ITEM 1
THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS, AND
AFFILIATES
The name of the franchisor is
BAD ASS COFFEE COMPANY OF HAWAII, INC. In this disclosure document, BAD ASS
COFFEE COMPANY OF HAWAII, INC. is referred to as "we" or
"us" or "BACH." "You" means the person who buys
the franchise and includes the owners of a franchise that is a corporation,
partnership or other entity. If you are a corporation, partnership or other
entity, your owners must sign an agreement that all provisions of our franchise
agreement also will apply to your owners they must personally guarantee and be
personally bound by your obligations under the franchise agreement. Our
principal place of business is 155 West Malvern Avenue, Salt Lake City, Utah 84115. Our website is www.badasscofTee.com.
Our company was incorporated in November 1997 in Utah. Our fiscal year ends
December 31S1. Bad Ass Coffee Distributors, Inc. ("BACD")
is an affiliate of ours. BACD was incorporated in Utah in December 1997 and is
located at 166 West 2700 South, Salt Lake City, Utah 84115. We purchased The
Bad Ass Coffee Co. trademark and certain other assets from our predecessor,
Royal Aloha Coffee, Tea & Spice Company, Inc. (hereinafter referred to as
"R.A.")in 1997. R.A. filed bankruptcy in April 1999 and is no longer
in business. We have no other parent, predecessors, or affiliates.
Our agents for service of process are disclosed in
Exhibit "F".
We were formed for the purpose
of licensing and training others to operate The Bad Ass Coffee Co.� retail
stores. Our affiliate, BACD, and other designated suppliers will supply you
with our trademarked products and other items.
There are two Bad Ass Coffee
Company� store franchises. A standard Bad Ass Coffee Company� store franchise
and a smaller Bad Ass Coffee Company� drive-through franchise. We plan to sell
franchises to individuals throughout the United States, Canada and elsewhere. The franchise agreements for both the standard franchise and the drive through
franchise are the same except for the initial franchise fee (See Item 5 and
Exhibit A-l). Each franchise authorizes you to use the "Bad Ass Coffee Co.
system." The Bad Ass Coffee Co. system refers to the entire concept of The
Bad Ass Coffee Company� stores including, without limitation, the marketing, preparation,
merchandising and sale of gourmet coffee items and other products and services
under the name The Bad Ass Coffee Co.� and other proprietary marks. Our system
includes, among other things: a store layout, interior decor, business format,
specific trademarks, manuals, recipes, and other confidential business
information, operating procedures, marketing concepts, and specifications for
certain equipment, supplies and inventory. As a BACH franchisee, you will have
the opportunity to use the Bad Ass Coffee Co. system at a specific location.
You will be required to purchase specialized equipment and supplies, coffee,
clothing, mugs, t-shirts and other accessory items from our affiliate, BACD.
These.items may be produced by third party suppliers pursuant to private label
agreements. BACD was established to distribute trademarked products to
franchisees. You will be required to purchase all trademarked products from
BACD or designated suppliers. You will also be required to strictly follow our
methods, recipes, policies and procedures.
. Unless otherwise noted, the
terms of all offers are the same.
. You may also enter into a
multi-unit development agreement with us for the development of additional
franchise units in your territory. The size of the territory, the number of
units to be ■ developed and the development schedule are negotiable
between you and us.
We do not do business under
any names other than Bad Ass Coffee Company of Hawaii, Inc., The Bad Ass Coffee
Company and The Bad Ass Coffee Co.� Our business is similar to the one you will
operate.
The general market for gourmet
coffee shops is well-developed, and you will be required to compete for
potential customers in your territory. No studies or surveys have been done to
determine a need for our stores or services within your territory. You will
typically compete with other established coffee shops. There are many of these
competitors from large national coffee shop chains to smalt independent
operators.
At the present time, there are
no specific industry regulations that apply to the franchise, however, you
shall be responsible to obtain and keep in full force and effect all permits
required by government or regulatory agencies regulating your franchise
business and to comply with all applicable law and regulations. These include,
among other things, obtaining food handlers permits (Serve Safe), local
building permits, business licenses, health permits, complying with local
building code and fire code ordinances, and complying with OSHA construction
site rules and regulations, the Americans with Disabilities Act (ADA) and the
U.S. Patriot Act and Anti-Terrorism laws. You are solely responsible to
determine what local or state regulations, permits and licenses you will need
to comply with and/or obtain to conduct the franchise business in a particular
state, city or town.
There are no guarantees of
your success.. Among your business risks are changing market conditions, public
perception of coffee, demand, competition, cost of coffee and supplies, and the
weather in producing countries, among others. Coffee supply and prices are
subject to volatile international and domestic markets. An increase in
wholesale prices (or a reduction in retail prices) could affect your
profitability.
You will be given an area
limiting our ability to establish other businesses using The Bad Ass Coffee
Co.� system. (See Item 12)
We have been operating and
licensing others to operate Bad Ass Coffee Co.� stores since February 1998. Our
Chairman, Michael Bilanzich, has operated The Bad Ass Coffee Co.� stores since
1995. R.A. Operated Bad Ass Coffee Company stores in Hawaii from 1991 through
1997. R.A. also offered and issued licenses to others for the operation of Bad
Ass Coffee stores for approximately four years, but ceased doing so in 1995.
After BACH was organized, R.A. ceased operating its Bad Ass Coffee Businesses
and is now out of business.
As of the date of this
disclosure document, neither we nor our affiliate has offered for sale or sold
franchises in any other line of business. R.A. previously issued licenses for
use of its trademark to a small number of coffee retailer, the bulk of which
were located in Hawaii. Most of these licensees converted to Bad Ass Coffee
Co.� franchise stores. In addition, R.A. may have given a limited number of
licenses for developing The Bad Ass Coffee Co.� Stores in Texas, Las Vegas, Nevada, New Orleans, Louisiana, Colorado, Arizona, Hawaii and Canada. We do not know the full extent of these licenses but, to our knowledge, none of
these licenses have been used to open The Bad Ass Coffee Co.� Stores. As a
result of R.A. ''s bankruptcy petition, however, the R.A. licenses were
terminated by operation of federal bankruptcy law.
