International Franchise Prospectus

June 2010 Black Canyon (Thailand) Co. Ltd. 2991/8 Visuthanee Hitech Office Park Lardprao Road, Soi 101/3 Klongjan, Bangkapi Bangkok 10240 tel. 376-0014 to -0018 fax 376-0019 WWW http://blackcanyoncoffee.com Email international@blackcanyonthai.com

Copyright 2010 Black Canyon (Thailand) Co. Ltd. All rights reserved.

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Contents
Company Background........................................... 2 Company Facts .................................................... 2 Company History .................................................. 3 The Black Canyon Menu ....................................... 4 Franchise Services ............................................... 5 Franchise Application Process ............................... 6 Franchisee Evaluation Criteria ............................... 7 Franchise Fees..................................................... 7 Initial Investment................................................... 9 Site Selection ....................................................... 9 Design & Construction ........................................ 10 Employee Selection ............................................ 12 Training ............................................................. 13 NOTE ................................................................ 13 Frequently Asked Questions ................................ 14

Black Canyon now has more than 200 branches all around Thailand, and more than 35 branches outside of Thailand. The power of our basic concept is Siam Society, Bangkok further proven by the flexibility achieved in our formats. In addition to our full service restaurants, Black Canyon also operates coffee corners, kiosks and carts in locations such as airports and gas stations. Each year, Black Canyon serves more than one million cups of coffee to Thais and foreigners visiting Thailand, who appreciate the flavor and aroma of real coffee, and keep coming back for more. Experts at Black Canyon monitor and control the quality of every batch of coffee to ensure that our customers get the same experience every time they visit a Black Canyon restaurant. The most unique selling point of a Black Canyon franchise is the distinct format. The combination of high quality coffees with an international Thai cuisine menu has no competition in any market. In late 2006, Black Canyon launched a new concept, Caff Nero by Black Canyon, which combines the same great Black Canyon coffees with a more Italian-oriented menu. In 2008, an additional concept was launched, Gelatoni, which sells authentic Italian gelato (Italian style ice cream).

Company Background
Since 1993, Black Canyon (Thailand) Co. Ltd. coffee houses have been serving food and coffee of the highest quality, located in shopping centers, discount stores, gas stations, hotels and other types of locations throughout Thailand. Since 2002, the company has expanded it's network to include
Yangon, Myanmar

Company Facts
Registered Company Name: Black Canyon (Thailand) Co., Ltd. Registered Address: Visuthani High-Tech Office Park 2991/8 Ladprao Road, Soi 101/3 Klongjan, Bangkapi Bangkok 10240 Tel. +66 2 376-0014 to 0018 Fax +66 2 376-0019 Year Incorporated: 1993 Web Site: blackcanyoncoffee.com

an increasing number of overseas locations. Black Canyons excellent reputation is based on serving coffees of the highest quality, with the best aroma and taste, made from 100% fresh coffee beans mostly grown in Thailand under Royal patronage. Most Black Canyon coffee houses also serve an extensive food menu. While focused on the uniquely flavorful Thai cuisine, the menu combines Western dishes such as soups, salads, pasta and French fries with Eastern favorites like fried rice and noodles; and Thai specialties such as tom-yum, som-tam, and green curry. A unique feature of the menu are the fusion dishes which combine East and West, examples of which are fettuccine with green curry sauce or fusilli noodles in tom yum soup.

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Company History
Major achievements in the history of Black Canyon (Thailand) Company Limited:

First branch in Myanmar opened.

2005
Opened first three branches in the United Arab Emirates. Black Canyon barista wins first Thailand National Barista Contest and represents Thailand at the World Cup barista championships.

1993
Black Canyon (Thailand) Company Limited formed and first branch opened at Central Plaza Ram Intra.

1994
First franchises offered.

2006
Opened first branch in Cambodia, in Phnom Penh. Black Canyon barista wins second Thailand National Barista Contest. Launched new Caff Nero concept at three by Black Canyon concept at three branches in Bangkok's airport. branches in Bangkok's new internationalnew international airport.

