Village Coffee or “Franchise”

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Village Coffee is branching out.

The Alabama-based company is growing through licensing, which allows the buyer a more affordable and more flexible opportunity than franchising, Lowery said. Under a franchise agreement, the store operator follows instructions from corporate on almost every aspect of running the business. In a license agreement, the store owner has permission to use a company’s name and sell its products, according to Daniel Slocki, a counselor at the Auburn University Small Business Development Center.

Slocki said franchises generally are more profitable for the parent company, but license agreements are easier to manage.In its licensing arrangement and or Store Package, Village Coffee charges a one-time set-up fee and then a licensing fee kicks in. The licensing fee is payable monthly, and then the buyer owns the license outright. Stores are not required to purchase products from Village but can do so at 10 percent above the distributor rate. That, Lowery said, is one of the main selling points for his licenses. “We have already opened up several stores,” he said. “We have access to better pricing. It is going to save them money.” Lowery started Village Coffee with the Troy store in 2004. He followed that with the two Montgomery stores, then decided he had his hands full running the stores, but still wanted to grow the business. He considered franchising, but decided that was too restrictive on the buyers. “I was trying to put together a program that could help people and get them in the right direction,” he said. “We want every store to blend with the environment they are in.”

Through licensing, store owners largely are free to pick their own decor and music, among other things. Franchise stores, on the other hand, usually are more tightly controlled. Lowery said license purchasers will have a protected area with a population of at least 20,000 in which no other Village Coffee can open. Lowery learned Tuesday that the franchising Web site www.topnewfranchises.com recognized his company for its plan. That award, he predicted, will help Village Coffee grow. “I think it is very important because it gives us a lot of national exposure,” he said. That national exposure, Lowery said, will lead to Village Coffee stores in far-flung locations, but it will remain centered in Alabama. Village locations offer a homey feel with comfortable couches as well as chairs and tables. Free wireless Internet is available, and customers are welcome to sit and work even after they finish their coffee.

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