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1 Q: Details about the company history Colombiano Coffee House is based on a mythical and Old love story that brought together Coco from Costa Rica, her Grand Mama Lomalita & the love of her heart, the Italian gentleman Fabiano, and helped create Co.Lom.Biano, by the joining of their names. For more information about our love story, pls visit our website at: Q: and what is the concept? Whether serving Hot coffee based beverages ( Calientes ), Frozen Picoccinos, Refreshing Fruit based Drinks ( Frescatas ), Mouth watering pastries ( Joyas de Luna ), Yummy ice Cream ( Crema Divina ) or Healthy sandwiches & salads ( Bocadillos & Ensaladas ), our Euro Latino / Spanish image always adds a unique flavor to the coffee house experience. In practice, one of our various advantages is that we can be considered as being a "two in one" concept, instead of just being just a Coffee Shop or a Tea shop or a Donut shop: We offer an extensive experience in the Coffee & Beverage category like other super well known coffee shop concepts We also offer an extensive experience in the Sandwiches and Salads category like other super well known Sandwich & Salads outlets. Q: It will be good if pictures are added with a good design layout.

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5 Q: Company size, store number nationally and internationally. Colombiano Coffee House regional office, for the Middle East & North Africa is based in Beirut. Today, Colombiano Coffee House stores are spread over 13 locations, with 5 in Abu Dhabi, 5 in Beirut & 3 in Doha, with more on the way.

6 Q: Some information and research about the market potential and potential for this concept. The Coffee business is a multi million dollars industry around the world. Everyone, everywhere, consumes coffee on a daily basis. Regardless of race, background, education, social status or gender, coffee remains the most favorite hot beverage consumed by all. In our fast moving societies and way of life, coffee shops are becoming a necessity rather than a luxury. People of all ages stop at a coffee shop for all reasons, whether resting briefly on a busy shopping day, or meeting for a business discussion, or perhaps just relaxing a bit and meeting with friends over a hot cup of coffee. Despite any worldwide financial crisis, a positive ray of light in any big Dark cloud is that many economics researchers point out that the Hospitality Service sector usually do not get as gravely affected as other sectors, since people will always need to eat and drink, especially at relatively " NOT expensive " places, such as Coffee Shops ( or Bistro- Café). Further, the Coffee based business is indeed a " LOW COST / LOW TICKET per person business" and investing in such a business is always an ever more interesting and tempting investment. Moreover,the coffee shop market is still in its infancy; there are still a lot of opportunities in this business. There are one ( or two) super well known brands and trade names in the world. Any number two trade name or brand is far far far away from the Number one brand in the world in terms of coffee house outlets Hence, the opportunity of any Colombiano Coffee House ( or CCH) franchisee to position CCH in his-her market as the number two trade name, or at least among the top five, is not a difficult task to do To give you an example, the Franchisee of a Leading competitor, in the coffee house business, in a city of about 3 Million people locals and visitors, and with almost 10 years of presence, has close to 76 shops (between opened and in development), with more on the way. The Franchisee of another leading competitor has opened, in a new territory of almost 2 Million people, close to 22 shops in TWO years The undisputed leader in this coffee house business has close to stores world wide, between franchised and self operated Simply put, the business model of coffee shops is based on developing the largest network of shops possible, since the more shops are opened, the more people will see the Trade Name and Signage, which means that less advertisement is required, and more profit may be generated from increased customer traffic, in addition to more profit being generated from the appreciation in the real estate value of each opened coffee house, whenever applicable.

7 Q: Franchisee profile Colombiano Coffee House At Colombiano Coffee House, we believe that the most important factor for the success of Colombiano Coffee House, in any territory and / or country, is most importantly dependent on the Colombiano Coffee House LOCAL franchisee's potential, local power and professionalism in that territory and / or country. As a result, we are actively looking for Franchisees who can operate as our associates, our team players and our success partners, and who can encompass the below listed criteria for success. Good standing in the society where the investment and development will take place Financial Stability Previous Management Expertise Historical Success Strategic Vision & Long Term ROI attitude Q: Cost of franchise fees including royalty Based on your requirements on the number of Multi units or Store Format that you want to develop in your selected area, you will just have to pay the Franchisor: 1. A Territory / License fee for a Number of multi units in a given territory or area, as agreed upon, thereby insuring the exclusive right of first refusal for the selected territory/ area over the period of the Franchise Development agreement and, 2. As time goes by, a Coffee House Opening, Operation & Administration fee, per shop opened. 3. A very reasonable ongoing Royalty Fee of 7.5 % of the turnover, which allows the Colombiano Coffee House Franchisor to continuously support the franchisee in marketing consultation, operations improvement as well as product & menu upgrade, not to mention the continuous development and upward positioning of the Colombiano CoffeeHouse Trade name