1996
Introduced new method of distributing coffee to branches using foil vacuum packs containing single servings of fresh coffee beans, to retain freshness of the coffee.

1998
Opened first branch at Bangkok International Airport (Don Muang).

2007
Sunanta Niyom in the Black Canyon barista takes first place takes Thailand Latte Artfirst place rt Championship. Championship. Received the Prime Minister's Export award in the category of Best Service Provider.

1999
Branch opened at Queen Sirikit National Convention Center.

2001
Introduced new menus featuring a unique fusion food concept combining the tastes of East and West.

2008
Gelatoni - The healthy Italian ice cream - brand launced. Black Canyon gets the Gold Award from the SME Best Brand Awards. Again awarded Superbrands status for 2007 2009.

2002
Received an investment of 18 Million Baht (about US$ 425,000) from the Thai government Small & Medium Enterprises (SME) venture capital fund. First branch outside of Thailand opened in Singapore. First branch opened in Malaysia.

2009
Black Canyon's Pad Thai takes first place for authentic taste in Thailand's first Pad Thai world championship. Black Canyon baristi win three national competitions: the Grand Barista Championship Thailand 2009; the National Thailand Barista 2009; and the Thailand Barista Championship.

2003
Opened the 100 branch in Thailand. First grand opened in Indonesia.
th

2004
Named one of Thailand's Superbrands for 2004 to 2006. Awarded the "Shell Chuan Chim" logo, Thailand's version of the Michelin guide.

2010
First branch in China (Shanghai) opened.

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The Black Canyon Menu

One of the best selling points of the Black Canyon concept is our menu. The over-sized format filled with appetizing photographs of almost every food and drink item not only help to entice customers into your outlet, but they've also proven to be irresistible to landlords. No shopping center manager would dare pass up the chance to have a caf with such attractive menus drawing shoppers to their project. Behind our menus is a proven system for delivering food and drinks of the highest quality and consistency at a reasonable cost to the consumer. As a Black Canyon franchisee, you will have access to our extensive library of tested recipes for Thai food, coffees and specialty drinks. Our master chefs work with each of our country franchisees to help ensure that local ingredients meet our high standards, and that the taste of each dish is acceptable to your customers. The secret to ensuring the consistent quality and taste of our menu is our carefully controlled system of coffees and pre-mixed seasoning sauces. Coffees are roasted at our own roasting facility and packed in a unique singleserving pouch so that every cup of coffee is as fresh as possible. Our sauces ensure that every customer gets that authentic Thai taste, and

Coffees
Black Canyon offers all the standard coffees customers expect from specialty coffee shops today, plus our own unique creations, such as: Black Canyon Iced Coffee, Mexican Iced Coffee, Iced Mocha, Blackpucchino, Americano, Mocha, Vienna, Black Mocha Shake and Black Hazelnut Shake.

Other Drinks
To create a family place that has something for everyone, Black Canyons drinks menu also includes a wide range of non-coffee beverages. For example: Fresh juices; smoothies; cold or hot milk; lemon tea; hot tea; cold tea; and Thai herbal teas.

Food
Black Canyons food menu is what really sets it apart from all the other coffee bars in the market. The International Thai Cuisine menu includes: Soups, Salads, Sandwiches, Steaks, Thai style appetizers, spicy Thai salads, individual Thai dishes, Thai curries and Black Canyons own Fusion specialties, mixing east and west.

Request a sample menu for a complete list of Black Canyons food and beverage options. Note that standard halal menus are available where needed. You will be charged US$40 to cover material costs and shipping.

they also reduce preparation time.

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Franchise Services
The Black Canyon Franchise represents a long, enduring and mutually beneficial relationship between you and Black Canyon. In order for the franchise to succeed, it requires the commitment and dedication of both parties to fulfill their obligations. As a franchisee of Black Canyon, you will receive the following services and benefits: A license to use the Black Canyon name, logo and all service and trade marks of Black Canyon. Access to Black Canyons designers to assist you in the design and construction of your outlet. Training and manuals for all your staff, which includes classroom instruction and on the job experience. Marketing assistance, including the design and production of special materials to promote your branch opening. A complete set of operations manuals, which includes recipe books for Black Canyon foods and coffees; marketing guides; service guidelines; etc.

