In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Ziggi’s Coffee franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Ziggi’s Coffee franchise, based on Item 7 of the company’s 2021 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Ziggi’s Coffee franchise, based on Items 5 and 6 of the company’s 2021 FDD
- Section IV – Number of franchised and company-owned Ziggi’s Coffee outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD
- Section V – Presentation and analysis of Ziggi’s Coffee’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
- 2020 actual total sales, discounts, gross sales, cost of goods sold, labor costs, gross profits, and royalty for the 4 Drive-Thru Ziggi’s Coffee Shops operated by Ziggi’s affiliated companies for the entire calendar year 2020
- 2020 actual total sales, discounts, gross sales, cost of goods sold, labor costs, gross profits, and royalty for the 1 Café with Drive-Thru Ziggi’s Coffee Shop operated by Ziggi’s affiliated company for the entire calendar year 2020
- 2020 average total sales for the 11 Drive-Thru Ziggi’s Coffee Shops operated by franchisees for the entire calendar year 2020
Section I – Background Information
23 Things You Need to Know About the Ziggi’s Coffee Franchise
Announces New Headquarters and Training Facility
1. In mid-February 2021, Ziggi’s Coffee announced that it had purchased land in Mead, Colorado at the corner of third and Welker, upon which it would build a three-story, 10,350 square-foot building. The new development will house its new headquarters as well as an on-site training facility, a 750 square-foot rooftop deck, and a 1,500 square-foot Ziggi’s Coffee café and drive-thru.
2. The new facility will allow franchisees to have an all-encompassing experience that will grant them easy access to a robust support team and will provide a unique training experience. New franchisees will have the ability to go from classroom training to real-life experience, beginning with hands-on learning in a lab setting and culminating with practicing their skills inside the fully operating café drive-thru.
3. According to Brandon Knudsen, co-founder and president of Ziggi’s Coffee, “This will expand our resources beyond what we imagined possible when we began this business in 2004. With the amount of growth we have experienced over the past couple years, we knew it was time to create a space that will serve multiple purposes and become more than just an office space; it truly is going to be game changing from a training standpoint.”
4. At the time of the announcement, Ziggi’s had been recognized by top business and franchise publications as a company experiencing rapid growth. It ranked No. 225 on Entrepreneur Magazine’s Franchise 500, a highly esteemed list of the franchise industry’s leading companies recognized for their outstanding performance in areas including unit growth, financial strength and stability, and brand power.
5. Additionally, Ziggi’s Coffee ranked No. 3 on Franchise Gator’s list of Top Emerging Franchises: Franchises Worth Considering in 2021, and also ranked No. 5 on Franchise Gator’s list of Fastest Growing Franchises. Ziggi’s Coffee was also included on the 2020 Inc. 5000 list of the fastest-growing private companies in America.
6. Knudsen added, “It is an amazing opportunity to build our new headquarters in the Northern Colorado region, which has been our home-base since we started Ziggi’s Coffee over 17 years ago. This community has witnessed our growth over the years and supported us every step of the way. With its strong sense of community and support for local businesses like ours, we are honored to be part of Mead and the Northern Colorado area.”
Opens 40th Location
7. In early November 2021, Ziggi’s Coffee announced the opening of the brand’s 40th location. Founded on the corner of Main Street in Longmont, Colorado by Brandon and Camrin Knudsen in 2004, Ziggi’s Coffee has quickly grown into a trustworthy, reliable, and acclaimed franchise. From the beginning, Ziggi’s Coffee’s mission has always been simple: not only provide a superior cup of coffee, but also superior service customers can rely on.
8. With the same attention to detail that has gone into creating the perfect cup of coffee, the Ziggi’s franchise opportunity was created after over a decade of running successful café and drive-thru locations. There are now 40 Ziggi’s Coffee locations across the country, with over 100 stores in development spanning 25 states.
