Risk Score
Pending analysis
Investment Range
$155,400 - $568,500
Franchise Fee
$20,000
Total US Locations
2
Business Summary
Qargo Coffee operates a traditional quick-service coffee shop that serves a variety of freshly made hot and cold beverages along with select food menu items. The brand partners with Lavazza Corporation to offer high-quality coffee products and brand affiliation. Qargo Coffee locations stand out for their distinctive design, often utilizing shipping container prototypes to create pop-up or full-size cafes, which defines the brand's signature look and customer experience.
Corporate History
Qargo Coffee, Inc. was established in May 2020 as a Delaware Corporation. The company was founded with the specific goal of offering Qargo Coffee franchises and began its franchising operations in the same month. In addition to franchising, Qargo Coffee also engages in the coffee distribution business through its franchise system and other channels. The company does not operate any company-owned businesses that are the same type as the franchises it offers.
Financial Overview
Investment Range
$155,400 - $568,500
Franchise Fee (Low)
$20,000
Franchise Fee (High)
$50,000
Royalty %
6%
Marketing %
2%
Equipment Costs (Low)
$50,000
Equipment Costs (High)
$300,000
Working Capital
$75,000
Audited Financials
No
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
Qargo Coffee's financial statements raise concerns about the company's financial health, as explicitly stated in the FDD's special risks section. The franchisor's financial condition calls into question its ability to provide services and support to its franchisees.
Financing Details
Qargo Coffee does not offer any direct or indirect financing to its franchisees. Additionally, Qargo Coffee does not guarantee any notes, leases, or other financial obligations for its franchisees.
Performance Metrics
Total US Locations
2
Franchised Units
2
Corporate Units
0
Avg Square Footage
1,600
Franchising Since
2020
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
Yes
Litigation Summary
Qargo Coffee has no litigation to report in Item 3 of its Franchise Disclosure Document. This means Qargo Coffee and its management have not been involved in any material lawsuits that require disclosure.
Bankruptcy History
Qargo Coffee discloses that its Co-founder and former Director of Product & Vendor Management, Bernadette Bastorous, along with its Development Manager, Mark Bastorous, filed for personal Chapter 7 bankruptcy liquidation on December 8, 2017. Mark Bastorous's case was dismissed on September 30, 2020, while Bernadette Bastorous received a discharge from the bankruptcy court on July 14, 2022. This refers to personal bankruptcy filings by key personnel, not Qargo Coffee as a corporate entity.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement with Qargo Coffee, franchisees must meet several conditions. They must have fully complied with all material provisions of their current franchise agreement throughout its term. Franchisees must also have the right to maintain possession of their approved location, or a suitable substitute location approved by Qargo Coffee, for the duration of the renewal term. They are required to make any necessary capital expenditures to ensure their location maintains uniformity with the Qargo Coffee System's current standards. All monetary obligations owed to Qargo Coffee and its affiliates must be satisfied, and the franchisee cannot be in default of any agreement with Qargo Coffee. Franchisees must provide timely written notice of their intent to renew, agree to comply with any current training requirements, and sign the then-current franchise agreement, which may have different terms. Finally, they must sign a general release of any and all claims against Qargo Coffee and its affiliates.
Training & Support Program
Franchisor Assistance
Qargo Coffee provides a range of assistance to its franchisees. Before opening, Qargo Coffee helps with site selection by approving or disapproving proposed locations based on criteria like demographics and lease requirements. It also reviews and approves lease contracts. Qargo Coffee provides specifications for the development, remodeling, and decoration of the approved location. For grand opening, Qargo Coffee specifies the timing and amount to be spent on local advertising, approving the plan and directing the marketing program. Initial training, included in the franchise fee, covers operations, sales, marketing, financial controls, and more, for one designated manager and up to two assistants. This training combines classroom and on-the-job instruction at a designated Lavazza training center, Qargo Coffee's locations, or the franchisee's site. For a period of approximately three months after opening, a Qargo Coffee representative provides on-site opening assistance. On an ongoing basis, Qargo Coffee provides updates to its Operations Manual, offers advice and general guidance via phone and email, prescribes a standard accounting system, and provides pricing for products and services. Qargo Coffee also conducts periodic visits to locations for consultation and guidance.
Initial Training Hours
63
Training Location
Miami FL, New York NY, Los Angeles CA, Chicago, IL, Philadelphia, PA or Franchisee's location, including a designated Lavazza training center.
Ongoing Support
After opening, Qargo Coffee provides continuous support to its franchisees. This includes keeping them updated with system developments and operational changes through updated copies of the Operations Manual and other written documents. Qargo Coffee offers general guidance and advice on operating problems via telephone, email, and newsletters. They also provide additional training for designated managers as needed and for newly named managers, though they are not obligated to assist with general staff hiring or training. Qargo Coffee prescribes a standard accounting system and provides pricing for products and services. Furthermore, Qargo Coffee representatives make periodic visits to locations to offer consultation, assistance, and guidance on various aspects of operation and management.
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
Supervisory
Territory Type
Protected
Staff Count
28
Staffing Notes
Qargo Coffee requires that the franchisee's location always be under the direct supervision of either the franchisee or a designated manager. The designated manager must successfully complete Qargo Coffee's training program and is expected to work a minimum of 35 hours per week on-premises. Qargo Coffee will send a representative to assist with familiarizing the staff with the system and providing general guidance during the initial opening phase. Based on uniform costs, a typical Qargo Coffee location is estimated to have between 25 to 30 employees.