Black Canyon's Assistance

Black Canyon will provide you with the following support prior to the opening of your branch: Review business proposals and plans expansion targets, sales performance, etc. Site review to help you choose the best location for the new outlets, using Black Canyon's criteria and previous experience. Design review and approval. Training at Black Canyon branches in Bangkok Once opened, Black Canyon will provide you with the following continuing support: Developing new products and improve existing products together to cater to customers' changing needs, tastes and preference Help to audit, control and provide advice on the overall quality and standards of Black Canyon products Conduct operational audit and inspection on a periodic basis

Franchisees Obligations
The obligations below are those that must be fulfilled by you as a Franchisee. Construction and maintenance of the branch according to the approved designs Preparation and serving of food and coffees Customer service standards must be adhered to at all times Monthly and quarterly sales reports to Black Canyon Recruitment of new staff and ensuring that sufficient on-the-job training is provided to every new recruit Plan and conduct advertising and promotion activities with approval from Black Canyon Provide assistance in the development of a local menu that suits the tastes and preference of the local market Periodic assessment of employee performance
Black Canyon's Signature Iced Coffee Drinks

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Franchise Application Process

The application process consists of seven steps, as illustrated in the diagram at right. 1. Step one begins the process with your inquiry to us. 2. In step two we replied to your inquiry with this Prospectus and a copy of our Franchise Application Form. 3. If, after reviewing the information here, you wish to proceed with obtaining a franchise to operate a Black Canyon Coffee house, you need to complete the Franchise Application Form. Note that, before proceeding, you need to have a location picked out for your Black Canyon Coffee house. The location should meet the criteria described later in this section. You are required to send us information about the location along with your Franchise Application, as well as the information request in the form regarding your ability to finance the construction and operation of your Black Canyon Coffee House.

4. If your application is accepted and your location appears to meet our criteria, we will schedule a time to inspect the site with you in order to verify the feasibility and suitability of the site for a Black Canyon Coffee house. You will be responsible for paying the travel and accommodation expenses for up to two Black Canyon staff to perform the site inspection. See below for a description of the criteria we will use to evaluate potential franchisees. 5. We will inform you within 20 days if the site is approved. We will also provide you with further information about the Black Canyon franchise system as well as a draft Franchise Agreement. At this time, you should begin finalizing lease arrangements with the landlord of the approved location. 6. The Franchise Agreement must be signed at least 60 days before the opening date for your branch. Black Canyon will only provide you with manuals and other proprietary materials once the final Franchise Agreement is signed and fees paid.

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Franchisee Evaluation Criteria

We dont realistically expect every franchisee to posses all of the following attributes. However, Black Canyon will evaluate each Franchise Application based on these qualifications: 1. Business Experience. Your previous business experience will be a primary factor in your selection. This experience does not necessarily have to be in the restaurant industry. Because the restaurant business involves people, a strong business background with special emphasis on peoplehandling skills and management is desirable. 2. Financial Qualifications. Although business experience is very important, it is not the only qualification required in a franchisee. Franchising requires a substantial investment from franchisees; so your financial qualifications must be carefully assessed. You must be financially able to provide the initial cash investment (approximately US$300,000), with additional resources available thereafter, particularly for a possible financial emergency.

