How to Finance a Chocolate Fish Coffee Franchise: Café Startup
By Anthony Cornella
A Chocolate Fish Coffee franchise loan funds a specialty coffeehouse built on the brand’s own roasting program and the New Zealand café culture its founders brought to Sacramento. The franchisor publishes a fee, a royalty and a minimum investment, which gives buyers a starting point for planning a build-out, espresso equipment and working capital.
This article covers what Chocolate Fish’s own franchise materials say, how its SBA Franchise Directory listing and lease note affect a loan, and how buyers can finance a new café or an existing one.
US Professional Funding is not affiliated with, sponsored by or endorsed by Chocolate Fish Coffee; the name is used only to describe the business. Figures from the franchisor’s website and disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to approval. Nothing here is legal, tax or investment advice; review the current Franchise Disclosure Document (FDD) and franchise agreement with a franchise attorney and an accountant before signing.
Chocolate Fish Coffee Franchise Loan at a Glance
- Concept: specialty coffeehouses serving coffee the company roasts itself, plus online coffee subscriptions.
- Founded: 2008 in Sacramento, California, by Andy and Edie Baker.
- Initial franchise fee: $30,000, according to the franchisor’s website.
- Royalty: 6% of gross sales.
- Minimum initial investment: $264,200, including the franchise fee and training.
- System: the company lists six cafés in the Sacramento region, Modesto and Livermore, plus two outlets at Sacramento International Airport.
- SBA Franchise Directory: listed as “Chocolate Fish” under code S8233, with a note about the Lease Rider and Collateral Assignment of Lease.
What Is Chocolate Fish Coffee?
Chocolate Fish Coffee began in 2008 when Andy and Edie Baker opened their first coffeehouse in downtown Sacramento. Andy grew up in New Zealand’s espresso culture and wanted to recreate the daily ritual of coffee with friends. The name comes from a fish-shaped New Zealand chocolate treat traditionally given as a thank-you for a good deed.
Roasting. In 2010, after learning how specialty coffee is grown and milled at origin, the Bakers bought a roaster and began roasting for their own cafés. The company says it buys coffee seasonally, roasts in-house, visits growing regions and keeps direct relationships with producers that give it access to micro-lots. Its East Sacramento location operates as a café and roastery.
Locations. The company’s locations page lists cafés in downtown Sacramento, East Sacramento, Land Park, Folsom, Modesto and Livermore, plus two outlets in Terminal B at Sacramento International Airport, with Davis and Tracy listed as coming soon.
How lenders see the brand. Lenders know coffee shops well. Because Chocolate Fish is a young regional franchise system, a Chocolate Fish Coffee franchise loan will rest heavily on the buyer’s experience, the site’s morning traffic and a realistic budget.
Chocolate Fish Coffee Franchise Costs
Initial franchise fee. The franchisor lists a $30,000 initial franchise fee.
Real estate and build-out. Cafés are typically leased spaces, so the largest costs are leasehold improvements: plumbing for espresso machines and sinks, electrical work, counters, seating, finishes and signage. Our article on financing a restaurant build-out explains how lenders handle construction budgets.
Equipment. Expect espresso machines, grinders, brewers, water filtration, refrigeration, a pastry case, blenders and point-of-sale systems.
Opening costs and working capital. Opening coffee and food inventory, training, grand opening marketing, deposits and funds for the first months complete the budget.
Total investment. The franchise site states a minimum initial investment of $264,200, including the franchise fee and training. That is a floor, not a full range, so the Item 7 table in the FDD is the source for the high end and each line item, which typically include:
- Initial franchise fee
- Leasehold improvements and construction
- Espresso, brewing and refrigeration equipment
- Furniture, fixtures and signage
- Point-of-sale and technology
- Opening inventory and supplies
- Training and grand opening marketing
- Deposits, permits and professional fees
- Additional funds for the initial operating period
Build your loan request from those lines so it matches the FDD total for your site.
Ongoing Fees and How They Affect Your Loan
Royalty. Chocolate Fish charges a 6% royalty on gross sales.
Marketing and other fees. The franchise site describes marketing support, including advertising materials and coordination of online search marketing, but does not list a marketing fee. Check Item 6 of the FDD for any brand fund, technology, transfer and renewal fees.
