Risk Score
Pending analysis
Investment Range
$73,000 - $389,930
Franchise Fee
$6,375
Total US Locations
13
Business Summary
Jazen Tea® offers two franchise types: Stand-Alone Jazen Tea® Shops and Co-Branding Franchises. Stand-Alone Jazen Tea® Shops sell various fruit and tea drinks, smoothies, and snacks in a dedicated retail environment for on-premises consumption or takeout. Co-Branding Franchises allow existing or new Phở Hòa® Restaurant franchisees to add a selection of Jazen Tea® specialty beverages (Core Jazen Tea® Menu Items) and incorporate Jazen Tea® branding elements within their Phở Hòa® Restaurant operations.
Corporate History
South Bay Soup Corporation, operating as Jazen Tea®, was formed as a California corporation on September 2, 2005. It is a wholly-owned subsidiary of Aureflam Corporation. The company's principals have experience operating Phở Hòa® Restaurants since 1986 and began franchising Phở Hòa® in 1992. South Bay Soup Corporation itself has administered the Phở Hòa® franchise program since its formation in 2005. Jazen Tea® began offering its stand-alone franchises and co-branding opportunities for Phở Hòa® Restaurants in 2014, with the first Stand-Alone Jazen Tea® Shop opening in San Jose, California in September 2012 by its Parent company.
Financial Overview
Investment Range
$73,000 - $389,930
Franchise Fee (Low)
$6,375
Franchise Fee (High)
$10,000
Royalty %
4%
Marketing %
2%
Equipment Costs (Low)
$32,000
Equipment Costs (High)
$160,000
Working Capital
$10,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The FDD highlights that the franchisor's financial condition, as reflected in its financial statements, calls into question Jazen Tea®'s financial ability to provide services and support to franchisees. The company has a concentration risk, with a few franchisees accounting for a significant portion of its accounts receivable (92% from three franchisees operating four locations in 2023) and royalty revenue (51% from three franchisees operating seven locations in 2023). Additionally, the COVID-19 pandemic significantly disrupted and may continue to disrupt Jazen Tea®'s business, with the company waiving or reducing royalties and marketing fees for some franchisees in 2023 and 2022 due to severe sales declines.
Financing Details
Jazen Tea® does not offer direct or indirect financing to its franchisees, nor does it guarantee their obligations with third parties. However, if a franchisee obtains financing from a third-party lender that is guaranteed by the Small Business Administration (SBA), the franchisee must sign an SBA Addendum to the Franchise Agreement.
Performance Metrics
Total US Locations
13
Franchised Units
10
Corporate Units
3
Avg Square Footage
1,000
Franchising Since
2014
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Jazen Tea® has no litigation cases to report in Item 3 of the FDD.
Bankruptcy History
Jazen Tea® has no bankruptcy history to report for the franchisor or its key personnel in Item 4 of the FDD.
Agreement Terms
Initial Term
5 years
Renewal Term
5 years
Renewal Conditions
To renew a Jazen Tea® franchise, franchisees must be in good standing under the expiring agreement, provide timely notice of their intent to renew, and pay a renewal fee. They also need to adapt their Stand-Alone Jazen Tea® Shop or Co-Branded Phở Hòa® Restaurant to Jazen Tea®'s then-current décor and design standards. Additionally, franchisees must satisfy any current training requirements for renewing franchisees, sign a general release of claims, and execute Jazen Tea®'s then-current Franchise Agreement and a Renewal Amendment. The new franchise agreement may have different or higher fees and terms than the expiring agreement.
Training & Support Program
Franchisor Assistance
Before opening, Jazen Tea® provides franchisees with a confidential operations manual, design specifications, and a sample layout for kitchen equipment. While site selection is the franchisee's responsibility, Jazen Tea® may offer advice and will approve proposed sites. Franchisees receive a 6-day (48-hour) Basic Training program in or near San Jose, California, covering food handling, operations, POS system use, food safety, inventory, and marketing. Jazen Tea® also provides 7 days of on-site opening assistance (or 10 days for co-branded if coinciding) to help with staff training and operational procedures. Franchisees purchase an initial inventory of proprietary products. During operation, Jazen Tea® offers regular consultation and advice, designates required and recommended products, fills orders for proprietary products, and may provide continuing training classes. Jazen Tea® conducts periodic inspections of operations and records, administers a marketing fund, reviews local advertising materials, and manages the dual-brand gift card and loyalty card programs. The company also advises on grand opening advertising programs.