Franchise Fees
As a Black Canyon Coffee franchisee, you will be required to pay Black Canyon certain fees. These payments fall into two categories: 1. Initial Fees 2. Recurring Fees

Initial Fees
The following one-time payments are typically due at the time the Franchise Agreement is signed, or as incurred. Franchise Fee The Franchise fee is a one-time payment for each branch location, that allows you to use the Black Canyon name, logos, recipes and other proprietary information you will need in order to open and operate a Black Canyon Coffee house. The initial franchise period is five years, with an option to extend another five years at no charge, so long as the franchisee has operated their branch according to the standards required by Black Canyon. Franchise fees vary according to the size and type of branch that you plan to open. Outlet types and their franchise fees are as follows: Note: These fees are subject to change based on prevailing exchange rates, location and market conditions. 1. Full Service Coffee House Sells coffee, other drinks and the full food menu in a location of approximately 150 square meters or larger with full kitchen facilities. Franchise fee: US$40,000 2. Mini-Coffee House Sells a reduced menu of coffee and food where a full kitchen is not feasible. Franchise fee: US$33,000 3. Coffee Corner / Kiosk Sells coffee, other drinks and baked goods. Franchise fee: US$26,000

3. Track Record. Information about any previous business venture, whether or not it was a restaurant, is an important illustration of your capacity to succeed. 4. Willingness to Devote Full Time to the Operation. Black Canyon does not accept absentee franchisees. For your Black Canyon Coffee house to succeed, your full-time attention is necessary. 5. Long-Term Commitment. Running a restaurant demands a fairly long-term commitment. There is no guarantee that your Black Canyon Coffee house will be instantly profitable, and even if it is, the continued successful operation of the business will require your commitment. 6. Understanding the Concepts of Franchising. You should understand franchising and be psychologically prepared to accept and agree to the our role. You should thoroughly understand the pros and cons of franchising. You should understand the independence or lack of it possible in franchising.

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Development Fee A development fee will be calculated to cover the cost of menu development and Black Canyons travel expenses in supporting the setup and initial operations of your Black Canyon Coffee branch. Development fees will typically range from US$25,000 to US$50,000 depending on the distance and local economic conditions. The development fee is charged for each new branch. It decreases as the number of branches developed by the franchisee increases, and is generally waived after the third branch.

Recurring Fees
For the purposes of calculating Royalty and Marketing & Promotion Fees, Gross Sales includes all revenue from sales at the franchised outlet. Gross Sales does not include Sales, Value-Added or any other taxes. Royalty Fees The royalty fee is a charge for the continued use and development of the Black Canyon name, recipes and all related material. The royalty fee is 5% of total sales. The annual royalty fees must be not less than: For a Coffee Corner/Kiosk: US$6,000 Full Restaurant: US$12,000 Marketing & Promotion Fees The marketing and promotion fee is your required contribution to the corporate fund for advertising, promotional and other activities designed to build brand awareness and loyalty to Black Canyon, from which each branch benefits.

Design Fees The restaurant design will be done by one of Black Canyons designated design firms. The design fee will vary depending on the size and type of location. It is usually between US$5,000 to $7,500. The franchisee is responsible for retaining a local contractor capable of getting the design approved and executed. During the course of construction, there will generally be up to two follow-up visits by one of the designers, the cost of such visits to be borne by the franchisee. The marketing and promotion fee is 3% of total sales. For international franchisees, 2.5% of total sales is contributed to the incountry marketing and promotion fund, and 0.5% of total sales is paid to Black Canyon (Thailand).

Site Inspection & Review Fees Black Canyon franchise management and its designers must inspect any proposed location to establish its suitability as a Black Canyon Coffee house. This should be done before any rental or lease agreement is finalized. The franchisee is responsible for the travel and hotel expenses for two people, for two nights, to make this inspection trip.

Black Canyon in Semarang, Indonesia

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Initial Investment
The following table shows the expected range of costs for developing a typical full service Black Canyon Coffee outlet of around 150 square meters. All values are in US Dollars. Many of these costs will vary according to country. The values are provided here as a guideline only.
Amount Note Initial Franchise Fee Development Fee Travel & Living Expenses While Training Leasing Costs Basic Fit-out & Decoration Kitchen & Bar Equipment Furniture Signage POS Misc. Initial Inventory Marketing Additional Funds Agreement Performance Guarantee Total 40,000 25,000 to 50,000 750 to 2,000 per person Note 2 35,000 50,000 10,000 5,000 5,000 3,000 10,000 7,500 Note 5 10,000 $208,000 to $245,500 4 3 5 3 3 1

Site Selection
The selection of a site for a Black Canyon outlet is an important process. As such, you should dedicate sufficient time in selecting the most appropriate site, to ensure that it is suitable for a restaurant and enjoys high human traffic. There are many factors that you should consider before finally deciding on the outlet site. Black Canyon will work closely with you in choosing the right site.