8 Q: Cost of franchise set up unit For the initial decoration and set up itself, the Cost of the franchise shop will depend on the territory. As such, the territory franchisee would most probably be in a better position to evaluate the initial Decoration cost per sqm. In reality, the Construction & Decoration cost may vary upward or downward and will depend on several factors; such as: a- The Size of the store and b- The Construction costs per square meter in any given area, territory or country c- The economical situation and the economic parameters within the country of the selected territory. In practice, however, and as an indication, the overall construction investment to get the store off the ground can range from $75,000 up to $400,000. However, we recommend that the franchisee should budget (only budget) an approximate capital of USD to USD per shop, for a 100 sqm to 150 sqm area to safely cover the overall construction investment, pre-operating expenses, advance payment for store rent, minimum stock per store, etc... needed to get the store off the ground. This budget should cover the following costs : 1. Cost of Equipment. 2. Cost of Furniture. Cost of décor. 3. Cost of signage. While this is an approximate figure, it goes to show that this solution fits many requirements and needs and is not cost prohibitive. Q: Financial statement: P&L and cash flow Enclosed is a typical P&L created for a typical shop in Kuwait.

9 Q: Daily sales, average ticket, cost of sales, operational cost, staff cost, bottom line percentage. In terms of Operating cost, we are most probably equivalent to the cost of the competition in terms of staff cost, although our staff area trained to create in-house, in addition to the hot and cold and frozen coffee and noncoffee beverages, the various sandwiches and salads that we serve on the menu. ( we only outsource the Pastries and ice cream). In terms of Food cost, we are probably more competitive since we only oblige our franchisee to purchase the liquid ingredients from us, not everything. On the contrary, we help our franchisee monitor his cost carefully and try to keep it as low as possible. For more information on this subject, ps read below : 1- What are the recommended opening hours? Depending on the local market breakfast trend and night habits, in the franchisee territory, as well as on the competition & the traffic. Normally, opening between 7:00 am to 12:00 pm is recommended. Of course, it should be in harmony with the Market opening hours for similar or competing operations, and may vary per location. 2- How many employees per shift? This will vary depending on the area of the coffee house. Normally for a 90 to 100 sqm, the morning shift would require 3 baristas & the night shift would require at least 4 baristas, preferably 5. (Assuming Rush Hour is at night) One manager is also required. He/ she will be present, most probably, in the morning, throughout the day and then also in the night shift.( depending on Rush time) He/she can play the role of the Fifth Barista at night. Allowance must be made for the OFF- Day of the shop staff, so an extra Barista must be considered. Considering an average number of 9 to 10 people per shop is safe

10 In case of heavy traffic, more baristas can be added as needed, and the total number can got to 15 people, of not more. 3- What nationalities to employ? We recommend that the Manager be a Local if educated in the hospitality business and trained by the Franchisor. As for the baristas, we also recommend that they are either locals or expatriates if local labour laws allow it. If the salary of the local baristas will be prohibitive, we would recommend to hire at least one highly experienced local barista (who can eventually be trained to become a supervisor or a manager) and the rest may be hired from nationalities who may accept lower wages, if local labour laws allow it. 4- What would be the pay scale of the employees? It should be in harmony with the Market pay for similar or competing operations, as an average. We may need to consider overpaying the existing staff of the competitors in order to attract them to join & work with CCH. This will reduce the training period to our staff & will help the operation proceed with more self-confidence by the staff. In any case, we recommend that a detailed Market research be conducted with the territory Franchisee after the signature of the Franchise Development agreement for the territory in order to determine the market parameters on this issue 5- What would you estimate for the percentage of pay Roll from sales? As a Maximum, a healthy CCH operation should run at a payroll less than or equal to 15% of sales, but during the first period of business, in any new shop, and until the shop can reach the correct regular customer base, it can start at around 25% of sales. This will of course depend on the Outlet sales volume. The monthly % may increase in case of low traffic and may decrease in case of heavy traffic

11 B. Assume the store is located in a reasonably successful location 1. What would you estimate the total weekly sales to be? Of course, the territory franchisee will eventually need to conduct a serious market evaluation after the Franchise Development agreement is signed. A healthy traffic should be considered around 300 tickets daily, at an average of 30 Tickets per hour, at 5.5 USD average. In any feasibility study, we recommend to consider 290 Tickets per day. 2. Percentage of sales per: I. Hot Beverages. II. Cold Beverages. III. Ice Cream. IV. Food (Sandwiches, salads and pastries). V. Retail. This will vary greatly depending on the territory. Again, the territory franchisee will eventually need to conduct a serious market evaluation after the Franchise Development agreement is signed. For coffee shops in general, 60 (to 70 %) of the consumed items are the Beverages, with 35 % going to food, & up to 5 % going for retail. 3. Profit Margin Percentage I. Hot Beverages. II. Cold Beverages. III. Ice Cream. IV. Food (Sandwiches, salads and pastries). V. Retail. Of course, the Beverages have a higher profit margin that the food margin, with the retail margin being equal or lower than the food margin. This will finally be determined after the local food and beverage suppliers are selected in the franchisee territory

