Risk Score
Pending analysis
Investment Range
$198,500 - $406,600
Franchise Fee
$2,500
Total US Locations
27
Business Summary
Erik's DeliCafe operates retail food establishments called DeliCafes that offer delicatessen-style food in a relaxed, cafe-like atmosphere. Erik's DeliCafe serves fresh food items made from family recipes, including a variety of unique sandwiches, soups, salads, and bakery goods. Erik's DeliCafe aims to combine the speed and convenience of fast food with the friendly atmosphere and quality of full-service restaurants, appealing to customers seeking a quick, good quality meal at a moderate price.
Corporate History
Erik's DeliCafe began as a single deli in Scotts Valley, California, in 1973, founded and operated by Mr. Erik R. Johnson. In 1977, the business incorporated as Erik's Deli, Inc., which later changed its name to Erik's DeliCafe, Inc. in 1981, to manage company-owned locations. Erik's DeliCafe Franchises, Inc. was then established in 1986 specifically to franchise the Erik's DeliCafe concept, building upon the successful operations of its affiliate since 1973.
Financial Overview
Investment Range
$198,500 - $406,600
Franchise Fee (Low)
$2,500
Franchise Fee (High)
$20,000
Royalty %
5%
Marketing %
2.5%
Equipment Costs (Low)
$106,000
Equipment Costs (High)
$252,000
Working Capital
$38,550
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Erik's DeliCafe Franchises, Inc. shows fluctuating financial performance, with a net loss of $36,974 in 2023, compared to a net income of $37,115 in 2022 and $251,711 in 2021. The company consistently maintains positive retained earnings, which were $563,201 at the end of 2023. Auditors have not raised concerns about the company's ability to continue as a going concern. However, Erik's DeliCafe does have uninsured cash balances that have varied over the years ($233,798 in 2023), and its revenue is concentrated from networking marketing and royalty fees from franchisees. The company also carries federal and state net operating loss carryforwards.
Financing Details
Erik's DeliCafe Franchises, Inc. does not offer any direct or indirect financing to its franchisees. While Erik's DeliCafe has guaranteed leases in limited situations, it does not consistently do so, and there is no guarantee that it will agree to guarantee a prospective franchisee's lease.
Performance Metrics
Total US Locations
27
Franchised Units
26
Corporate Units
1
Avg Square Footage
1,600
Franchising Since
1986
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Erik's DeliCafe has no litigation to report, indicating a clean legal history.
Bankruptcy History
Erik's DeliCafe has no bankruptcy history to report for the franchisor or its key personnel.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew the franchise, Erik's DeliCafe franchisees must ensure they are not in default of their Franchise Agreement or lease, and must settle any outstanding debts owed to Erik's DeliCafe Franchises, Inc. or its affiliate. Franchisees will need to sign a general release and provide a copy of their renewal-related lease. They may also be required to remodel or expand their DeliCafe, update or replace furniture, fixtures, equipment, signs, and decor to meet Erik's DeliCafe Franchises, Inc.'s then-current brand standards, and pay a renewal fee of $2,500. Additionally, Erik's DeliCafe Franchises, Inc. may require the franchisee to sign a new franchise agreement with potentially different terms and conditions than their original contract.
Training & Support Program
Franchisor Assistance
Erik's DeliCafe Franchises, Inc. offers comprehensive support to its franchisees. Before opening, Erik's DeliCafe assists with designating the territory, advising on location selection, and providing a non-structural floor plan for the DeliCafe's design and construction. Initial training is provided for the franchisee and one additional person, covering administration and operations, with an additional week of on-site support before opening for team member training and system setup. Franchisees also receive digital access to the Operations Manual, initial financial reporting forms, and marketing materials. After the DeliCafe opens, Erik's DeliCafe provides one week of daily operational support, followed by periodic field visits for consultation. Erik's DeliCafe hosts mandatory periodic meetings for management updates and offers additional manager training for a fee. Corporate personnel are available for consultation via various channels, and Erik's DeliCafe regularly distributes updates and amendments to its Operations Manuals, along with newsletters, emails, and trend updates. It also negotiates with suppliers for products, manages the Network Marketing Fund for advertising campaigns, protects its trademarks, uses franchisee data for system improvements, and provides a system-wide loyalty program and an online ordering channel for catering.
Initial Training Hours
176
Training Location
At a DeliCafe in Northern California and Erik's corporate office
Ongoing Support
After a new Erik's DeliCafe opens, Erik's DeliCafe Franchises, Inc. provides one week of daily operational support to help establish staffing levels and operational procedures. Ongoing support includes periodic field visits by a representative to offer consultation and advice on DeliCafe operations and growth. Erik's DeliCafe hosts mandatory periodic meetings for franchisees and managers to stay updated on management techniques and other relevant topics. If required, additional manager training is available for a fee. Franchisees can also consult with corporate personnel in person, by phone, or email for day-to-day operational problems and questions. Furthermore, Erik's DeliCafe regularly distributes updates and amendments to its Operations Manuals, along with newsletters, emails, and trend updates to keep franchisees informed.
Franchise Requirements
Ideal Candidate Profile
Erik's DeliCafe Franchises, Inc. seeks franchisees who will either personally work full-time in their DeliCafe or designate an approved manager to do so. The designated manager must be certified by Erik's DeliCafe Franchises, Inc., which involves successfully completing a management questionnaire, holding valid ServSafe and Food Handler's certifications, and completing all required training. Ideal candidates should possess financial strength and business experience, in addition to relevant business considerations.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
supervisory
Territory Type
non-exclusive
Territory Size Requirements
Erik's DeliCafe Franchises, Inc. typically defines a Designated Area for each franchisee, which is usually described as a stated radius around a specific point, a given state, a county, or by street boundaries. Franchisees must select the exact location for their DeliCafe within this designated area, subject to approval from Erik's DeliCafe Franchises, Inc.
Staffing Notes
Erik's DeliCafe Franchises, Inc. supports franchisees in establishing appropriate staffing levels and operational procedures during the initial week of opening. This includes providing assistance with the setup of the DeliCafe and training team members before the grand opening. A certified on-premises manager is required for each DeliCafe, who must successfully complete a management questionnaire, hold valid ServSafe certification, and a current Food Handler's card.