Location
The three most important factors to consider when opening a restaurant are location, location and location! You may have heard this before, but this is the answer most experienced restaurateurs will give, and with reason. Naturally there are other factors to take into consideration, primarily concept, management, and money, but without a good or excellent location, your chances of success are greatly reduced. There is no single decision that has a greater effect on your investment and success than your choice of a location.

Black Canyon General Criteria

Here is a summary of Black Canyons criteria for a good coffee house location. Site Image & Management: Reputable Shopping Center with good management support Efficient Maintenance and Security Team Existing On-Going Marketing Support Site Attraction & Convenience: High visibility High Human Traffic Free from Noise & Air Pollution Location: Near Event Organizing Area Near Anchor Tenant e.g. Supermarket, Leisure Theme Park or Cineplex Space Requirements: Outlet should have at least 120 square meters.

Notes: 1) Variable amount is cost of air travel to and from Thailand. Training for 10 staff is included in the total amount. 2) Upfront fees and leasing costs vary widely from one country to another. You should have a reasonable idea of what you will pay in your country. 3) Black Canyon may provide some equipment, signs and decorations to you at cost. 4) Black Canyon requires payment in the form of a wire transfer or letter of credit (LC) for each stock order prior to shipment. 5) You should have sufficient funds to cover lease and labor costs for two months prior to opening plus three months after opening. Since both leasing and labor costs can vary widely from country to country, they are not estimated here.
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Outlet is preferably rectangle or square shaped so as to fully utilize the space.

Physical & Technical Requirements: Exhaust System Grease Trap Air Con System Electricity Supply of Minimum 100 amperes, 3 phase, round the clock supply. Gas Supply Water Supply Back door. To facilitate delivery, garbage disposal, staff entrance etc. Public Toilet nearby (having it within the unit will bring down space efficiency) Ceiling height of a minimum 3.0 meters

Design Concept for Yangon, Myanmar

Design & Construction

The image of the Black Canyon Coffee business must consistently be maintained, at the highest standards for Black Canyon Coffee outlets all over the world. As the layout and location of each site is different, we will work closely with you to ensure that the outlet is designed and renovated for optimal utilization of space and smooth running of the business. Upon Selection of the site and finalization of the lease agreement, we will assist you in the design and layout of the outlet based on the blueprint and specifications of the site. You should discuss with the Black Canyon (liaise directly with Black Canyon's Franchise Manager) regarding intended renovations. Supply floor plans of site to Black Canyon upon signing of lease agreement. Black Canyon will assist you in the following: Outlet design and layout Budget estimation for renovations and equipment costs Specifications for: Furniture & fittings (minimum amount) Power supply, water supply (minimum quantity) Franchisee is responsible for sourcing a reliable local renovation contractor.

Information Required by Black Canyon:

For site selection, the following information must be submitted to us: Map Location of Site Photographs and blueprints of site Site Evaluation Form (Available on Request) Samples of Terms & Conditions of Lease Agreement List of other restaurants, especially competitors, in the immediate area. Any other information deemed necessary.

Yangon, Myanmar

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Typical Stores
The photos below will give you a general idea of the range of layouts available for the design of your Black Canyon Coffee restaurant. Note that while design details and furnishings can vary, signs, logos and other decorations related to the corporate image are always consistent to ensure brand recognition.