12 4. What would be the cost of paper and consumables? Their cost should be 4 to 5 % of sales, as a maximum. The normal should be around 3% of sales. 5. What about depreciation? I. Furniture and fixtures. II. Equipment. III. Signage. IV. Leasehold improvements and décor. This will vary depending on which accounting principles the local auditors will recommend to use and depending on the franchisee s company policy. We recommend a 10-year depreciation approach 6. What would you recommend for the percentage of sales for marketing and advertising and would that include point of sales? For marketing & advertising, the franchisee should consider 5% of expected sales per point of sales with an initial budget for the first year - of USD per shop for corporate level advertising We also have an international / regional advertising fund that is not currently collected from franchisees 7. How to reflect the Head Office expenses (H.O) per shop? The head office (H. O) expenses cannot be really reflected in the profit & loss of one shop only. H.O expenses would include, among others, the salaries of the Operations Manager, Public Relations Manager, Accountant, Personnel Manager, Store keeper, Secretary, etc.) as well as the cost of the consultants (auditors, lawyers, etc ).

13 The territory franchisee will need to open a multiple number of shops in order to cover the H.O Overheads. This number will vary depending on the territory. Still, in any feasibility study, we recommend to allocate 2.5 % to 3 % of Sales, per shop, as contribution to the H.O expenses, including warehousing and storing contribution. Q: What the franchisor provide Colombiano Coffee House ( CCH) is A One Stop Shop: The Full CCH Support In Brief 1. The CCH Franchise comes with an extensive business operation manuals that takes away the guess work and reduces the risks involved in any start up business. 2. The CCH Franchise comes as well with an estimated start up investment and running costs, which are carefully calculated to reflect variations in the location of the outlet and the size of the real estate. 3. The Franchisee will also appreciate the support provided by CCH during the profiling and selection process of the personnel & staff, at all levels and in the CCH branches. 4. Since the success of every business depends on the skills and professionalism of its management and employees, even the Training manuals for the personnel and staff, needed to comply with the high standards of CCH, are also provided by CCH. 5. The CCH Franchisee can also expect a comprehensive on the floor training support at the pre-launch phase and a continued monitoring and upgrading support as time goes by. The Full CCH Support in Details CCH also offers you a complete system that will allow you to open and operate the business as effectively as possible, with minimum complications and hassles. Specifically, Colombiano Coffee House will provide the Franchisee with consultation, advice, training and assistance, all as needed by the Franchisee and as determined and approved by the Franchisor, and relating to:

14 A. Site Selection and Design Specification 1. Assistance in the Site selection and approval. 2. Assistance in the Concept Design and Decoration of the selected store to conform to CCH Standards. 3.Review and approval of the Franchisee's conversion plans and specifications for internal layout, designs, furniture and fixtures, in addition to signage. 4.Assistance in customizing layout for specific store based on CCH norms. 5.Assistance in selection of suppliers and specifications for FF&E. 6.Recommendation of best use of material, relating to furniture, décor and visuals according to CCH standards. 7.Audit of the interior decoration implementation during execution. B. Technical Specification 1. Audit of the Construction, conversion and refurbishment of the premises, including the needed input related to the shop interior architecture, engineering and electromechanical works. 2. Audit service during the construction and design implementation, including quality control monitoring and verification on site. 3. Recommendations during the selection of suppliers and contractors for the execution of the civil and electromechanical works 4. Overview of the purchasing of equipments, furniture, utensils and all other bar products needed for the opening of the coffee house. C. Operations & Administration 1. Assistance in the Operation & Organization setup. 2. Assistance in the implementation of purchasing procedures and warehouse keeping. 3. Assistance in setting up of the Budgeting & Reporting formats. 4. Assistance in setting up and in the implementation of control procedures including internal controls, stock and waste control and petty cash control. 5. Assistance in the discharge of proper Store, Assets and Equipment maintenance and repair procedures. 6. Assistance in preparing opening and closing duties customized to your location. 7. Assistance in Setting up the complete personnel procedures 8. Assistance in recruiting the complete staff during the start up phase. 9. Training on site or at a CCH selected location of all Franchisee staff and managers before opening. ( pls refer to the sample Idea on the training provided, further below ) 10. Comprehensive and systematic training on the job. ( pls refer as well to the sample Idea on the training provided, further below ) 11. Continuous support from the CCH corporate team in guiding the franchisee through the opportunities that can arise during the opening and throughout the operation afterwards. D. Marketing, Advertising & Communications 1. Recommendation of best suited Advertising Guidelines 2. Assistance in implementing these Marketing Guidelines 3. Assistance in the selection and approval of Adv / PR agency 4. Assistance in the preparation and implementation of the Grand Opening 5. Assistance in the local implementation of the CCH corporate identity on the Franchisee s staff image and appearance (uniforms, name tags, Access Cards, etc ) as well as local documentation and paperwork s, such as envelops, letterheads, business cards, uniforms and others. 6. Assistance in customizing the business marketing and communications strategy.