Coffee purchasing. Because the brand roasts its own coffee, expect the FDD to address where franchisees buy coffee and other required products. Product costs flow straight into margins, so lenders will want them reflected in projections.
How lenders factor these in. Royalty comes off the top of sales before rent, labor, product and debt service. Lenders model each Item 6 fee into a monthly forecast and look for cash flow that covers loan payments with room to spare.
Franchisor Requirements for New Owners
The franchise site does not publish a minimum net worth or liquid capital figure, so ask the franchise team and confirm in the FDD. Lenders will want to see the equity injection, the gap between the published minimum and your site’s real cost, and reserves after closing.
The approval process. The franchisor describes a process in which candidates submit an inquiry, receive the FDD and have 14 days to review it, then apply for financing if needed. Starting financing conversations during that review period keeps the timeline moving.
Ways to Own a Chocolate Fish Café
A new café. Most buyers will open new locations financed on projections, the lease and their own capital. Our overview of franchise start-up financing covers how we approach new units.
Buying an existing café. If a franchised café comes up for sale, the franchisor must approve the buyer and transfer, and lenders can underwrite actual results. Our article on buying a coffee shop covers what to evaluate.
Adding locations. Owners who perform well may add cafés over time, financing each one separately as cash flow allows.
Financing Options for a Chocolate Fish Coffee Franchise
SBA 7(a) loans. With its directory listing, the SBA 7(a) loan program is a natural fit for the franchise fee, build-out, equipment and working capital of a new café, or for buying an existing one.
SBA 504 loans. The SBA 504 program fits owner-occupied real estate and long-lived fixed assets, so it applies only if the owner buys the building, such as a freestanding café.
Conventional term loans. Buyers with strong finances may use a conventional business loan, with different structures and covenants.
Equipment financing. Espresso machines, grinders, brewers and refrigeration can be financed or leased separately, which can preserve cash for opening. Learn more about restaurant equipment financing and leasing.
Working capital and lines of credit. A new café needs cash for payroll, coffee and food inventory and rent while sales build. A line of credit can also cover equipment repairs. See our restaurant working capital options.
Seller financing on resales. On the purchase of an existing café, a seller may carry part of the price. A seller note must be acceptable to the senior lender, is typically subordinate to it, and may be limited under SBA program rules.
SBA Loans for Chocolate Fish Coffee Franchisees
SBA lenders generally need a franchise brand on the SBA Franchise Directory before making an SBA-guaranteed loan to its franchisees. The listing clears the franchise relationship for review; it does not approve any borrower.
Chocolate Fish’s listing. The brand appears as “Chocolate Fish” under code S8233. The directory note says that when the real estate where the franchise business is located will secure the SBA-guaranteed loan, the Lease Rider and Collateral Assignment of Lease may not be executed.
What the note means. The franchise documents include a Lease Rider and a Collateral Assignment of Lease, which generally give the franchisor rights in the café’s lease, such as taking it over if the franchise ends. Those documents fit a leased café. If the owner instead buys the property and it secures the SBA loan, they should not be signed. For most leased cafés, expect them in the closing package, reviewed alongside the lease by your lender and attorney.
Program size and tips. The SBA 7(a) program maximum is currently $5 million, though program rules can change. Bring the FDD and franchise agreement, a lease or letter of intent, contractor bids, equipment quotes, a personal financial statement, tax returns and monthly projections. Our SBA loan calculator can help with early estimates for planning only.
How Lenders Evaluate a Chocolate Fish Deal
Personal credit and financial history. Expect a review of credit, tax returns and a personal financial statement, plus a personal guarantee.
Net worth and liquidity. Lenders confirm the source of the equity injection and look for reserves after closing.
Industry and management experience. Coffee, food service or retail management experience helps. The franchisor’s training and coffee courses strengthen a first-time owner’s profile.
Business plan and projections. Base sales on the site’s morning commute traffic, nearby offices and residents, and weekend demand. Include the 6% royalty, every Item 6 fee and realistic coffee and dairy costs.
The FDD and franchise agreement. Lenders review term, renewal, transfer and territory provisions. Our article on how lenders read a Franchise Disclosure Document explains what matters most.
Site and lease. The lease term should generally match or exceed the loan term, and lenders will review the Lease Rider and Collateral Assignment of Lease with it.
Historical financials for resales. For an existing café, expect several years of profit and loss statements matched against tax returns.