Construction
In the course of renovation work, Franchisee must pay extra attention to: Ensure that Black Canyon's color specifications are complied with. Ensure that the Black Canyon sign specifications are complied with, both internally and externally. Ensure that the renovations are in line with local government requirements and do not breach any regulations. Supervise renovation works frequently to ensure that they are of the required standard and thus minimizing any later modifications. The franchisee must liaise closely with Black Canyon regarding progress and schedule of renovations.

Chang Klan Plaza, Chiang Mai

Mal Ratu Indah, Makassar, Indonesia Ladprao Hospital, Bangkok

Dubai Health Care City, UAE

Interior, Chang Klan Plaza, Chiang Mai

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Employee Selection
During the set-up/establishment phase, you need to recruit the key personnel a few months before the grand opening. This is to allow them time to learn the trades and all operational and management skills required to smoothly undertake the day-to-day operations of a Black Canyon Coffee outlet. The training on Black Canyon operations will be conducted in the Black Canyon Headquarters in Bangkok for up to 45 days for each position. It is an intensive training and it involves formal classroom training as well as on-the-job experience at an existing branch. After the training, the Black Canyon team will work closely with the Franchisee team (Restaurant Manager and Chef) to establish the Black Canyon Coffee outlet.

Canyon outlet must also be sufficiently staffed, in order to ensure that all customers who walk into a Black Canyon outlet are provided with the same amount of service. All staff manning Black Canyon outlets must also be given the appropriate training so that they would know how to service the customers, from greeting them at the door to serving food and drinks at their table. The following are the different positions that must be filled in a Black Canyon outlet: Management Staff: Restaurant Manager, Assistant Restaurant Manager, Supervisor Captain Cashier Kitchen Staff: Head Chef / Chef Chefs Helper 1, 2 General Kitchen Staff Customer Service Staff: Barista Service Staff (Waiter and Waitress) The minimum staffing for a restaurant is typically at least one of each of the bullet items above. Of course, you will usually need much more than one waiter during normal operations. Operating Hours & Shifts When recruiting staff for your restaurant, you will need to keep in mind the operating hours of the branch, and shifts that will be needed to cover these hours. Operating hours are typically 10:00 am to 10:00 pm. Note that you must obtain Black Canyons permission to set your normal opening time later than 11:00 am or close earlier than 9:00 pm. To cover the operating hours, employees are usually assigned to two shifts: Morning Shift from:8:00 am to: 5:00 pm -or9:30 am to: 6:30 pm Afternoon Shift from: 1:00 pm to: 10:00 pm

Branch Organization
In broad terms, a branch is organized as shown below:

Staff Recruiting
Customer service is paramount to the success of a Black Canyon outlet. Therefore, tremendous care must be given to hiring the right persons. Furthermore, each Black
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Training
The purpose of the training program is to ensure staff with different experience and different capabilities are given a standardized set of skills so that you can manage your manpower more efficiently. Note: Black Canyon requires that a minimum number of staff attend training in Bangkok for the full course prior to opening the first branch in any country. The minimum number will vary depending on the size and type of outlet, but will typically be about 10 people for a full service branch. There will be no exceptions to this requirement.

Schedule
The table below shows the overall schedule for training each position. Note that training needs to begin at least seven weeks before you open your branch. Week Position 1 2 3 4 5 6 7 Restaurant Manager Asst Restaurant Mgr Supervisor Cashier Captain Head Chef Chef Barista Waiters General Kitchen Staff Note: Training at headquarters Training at an existing branch Every new employee of every section for a new branch of Black Canyon must be sent to the head office for training.

A team of trainees from Bali enjoys a day in Bangkok

NOTE
Any and all information in this prospectus is confidential and for the sole use of the prospective Black Canyon Franchisee in determining their interest in investing in a Black Canyon outlet. No part of this document may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, in part of whole without the express written consent of Black Canyon (Thailand) Company Limited. Black Canyon may from time to time, and in its sole and absolute discretion, update, amend, modify and supplement the prospectus. Black Canyon offers no warranty, express or implied, as regards to the terms and conditions laid forth here, nor is there any guarantee of success for your franchise business.

