Haraz Coffee House Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$349,500 - $517,705
Franchise Fee
$45,000
Total US Locations
17
Business Summary
Haraz Coffee House operates quick-service coffee cafes that offer in-cafe seating and carry-out services. These cafes specialize in Yemen-grown coffee blends, espresso, teas, pastries, and related items. Typical Haraz Coffee House locations are situated in strip centers, often as end-cap units that may include a drive-up window for vehicle customers, in addition to inside seating for walk-in patrons.
Corporate History
Haraz Coffee House Franchising, LLC was organized as a Michigan limited liability company on January 6, 2023, specifically to offer Haraz Coffee House franchises. The Haraz Coffee House concept originated with an affiliated entity, Village Qahwah, LLC, which was organized on July 15, 2019, by the current CEO and Founding Member, Hamzah Nasser. The first Haraz Coffee House cafe opened in Dearborn, Michigan, on April 10, 2021. Several other affiliated entities, also owned and operated by Mr. Nasser, include Haraz HQ, LLC (a designated supplier for certain products and a warehouse facility), HCH Distribution, LLC (supplier of equipment, coffee beans, teas, sauces, mixes, etc.), and HCH Bakery, LLC (primary supplier for bakery items). As of the FDD's issuance, in addition to the original Dearborn location, two affiliated Haraz Coffee House locations operate in Texas. The franchise system has been built upon the foundation of Village Qahwah's cafe.
Financial Overview
Investment Range
$349,500 - $517,705
Franchise Fee (Low)
$45,000
Franchise Fee (High)
$50,000
Royalty %
4%
Marketing %
1%
Equipment Costs (Low)
$233,500
Equipment Costs (High)
$354,905
Working Capital
$22,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Haraz Coffee House Franchising, LLC's financial statements show a negative equity (members' deficit) of $(401,844) as of July 31, 2024, and $(3,460) as of July 31, 2023. The FDD highlights this as a special risk, stating that the franchisor's financial condition "calls into question the franchisor's financial ability to provide services and support to you." Due to this, the states of Illinois and Maryland require financial assurances, such as deferring initial franchise and development fees until pre-opening obligations are met.
Financing Details
Haraz Coffee House Franchising, LLC does not offer any direct or indirect financing for its franchises. It also does not guarantee any franchisee notes, leases, or other obligations. However, Haraz Coffee House Franchising, LLC may provide information and advice to assist franchisees in seeking third-party financing.
Performance Metrics
Total US Locations
17
Franchised Units
14
Corporate Units
3
Avg Square Footage
2,150
Franchising Since
2023
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Haraz Coffee House Franchising, LLC has no litigation to report in this FDD. Item 3 explicitly states that no litigation is required to be disclosed.
Bankruptcy History
Haraz Coffee House Franchising, LLC has no bankruptcy history to report. Item 4 of the FDD explicitly states that no bankruptcies are required to be disclosed.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their Haraz Coffee House franchise, franchisees must not be in default of their agreement and must not have received two or more notices of default within the last 12 months. They need to provide a written notice of their intent to renew 6 to 12 months before the current term ends. Franchisees must maintain possession of the franchise location, or secure an approved alternative site, and refurbish it to meet current brand standards. They must have satisfied all payment and reporting requirements throughout the initial term, meet current training standards, and sign a general release of claims against Haraz Coffee House Franchising, LLC. Additionally, franchisees are required to sign a new franchise agreement, which may contain materially different terms and conditions, and pay a renewal fee of $25,000.
Training & Support Program
Franchisor Assistance
Haraz Coffee House Franchising, LLC provides various forms of support to its franchisees. Before opening, Haraz Coffee House Franchising, LLC assists with site selection and lease negotiation, provides standard architectural plans and specifications for leasehold improvements, and specifies required equipment, fixtures, signs, inventory, and suppliers. Franchisees receive an Operations Manual and initial training for up to two people without charge. Haraz Coffee House Franchising, LLC also provides a representative for up to five days before and during the grand opening to assist with initial operations. On an ongoing basis, Haraz Coffee House Franchising, LLC provides updates to the Operations Manual, product and service specifications, and supplier lists. Representatives conduct periodic on-site visits to evaluate operations and offer advice. The franchisor also guides and approves pricing, administers the advertising fund, reviews local advertising proposals, and provides indemnification for trademark actions.
Initial Training Hours
80
Training Location
A hybrid of corporate office in Dearborn, MI, a Haraz Cafe location in metropolitan Detroit, and the franchisee's own franchised location.
Ongoing Support
After opening, Haraz Coffee House Franchising, LLC provides continuous support to its franchisees. This includes regular updates and modifications to the Operations Manual and product specifications. Haraz Coffee House Franchising, LLC representatives conduct periodic on-site visits to evaluate operations and offer necessary advice and assistance. Franchisees can also receive operational advice and support via telephone or email upon request. The franchisor guides and approves pricing for products and services, administers the advertising fund, and reviews local advertising for approval. Haraz Coffee House Franchising, LLC indemnifies franchisees against trademark infringement claims when marks are used in accordance with their system. Additionally, the franchisor handles modifications or substitutions of franchise marks uniformly.
Franchise Requirements
Ideal Candidate Profile
Haraz Coffee House Franchising, LLC seeks franchisees, particularly "Designated Owners," who will devote their full-time effort to the day-to-day active management and operation of the franchise business. Ideal candidates should possess strong character, business experience, financial strength, and good credit standing. They should also demonstrate business ability, experience, and the availability of management personnel. If pursuing a multi-unit franchise, candidates must also meet qualifications for owning multiple locations.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Full-Time
Territory Type
Protected
Territory Size Requirements
Haraz Coffee House Franchising, LLC grants a protected area with a radius of three miles from the franchise location. However, in densely populated urban areas, the protected area may be less than one mile and will be mutually agreed upon. In less populated rural areas, a larger protected area may be granted at the franchisor's discretion.
Staffing Notes
Haraz Coffee House Franchising, LLC requires franchisees to implement a training program for their employees that complies with franchisor standards and maintain a sufficient staff of trained employees. All employees must wear uniforms as specified by Haraz Coffee House Franchising, LLC. Franchisees are responsible for all employee-related decisions, including hiring, firing, scheduling, discipline, performance evaluations, promotions, wages, and benefits, ensuring compliance with legal and health standards. The franchisor provides an Operations Manual with guidance on human resources, including staff recruitment, hiring, retention, and detailed job responsibilities for roles such as Cashier, Espresso Barista, Coffee/Tea Barista, Weekend Shift Barista, Dishwasher, and Coffee House Manager.