guarantee any lease obligations or other debts that franchisees might incur. Franchisees are responsible for securing their own funding. However, the franchisor may require franchisees, especially if they are a business entity, and their spouses to provide an unconditional guarantee for all obligations under the franchise and any area development agreements. Additionally, the franchisor may require a standby letter of credit for $20,000 per franchise agreement, with a maximum aggregate of $200,000 for area development agreements. Franchisees are also subject to financial covenants, including maintaining a minimum net worth (ranging from $50,000 to $75,000 per store) and a debt-to-asset ratio not exceeding 1:1.
Performance Metrics
Total US Locations
188
Franchised Units
77
Corporate Units
111
Franchising Since
1999
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
5
Litigation Summary
The Coffee Bean & Tea Leaf is currently involved in a class-action lawsuit, Fisher v. International Coffee & Tea, LLC, filed in March 2024. This lawsuit alleges deceptive trade practices regarding the brand's sustainability claims, stating they are untrue or misleading, and includes claims for fraudulent business practices and breach of warranty. The Coffee Bean & Tea Leaf denies these allegations. In a concluded matter, New Amsterdam Coffee & Tea Co., LLC, et al. v. International Coffee & Tea, LLC, et al., the brand was involved in an arbitration and subsequent lawsuit that began in January 2014. This case stemmed from four area development agreements for 200 stores, with franchisees alleging misrepresentation and breach of contract. The Coffee Bean & Tea Leaf filed counter-claims, and the dispute was settled in January 2017 with the franchisees paying $4,050,000 to The Coffee Bean & Tea Leaf and all related agreements being terminated. Another case, Robert Azinian v. CBTL Franchising, LLC, et al., was filed in May 2015 by a former franchisee owner. Allegations included breach of fiduciary duty and unfair competition. Some claims were dismissed, and the case was settled in August 2016, with The Coffee Bean & Tea Leaf making a $10,000 charity donation. Viet Café Trading Company Limited v. CBTL Franchising, LLC and International Coffee & Tea, LLC was an arbitration initiated in August 2020 by an international area developer, alleging breach of franchise agreements. The developer voluntarily withdrew all claims in November 2020. Lastly, an affiliate of The Coffee Bean & Tea Leaf, Smashburger, was involved in a class-action lawsuit, In re Smashburger IP Holder, LLC, et al., filed in May 2019. This case concerned deceptive advertising of Smashburger's "Triple Double Burger." The lawsuit, which initially involved Jollibee (The Coffee Bean & Tea Leaf's ultimate majority owner), was settled in September 2023 with a payment of $2,500,000 for fees and class member claims or vouchers.
Bankruptcy History
The Coffee Bean & Tea Leaf has no bankruptcy history to report.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, The Coffee Bean & Tea Leaf franchisees must notify the franchisor at least 12 months before the initial term expires. They are required to be in full compliance with all material obligations of their current franchise agreement and operational manuals. Franchisees must also complete a reasonable remodel of their store to meet the franchisor's then-current standards and specifications for new locations, at least 6 months prior to the renewal term. They must not have committed two or more material breaches of the agreement within any 12-month period during the term, regardless of whether those defaults were cured. Furthermore, franchisees must sign a general release of any known and unknown claims against the franchisor and its affiliates, and pay a renewal fee equivalent to 50% of the initial franchise fee.