Initial Training Hours
48
Training Location
San Jose, California or Sacramento, California
Ongoing Support
After opening, Jazen Tea® franchisees receive ongoing support through regular consultation and advice in response to inquiries about administrative and operational issues. Jazen Tea® periodically designates new proprietary and non-proprietary products that franchisees may or must stock. The company fills orders for additional proprietary products reasonably promptly. Continuing training classes are offered periodically at designated locations, and Jazen Tea® conducts regular inspections of operations, observes employees, and reviews records to ensure compliance. Jazen Tea® also administers the Jazen Tea® Marketing Fund, reviews franchisee-created local advertising, and supervises the dual-brand gift card and loyalty card programs. The company also periodically revises its operations manual.
Franchise Requirements
Ideal Candidate Profile
Jazen Tea® seeks franchisees who possess the requisite character, business experience, creditworthiness, and meet minimum financial requirements. For Co-Branding Franchises, candidates should have adequate financial resources, sufficient space in their Phở Hòa® Restaurant, and a positive history as a franchise operator. While Jazen Tea® does not require owners to personally dedicate full-time attention to daily management, the franchisee must ensure that the Stand-Alone Jazen Tea® Shop or Co-Branded Phở Hòa® Restaurant is under the direct personal supervision of one or more Certified Managers at all times. These Certified Managers must successfully complete Jazen Tea®'s Basic Training program and be ServSafe certified.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Supervisory
Territory Type
Limited
Territory Size Requirements
For Stand-Alone Jazen Tea® Shops located outside of a Metropolitan Urban Core Area, Jazen Tea® assigns an exclusive territory measuring approximately 3 miles from the front door of the shop. The boundaries are identified by roads or other geographic or political markers. However, if a Stand-Alone Jazen Tea® Shop is located within a Metropolitan Urban Core Area (defined as a geographic area within a Metropolitan Statistical Area with a high concentration of residents or daytime workers, such as Manhattan, downtown Chicago, or San Francisco), Jazen Tea® does not assign an exclusive territory. Co-Branded Phở Hòa® Restaurants follow the territorial rights defined in their Phở Hòa® Franchise Agreement, which are not altered by the Co-Branding Addendum.
Staffing Notes
Jazen Tea® does not require franchisees or their owners to personally dedicate full time to managing and supervising all administrative and operational activities of their Stand-Alone Jazen Tea® Shop or Co-Branded Phở Hòa® Restaurant. If owners opt not to, they must delegate these responsibilities to a senior management member who has successfully completed Jazen Tea®'s Basic Training program and is ServSafe certified. Franchisees are responsible for keeping Jazen Tea® informed about their management employees' identities. The owner ultimately remains accountable for compliance with the Franchise Agreement, even when delegating day-to-day duties. For Co-Branded Phở Hòa® Restaurants, at least one front crew member per shift must be dedicated solely to preparing and serving Core Jazen Tea® Menu Items, wearing a Jazen Tea® logo t-shirt. Other employees preparing Phở Hòa® Menu Items will wear Phở Hòa® logo t-shirts. Jazen Tea® recommends that Stand-Alone Jazen Tea® Shops employ at least two management-level supervisors who qualify as Certified Managers to ensure continuous supervision and to mitigate the impact of personnel turnover. All employees are required to maintain a neat and clean appearance and wear Jazen Tea®-designated uniforms for their roles. Franchisees must hire a sufficient number of competent employees and ensure they receive appropriate training according to the Jazen Tea® System. Employees in customer service roles must be adequately literate and fluent in English.