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Frequently Asked Questions

About Black Canyon
How many years has Black Canyon been in business? Black Canyon (Thailand) Co. Ltd. was formed in 1993. How many branches does Black Canyon have, and how many are franchised? There are more than 200 branches of Black Canyon in Thailand (as of June 2010), plus 38 international locations in Malaysia, Singapore, Myanmar, Dubai, Cambodia, China and Indonesia. About 50% of the branches in Thailand are franchised. Many franchisees own more than one branch. All international branches are franchised. All together, Black Canyon has more than sixteen years' experience in franchising and has more than 40 franchisees. There are lots of coffee bars in my area, what makes Black Canyon unique? Black Canyon is not just another coffee bar clone. Typical Black Canyon Coffee Houses are full service quick-casual restaurants serving not only coffee, but a full range of fresh-cooked international Thai cuisine. This combination of the world's most popular drink with one of the world's most exciting cuisines makes Black Canyon a truly unique offering. What is a Typical Black Canyon Coffee House? Although Black Canyon branches can be in a variety of sizes and formats, most typical branches are approximately 120 to 170 square meters and offer our full menu of coffees and international Thai cuisine.

Specifically, Black Canyon offers a "Business Format Franchise" -- a type of franchising which offers the franchisee a complete business package, characterized by an continuing business relationship between Black Canyon and its franchisee that includes not only the product, services and trademark, but the entire business format itself -- a marketing strategy and plan, training, operating manuals and standards, quality control and continuous two-way communications. Are you looking for Master Franchisees only? Yes. If there are currently no Black Canyon Coffee Houses in your country or province, then our first priority is to find a Master Franchisee. How do I become a Master Franchisee? Master franchisees must have the financial resources to develop a minimum of three full service branches within the first two years of the opening of their first branch in a territory. The territory is protected for that period of time but the prospective Master Franchisee will not be allowed to sub-license branches within that period. Who finds the locations? Location is the single most important factor in the success of any food or coffee business. As a resident of the territory where you want to open a Black Canyon Coffee House, you should have a better idea of which locations will generate traffic to support your branches. Black Canyon will advise you on the technical suitability of any location you have under consideration. Do I need restaurant experience? While it is advantageous, restaurant experience is not required. Our training program will prepare you for all aspects of running your operation. During the training program, you will learn both front and back of the house policies and procedures.

About Franchising
What is Franchising? Simply put, franchising is a system that involves two people: (1) the franchisor -- Black Canyon, who lends our trademark, trade name and business methods to a (2) franchisee, who pays an initial fee and royalty for the right to do business under the franchisor's name and system.

Costs & Returns

How much does it cost? The total cost will vary according to the size and location of the branch. A full service restaurant will usually require approximately US$200,000 to $250,000

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including franchise fees, lease/rent advances, construction and pre-operating salaries for staff. Of that total, approximately 20% is costs related to leasing space, which can vary widely from one country to another. What is the Franchise Fee? The franchise fee will vary according to the format of the proposed branch. Fees run from US$26,000 for a kiosk or coffee corner up to US$40,000 for a full service branch. Kindly note that Black Canyon will only license full service (coffee + food) branches in new territories. Smaller formats are only allowed once there is a minimum number of full service branches in a territory. Does Black Canyon provide financing? No, you must work with your own preferred financial institution to arrange financing. What do I get for my money? For the initial franchise fee, you receive the right to use the Black Canyon trademarks, our system for preparing, marketing and selling food and coffee products, our information, specifications, know-how and other confidential and proprietary information for the term of the agreement. Included in the indicative total investment cost discussed above, there is also some allowance (not part of the initial fee) for management and staff training and initial marketing support prior to opening, although these also depend on the particular area in which you choose to operate. Most of the start-up costs are comprised of construction/decoration and equipment costs which will vary, depending on your site.