Training & Support Program
Franchisor Assistance
The Coffee Bean & Tea Leaf offers comprehensive support to its franchisees. Before opening, the franchisor reviews and accepts proposed store sites (though franchisees are responsible for site selection) and provides master template plans and specifications for store design. Initial training is provided for the Director of Operations, Certified Training Manager, and General Manager, lasting 15 days, along with a 5-day Owner Training program. Franchisor staff also provide on-site support for 15 days during the opening of the first store (10 days for the second and third stores), though franchisees must reimburse travel and living expenses for this support. Franchisees receive a loan of confidential operations manuals (or online access). Ongoing support includes: for Area Development Agreement holders, one representative visits the development area for up to 14 days annually for advice, with franchisees covering travel expenses; standard print advertising materials are furnished; and additional guidance is available upon request (which may incur charges). Franchisees must participate in the brand's Marketing Program by contributing a 2% Central Marketing Fee (which, combined with local advertising, can increase to up to 4% of gross revenues). This fund supports national, regional, or local advertising, public relations, and promotional campaigns. Franchisees are also required to spend at least 1% of their gross revenues on local advertising and participate in brand-wide digital programs, including online/mobile ordering and loyalty programs. The Coffee Bean & Tea Leaf mandates the use of an approved Point of Sale (POS) system capable of telecommunicating sales data and requires franchisees to maintain an electronic connection to the brand's intranet for communication and access to manuals. The franchisor periodically designates required products and approves suppliers.
Initial Training Hours
96
Training Location
Southern California (corporate headquarters or company-owned/affiliate-owned store)
Ongoing Support
The Coffee Bean & Tea Leaf provides ongoing support to its franchisees through various channels. If a franchisee has an Area Development Agreement, the franchisor sends one representative to the development area for up to 14 calendar days each year to offer advice and assistance; franchisees are responsible for reimbursing the travel, meal, and lodging expenses for this support. The franchisor furnishes standard print advertising materials and can provide additional guidance and assistance on operating methods, standards, purchasing, advertising, employee training, and administrative procedures upon request, although charges may apply for this supplementary help. Franchisees are required to participate in all brand-wide digital and promotional campaigns, such as online ordering, mobile ordering, loyalty cards, and loyalty programs, bearing the associated costs. Mandatory or optional supplemental training programs are also offered, with franchisees covering their own travel, living, and compensation expenses, and paying a fee for optional courses. Franchisees must use an approved Point of Sale (POS) system to record sales data and maintain a high-speed internet connection for data transmission. Additionally, franchisees are required to maintain an electronic connection with the brand's intranet for communication and access to updated manuals and confidential information. The franchisor reserves the right to periodically designate required products and approve suppliers.
Franchise Requirements
Ideal Candidate Profile
The Coffee Bean & Tea Leaf seeks franchisees with strong business acumen capable of succeeding in a highly competitive retail food service environment, emphasizing that location choice is paramount. While The Coffee Bean & Tea Leaf does not mandate personal full-time supervision of the business, it strongly recommends active involvement. Franchisees must, however, employ and retain a General Manager for each store, a Certified Training Manager for Traditional Stores, and for Area Developers, a Director of Operations. These key management personnel must successfully complete initial training and obtain the franchisor's approval. The Director of Operations, for Area Developers, is expected to dedicate full-time efforts to the business, with any other business interests requiring disclosure and franchisor approval. Financially, prospective franchisees must demonstrate a minimum capitalization and maintain a net worth between $50,000 and $75,000 for each store committed to open, along with a debt-to-asset ratio not exceeding 1:1.
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
For Traditional Stores, The Coffee Bean & Tea Leaf grants a Designated Territory defined as a 0.25-mile radius around the store location. For Special Distribution Stores, the Designated Territory typically encompasses the specific premises where the store is located, such as an airport terminal, casino, or a food court.
Staffing Notes
The Coffee Bean & Tea Leaf requires franchisees to employ a General Manager for each store. For Traditional Stores, a Certified Training Manager is also required. Franchisees with an Area Development Agreement must employ a Director of Operations. All these key management personnel must successfully complete initial training and be approved by The Coffee Bean & Tea Leaf. The General Manager of a Traditional Store is responsible for training by the Certified Training Manager, and all other store employees must receive at least 7 days of initial training from either a Certified Training Manager or a certified General Manager. A trained individual must be present at the store at all times during operating hours. For Area Developers, the Director of Operations must dedicate full-time effort to the business; any other business interests must be disclosed and are subject to franchisor approval, which may be withheld if such interests impair their role.