9. Brandon Knudsen, co-founder and president of Ziggi’s Coffee, said, “We are humbled by the continued growth of the Ziggi’s Coffee brand. When we started this company over 15 years ago, we could only dream of this success. Our value of creating meaningful, community-focused relationships is what truly makes us a family that stretches across the nation. We are grateful to our franchise owners and local communities that have made this possible and we look forward to the continued expansion of Ziggi’s Coffee.”
10. The 40th store is in Loveland, Colorado, and is owned by local franchisees Jill and Greg Bland. Located at 2016 W. Eisenhower Blvd., this new shop features a convenient drive-thru with a walk-up window. The new location offers a wide selection of handcrafted beverages from coffee classics to Red Bull Infusions, a variety of delicious food options, and a kidZone menu featuring kid-friendly items.
11. Jill Bland said, “When we first decided to join the coffee industry, we researched several companies and ultimately decided to join the Ziggi’s Coffee franchise. They made us feel like more than just a number, we were truly joining a family. As big believers in the brand and the products, we couldn’t wait to grow with this up-and-coming company.”
12. Jill and Greg Bland opened their first Ziggi’s Coffee location in Loveland in 2020 to lay down roots in their new hometown and get involved in the community. They now have two locations in Loveland, two in Colorado Springs, and more on the way. Jill Bland added, “The Ziggi’s Coffee Corporate team is an incredible resource for us as we continue to grow our footprint of Ziggi’s Coffee locations. We have now opened four stores and it just keeps getting easier!”
Inks 150th Franchise Agreement
13. In late December 2021, Ziggi’s Coffee signed its 150th franchise deal. New franchise owners Ron and Denise Cazares have joined the Ziggi’s Coffee franchise family with a multi-unit agreement. The Cazares plan to open their first Ziggi’s location in Parker, Colorado.
14. “When we first decided to become franchise owners, it was with our community of Parker at the front of our mind,” said Ron and Denise Cazares. “It was extremely important to us that we were able to contribute to the community that we actively work and live in. Ziggi’s made this possible through their national franchise program.”
15. With the same attention to detail that has gone into creating the perfect cup of coffee, the Ziggi’s Coffee franchise opportunity was created after over a decade of running successful café and drive-thru locations. Ziggi’s developed a process and system for franchises to duplicate and launched their national franchise program in 2016 and has since experienced great success.
16. The Cazares added, “The entire Ziggi’s franchise process was extremely educational and well-managed. The Ziggi’s Coffee franchise team shares our community-first and family-oriented values, so signing a multi-unit deal with them was an easy decision. We are excited to bring the Ziggi’s brand to the Parker community and grow with this company.”
17. Ziggi’s celebrated its 100th franchise signing just six months before signing the 150th agreement. With 44 open locations nationwide and over 100 in development, Ziggi’s Coffee is positioned for remarkable growth.
18. Justin Livingston, vice president of franchise development for Ziggi’s Coffee, said, “This franchise agreement signing is a milestone many franchise companies never reach. Signings, however, are only as good as the success of the franchisees. The incredible validation of Ziggi’s franchise family and expansion of additional units from current franchisees speaks volumes for the support, systems and market dominance of a Ziggi’s Coffee location. The future is bright for this industry leader.”
19. Ziggi’s Coffee was founded in 2004 by husband and wife duo Brandon and Camrin Knudsen in Longmont, Colorado. A year before, the Knudsens decided to leave the West Coast and move to Colorado to open a high-quality coffee shop. The Knudsens had some experience running their own business as they owned and operated a pre-existing sandwich and coffee shop in Thornton, Colorado. However, the couple was determined to start their own coffee shop from scratch.
20. While operating the coffee shop in Thornton, the Knudsens partnered with a coffee roaster who wanted to start a chain of coffee shops under the name Gizzi’s. Unfortunately, the partnership fell through and the coffee roaster left with the name Gizzi’s. Undeterred, the Knudsens decided to go ahead and open their own coffee shop and named it Ziggi’s.
21. The first Ziggi’s wasn’t an instant success and it took five years for the Knudsens to find what worked for their business. Eventually, the Knudsens built a menu that was driven by what customers wanted. This included adding a kids’ drink menu that had drinks that were affordable for families.