Is there a Marketing Fee Yes, you will be required to pay 0.5% of your gross sales to Black Canyon for continued access to marketing materials developed by the company. You should plan on setting aside an additional 2.5% of your gross sales for marketing and promotion in your country or territory. How much will I make? There are no guarantees. In fact the laws of may countries prevent us from making any specific claim. All businesses involve risk, but with a proven concept like Black Canyon and a good location your chances of success are very high. There are some common misconceptions about the profits of a restaurant business. People often observe that the cost of the ingredients for a menu item are a small fraction of the selling price. While this is usually the case, you must also remember that the people who cook the food, bring it to your table and wash the dishes all have to be paid, in addition to the rent, utilities, etc. These other costs account for a high percentage of the costs for a restaurant, especially in developed countries where labor costs are quite high.

We can provide you some assistance in preparing a business plan to help you understand the potential return on your investment. We have extensive and reliable information on the revenue and costs of goods associated with a Black Canyon restaurant, gained from over seventeen years experience in the business.

Other Questions
What support will you give me to build my unit?

How long is the Franchise term? The franchise agreement is a ten year term with a five year break ("5 + 5"). Renewal at the end of the first five years is subject to meeting all continuing operating and financial standards. There is no fee. At the end of the full ten year term, a renewal fee equal to 50% of the then current franchise fee is required to continue the franchise for another five years. What is the Royalty Fee? The Royalty is 5% of gross sales, paid monthly.

International franchisees may choose to use their own local designers to ensure compliance with local regulations and standards. In such cases, the franchisee should allow for their designer to make one or more trips to Bangkok to receive training in our design standards. Alternatively, if desired, we can arrange for one of our independent designers to create a concept for your branch according to our standards. As these designers are independent contractors, there is an additional cost for this service.

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In either case, you will need to engage a qualified local contractor to construct your branch and ensure compliance with local building codes. Am I required to purchase equipment from Black Canyon? No. Black Canyon can arrange to supply you with some specialized equipment, such as espresso machines, but you are under no obligation to purchase these items from Black Canyon. However, you must ensure that any equipment you purchase meets our exact specifications and requirements. Failure to do this may mean you are unable to prepare food and coffee according to our standards. Am I required to sell all items on Black Canyon's standard menu? No. Black Canyon recognizes that different countries will have different tastes, as well as specific dietary restrictions, such as halal requirements. We therefore allow each country to develop its own menu by selecting from our existing product range. We do require that a small number of 'signature dishes' be included on all menus.

What training will you give me and my staff? How many people does it cover? You and your team will go through our training program for each position, as appropriate. Training for each position consists of up to one week of classroom instruction at our Bangkok headquarters, followed by up to six weeks of on the job training at one of our existing training stores. Please note that the franchisee pays the travel costs, lodging, meal and wages/salaries of their staff while they are undergoing training. We do not explicitly limit the number of people that you can send for training, nor do we charge you anything for the training programs.

Where do I purchase supplies? Franchisees must purchase Black Canyon's proprietary coffee blends and roasts from the company, as well as specially blended sauces for food preparation. We also offer franchisees the ability to purchase our branded china and glassware from Black Canyon. If not purchased from us, these items must be obtained independently and meet our specifications. Fresh ingredients and other commodities must be purchased from local suppliers. Your head chef will be instructed in our quality standards so that he may assist you in selecting a local supplier.

Fried Green Curry Rice with Chicken

Can I sell my franchise rights? The rights granted by Black Canyon are specific to you. Even where franchises are granted to a corporate entity, Black Canyon's license agreement requires that the individual(s) having majority ownership of the company retain control over the company for the life of the agreement. However, Black Canyon will allow ownership of the company and/or franchise to be transferred as long as it can be demonstrated that the prospective new owners are financially and managerially able to support the business.

Can I only sell what is on the menu? Black Canyon encourages franchisees to develop 'house specials' if they so desire. Branch-specific specials should consist of no more than about six items that can be presented on a tent card. You must inform Black Canyon any time you plan to offer items not on the menus.

Confidential Information of Black Canyon (Thailand) Co. Ltd.

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