15 7. Assistance in the preparation of all above, below and through the line marketing, advertising and communication visuals and materials. E. Food & Beverage 1. Supply of a varied yet efficient menu, updated regularly 2. Supply of menu items technical sheets, with detailed ingredients and CCH s special recipes (whenever applicable). 3. Supply of coffee beans required for the operation 4. Supply of drinks and beverages special mixtures and flavorings 5. Supply of all disposables and paper work designs. 6. Supply cutlery, glass and china, including plates, mugs, cups and saucers and all F&B support items needed to maintain CCH s exclusive image 7. Assistance in the selection and evaluation, then final approval of local suppliers of all Food items to be selected locally 8. Supply of the POS software with back office support and inventory system, integrated and ready for use. NB: ALL SUPPLIES LISTED ABOVE ARE USUALLY CHARGED TO THE FRANCHISEE AT ESPECIALLY COMPETITIVE RATES. Sample idea on the Training & Training & Training & re-training Support ( depending on the Colombiano Coffee House Format that the Franchisee will eventually Select as clarified later below ) At least for the first shop, your Coffee House staff can be trained at our training facilities, located at our Head office, if you prefer. Normally, however, we would send a team of up to Six people (The Opening Team) to train the Franchisee start up team, before the Franchisee opens the first shop, and as highlighted below. 1- A senior level SHOP Kitchen training manager. This person will train all the staff on how to prepare all menu items (Calientes, Picos, Frescatas, otras, Sandwiches and salads), and on how to use all Kitchen management documentation and forms. HE/ SHE will also train the head office based Kitchen manager of the Franchisee on how to monitor the Kitchen operation, maintain the shops overall Food quality control and product consistency, and on how to maintain the lowest Food cost & Kitchen overheads possible at the shop level This training is 15 days before opening the first shop and up to 15 days after shop opening. 2- A senior level SHOP Service training manager. This person will train all the staff on how to best communicate with the customers, how to take orders quickly, effortlessly and with a smile, how to make the customer feel at home and how to try to encourage him-her to buy more items from the menu.

16 HE/ SHE will also train the head office based Service training manager of the Franchisee on how to monitor the service side of the operation, maintain the shops image and service quality control. This training is 7 days before opening the first shop and up to 15 days after shop opening. 3- A senior level SHOP Technical ( Operation) training manager. This person will insure that the Kitchen & Service Trainers have properly trained all the staff on how to perform beautifully well in terms of Food preparation and Floor presentation as well as Customer interaction. HE/ SHE will also train the Floor staff, from Barista to Branch Manager, on how to use all Branch management Operation documentation and forms. HE/ SHE will also train the head office based Operation manager of the Franchisee on how to monitor the operation, maintain the shops overall quality control in terms of product & Service consistency, and on how to maintain the lowest Total controllable overheads possible at the shop level This training is 15 days before opening the first shop and up to 15 days after shop opening. 4- A senior level Accounts training manager. This person will train all the staff on how to use the Shop Software application, including purchasing, inventory control and Invoicing. HE/ SHE will also train the head office accountants and warehousing people on all cost control related issues, procurement process and optimum inventory management applications - This training is SEVEN days before opening the first shop and up to 15 days after shop opening, in time to do the first inventory control of the shop 5- A senior level Branch Manager. This person will assist the staff during the first 15 days of operation to insure that what they have learned in theory is being perfectly applied in-store with customers. This Person would stay in the Franchisee market / country SEVEN days before opening the first shop and up to 15 days after shop opening, also in time to do the first inventory control of the shop. 6- A senior level Communication & Marketing Manager. This person will meet the person in Charge of the Franchisee Communication & Marketing at least one month before opening the first shop and will agree with the Franchisee people on the most efficient and effective LOCAL Communication & Marketing strategy for the Colombiano Coffee House store, as per the Franchisee market / country local culture and preference, while maintaining the feel of the Colombiano Coffee House Euro -Latino image. Of course as more shops open, the time needed by our Opening team to stay in any particular territory will become much much - shorter. Eventually, our visits to the Franchisee operation will consist of very short stays involving auditing the operation, updating the Franchisee team with new developments and providing them with the needed REtraining and other required support, as the Franchisee may request in time.

17 Q:Testimonial (if available): Visit our website guestbook N.B: Also enclosed is our FAQ

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