22. The Knudsens opened a second location in 2009 and added a drive-thru. This boosted sales and the Knudsens decided to focus on a drive-thru business model going forward. Ziggi’s started franchising in 2016 and there are now locations in several states.
Entrepreneur’s Franchise 500
23. Ziggi’s Coffee ranked No. 283 on Entrepreneur’s 2022 Franchise 500 list.
Section II – Estimated Costs
- Detailed estimates of Ziggi’s Coffee franchise costs, based on Item 7 of the company’s 2021 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Detailed information on Ziggi’s Coffee’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 8
- Net Change: +7
- Outlets at the Start of the Year: 8
- Outlets at the End of the Year: 14
- Net Change: +6
- Outlets at the Start of the Year: 14
- Outlets at the End of the Year: 20
- Net Change: +6
- Outlets at the Start of the Year: 6
- Outlets at the End of the Year: 6
- Net Change: 0
- Outlets at the Start of the Year: 6
- Outlets at the End of the Year: 7
- Net Change: +1
- Outlets at the Start of the Year: 7
- Outlets at the End of the Year: 7
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis
- The following is a historic financial performance representation about Ziggi’s existing affiliate-owned Coffee Shops and of Ziggi’s franchisee-owned Coffee Shops that operated for the entire calendar year 2020.
Part 1 – 2020 Actual Annual Gross Profits for Affiliated Company Coffee Shops
- Part 1 shows the actual annual Gross Profits generated by Ziggi’s affiliated companies by the type of models Ziggi’s offers under the Disclosure Document for the calendar year 2020. Ziggi’s offers two different Coffee Shop models, Drive-Thru and Café with Drive-Thru, with the Café with Drive-Thru model being offered as either a freestanding location or as an end-cap location.
- Ziggi’s affiliates operate four Drive-Thru Coffee Shops and one Café with Drive-Thru Coffee Shop. The Café with Drive-Thru model operated by Ziggi’s affiliate is located in a freestanding facility.
- Each of these units are operated similar to a Ziggi’s Coffee Shop like the kind you will operate, depending on the model you choose.
- Ziggi’s affiliates also operate two cafés without a drive-thru. Ziggi’s is not showing the results of those cafés since it is not offering that model under the Disclosure Document.
A. Affiliates with Drive-Thru Model (4 Coffee Shops)
Coffee Shop A
- Total Sales: $1,047,870
- Less Discounts: $87,808
- Actual Gross Sales: $960,062
- Cost of Goods Sold: $343,966
- Labor Costs: $264,411
- Gross Profits: $351,685
- Royalties (not incurred by affiliates): $57,604
Coffee Shop B
- Total Sales: $841,430
- Less Discounts: $68,570
- Actual Gross Sales: $772,860
- Cost of Goods Sold: $292,463
- Labor Costs: $240,083
- Gross Profits: $240,314
- Royalties (not incurred by affiliates): $46,372
Coffee Shop C
- Total Sales: $1,224,811
- Less Discounts: $111,634
- Actual Gross Sales: $1,113,177
- Cost of Goods Sold: $432,866
- Labor Costs: $324,157
- Gross Profits: $356,154
- Royalties (not incurred by affiliates): $66,791
Coffee Shop D
- Total Sales: $730,806
- Less Discounts: $61,224
- Actual Gross Sales: $669,582
- Cost of Goods Sold: $259,939
- Labor Costs: $207,653
- Gross Profits: $201,990
- Royalties (not incurred by affiliates): $40,175
- Total Sales: $961,229 (109.4%)
- Less Discounts: $82,309 (-9.4%)
- Actual Gross Sales: $878,920 (100.0%)
- Cost of Goods Sold: $332,308 (37.8%)
- Labor Costs: $259,076 (29.5%)
- Gross Profits: $287,536 (32.7%)
- Royalties (not incurred by affiliates): $52,736 (6%)
B. Affiliate with Café Drive-Thru Model (1 Coffee Shop)
Coffee Shop A
- Total Sales: $928,140 (108.7%)
- Less Discounts: $73,906 (8.7%)
- Actual Gross Sales: $854,234 (100.0%)
- Cost of Goods Sold: $353,191 (41.3%)
- Labor Costs: $261,755 (30.6%)
- Gross Profits: $239,288 (28.0%)
- Royalties (not incurred by affiliates): $51,254 (6.0%)
Part 2 – 2020 Average Annual Total Sales for Franchised Coffee Shops
- Part 2 shows the average annual Total Sales generated by Ziggi’s franchisees who operated for all of calendar year 2020 using the Drive-Thru model Coffee Shop. Further, Part 2 shows the number and percentage of those Coffee Shops who met or exceeded the average shown, together with the median annual Total Sales, and the Total Sales of the highest and lowest performing Coffee Shops in this group.