Coffee Equipment and Training
A specialty café depends on its espresso bar. Commercial espresso machines, grinders and water filtration are some of the most important purchases, and they need regular service. Lenders view them as useful collateral, but also as costs that come back as the equipment ages.
The franchisor describes a coffee school with courses on tasting, sourcing and coffee economics, alongside its initial training program, and ongoing support with customer service, pricing, ordering, accounting and purchasing. Lenders see that training as a sign the owner can hold quality from the first day.
Multi-Unit Growth
The franchise site does not describe a formal area development program, so most owners will grow one café at a time. Lenders usually want the first café operating and profitable before funding the next. Keep clean financial statements, plan equity for each café and confirm any development terms in the FDD.
Real-World Scenarios
A barista-turned-owner. An experienced café manager opens a Chocolate Fish café in a growing suburb, using an SBA 7(a) loan for the build-out, espresso equipment and working capital, with the Lease Rider and Collateral Assignment of Lease signed at closing.
A buyer purchasing a freestanding building. A buyer acquires a small freestanding building for a café. Because the real estate secures the SBA loan, the lease documents named in the directory note do not apply.
A couple buying an existing café. The lender underwrites the café’s sales history, the franchisor approves the transfer and the seller carries a small subordinate note.
Common Mistakes to Avoid
- Treating the $264,200 minimum as the full cost of a café
- Overlooking Item 6 fees and required coffee purchases in projections
- Signing a lease before reviewing the Lease Rider and Collateral Assignment of Lease
- Skimping on espresso equipment service and replacement plans
- Starting with too little working capital for the ramp-up
Read more about restaurant loan mistakes to avoid.
Next Steps to Finance Your Chocolate Fish Coffee Franchise
Step 1: Contact the franchise team. Request the FDD and ask about net worth and liquidity expectations.
Step 2: Review the FDD. Use the 14-day review to study Items 5, 6, 7, 8, 17 and 19 with a franchise attorney and accountant.
Step 3: Talk with a financing specialist. See how a Chocolate Fish Coffee franchise loan would be sized under SBA 7(a) or conventional terms.
Step 4: Secure a site. Get site approval and negotiate a lease that works with the franchisor’s lease documents.
Step 5: Build the budget. Collect contractor bids and equipment quotes and build monthly projections.
Step 6: Apply and close. Submit your loan package, coordinate closing with construction and keep working capital in reserve.
Chocolate Fish Coffee Franchise Loan FAQs
How much does a Chocolate Fish Coffee franchise cost?
The franchisor lists a minimum initial investment of $264,200, including the franchise fee and training. Item 7 of the FDD shows the full range.
What is the Chocolate Fish franchise fee?
The franchise site lists $30,000.
What royalty does Chocolate Fish charge?
A 6% royalty on gross sales. Check Item 6 for other ongoing fees.
How much liquid capital do I need?
The franchise site does not publish a figure. Ask the franchise team and plan for the equity injection plus reserves.
Can I get an SBA loan for a Chocolate Fish café?
Yes, subject to approval. The brand is listed on the SBA Franchise Directory under code S8233.
What are the Lease Rider and Collateral Assignment of Lease?
Lease documents in the franchise package. The SBA directory note says they may not be executed when the café’s real estate secures the SBA loan.
Can I finance the espresso equipment separately?
Often, yes. Espresso machines, grinders, brewers and refrigeration can be financed or leased on their own.
Can a first-time owner get a Chocolate Fish Coffee franchise loan?
Yes, if the franchisor approves the candidate and the borrower meets lender requirements. Training and coffee experience help.
Can I buy an existing Chocolate Fish café?
Yes, when one is for sale and the franchisor approves the transfer.
Does Chocolate Fish offer financing?
The franchisor says candidates may apply for financing after reviewing the FDD. Check Item 10 for any direct financing.
How long is the franchise term?
The franchise site does not state it. Item 17 of the FDD covers term, renewal and transfer.
Final Thoughts
Chocolate Fish brings a roaster’s focus on quality and a New Zealand café spirit to its franchise. A sound Chocolate Fish Coffee franchise loan starts from the FDD rather than the published minimum, plans for the lease documents named in the SBA directory note and keeps enough working capital for the first months.
US Professional Funding helps franchise owners finance start-ups, acquisitions, equipment and working capital. Learn more about our franchise financing and restaurant and café financing.