- The “median” for purposes of Part 2 means the results of the Coffee Shop falling in the middle of the group of Coffee Shops shown in that table, or, where there is an even number of Coffee Shops, the average of the results of the two Coffee Shops falling in the middle of the group.
- The table below shows the 2020 average annual total sales for the Drive-Thru Ziggi’s Coffee Shops operated by those franchisees of Ziggi’s who operated that model of Coffee Shops for the entire calendar year 2020. There are 11 franchised Drive-Thru Ziggi’s Coffee Shops that operated for the entire calendar year 2020.
- Ziggi’s had one franchisee who operated a café model Coffee Shop for the entire calendar year 2020. Ziggi’s is not showing the results of that Coffee Shop since Ziggi’s no longer offers that model to franchisees.
- Ziggi’s also had two franchisees who operated a Café with Drive-Thru model Coffee Shop for the entire calendar year 2020. Ziggi’s also is not showing the results of those Coffee Shops due to the small sample size.
Franchisees with Drive-Thru Model (11 Coffee Shops)
- Average Total Sales: $679,880
- Number and Percentage That Met or Exceeded the Average: 5/45%
- Median Total Sales: $672,461
- High Total Sales: $861,426
- Low Total Sales: $449,546
- “Total Sales” as used in this Item 19 means the total receipts of each of the Coffee Shops shown in the tables, but does not include sales tax or equivalent taxes. It includes revenue from the redemption of Ziggi’s gift certificates, customer loyalty cards, gift cards, and other prepaid cards.
- “Actual Gross Sales” as used in this Item 19 means Total Sales minus the value of discounts and complimentary products given to employees. This is the amount on which franchisees pay Royalty Fees and other fees.
- “Cost of Goods Sold” as used in this Item 19 means the direct costs attributable to the production of the goods and services sold in Ziggi’s Affiliate’s business.
- “Labor” as used in this Item 19 means the direct labor costs of employees that worked in Ziggi’s Affiliate’s business.
- “Gross Profits” as used in this Item 19 means Actual Gross Sales minus Cost of Goods Sold.
- The Coffee Shops included in these tables sell substantially the same products and services as will be offered by the franchised Coffee Shops offered pursuant to the Disclosure Document.
- The information for the Coffee Shops included in Part 1 is information as reported by Ziggi’s affiliates. The information for the Coffee Shops included in Part 2 is information as reported by Ziggi’s franchisees. None of the information has been audited or otherwise verified by Ziggi’s.
- Except for Costs of Goods Sold and Labor shown in Part 1, Ziggi’s does not show any operating expenses, non-operating income or expenses, or resulting net profit for any of the Coffee Shops shown in the tables.
- Other than the fact Ziggi’s affiliates’ Coffee Shops have operated for a longer period of time, there are no financial or operational characteristics of Ziggi’s affiliates’ Coffee Shops that are reasonably anticipated to differ materially from future operational franchise outlets that would affect the potential Gross Profits that could be generated from future operational franchise outlets.
- Some Ziggi’s Coffee Shops have sold this amount. Your individual results may differ. There is no assurance you will sell as much.