How to Finance a Haraz Coffee House Franchise: Yemeni Cafe Costs
By Marc Cornella
A Haraz Coffee House franchise loan funds a cafe built around Yemeni coffee traditions, from cardamom-spiced Harazi coffee to saffron and pistachio lattes. The brand started in Dearborn, Michigan, and has spread quickly through franchising, which gives a buyer a recognizable concept but also a young system that lenders will study closely.
US Professional Funding is not affiliated with, sponsored by or endorsed by Haraz Coffee House; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change, loan programs vary, 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 you sign.
Haraz Coffee House Franchise Loan at a Glance
- Concept: a Yemeni coffee house serving freshly roasted Yemeni coffee, spiced coffees, specialty lattes and chai in a cafe setting.
- Founder: Hamzah Nasser, who opened the first location in Dearborn, Michigan.
- Signature drinks: cardamom-infused Harazi coffee, saffron and pistachio lattes and Adani chai, a black tea with cardamom, cinnamon and nutmeg.
- Growth: franchised cafes have opened in Michigan and in a growing list of other states.
- Fees and investment: disclosed in Items 5, 6 and 7 of the FDD. We could not verify them from the franchisor’s own materials.
- SBA Franchise Directory: listed as “Haraz Coffee House” under code S8339, with a note about lease documents (explained below).
What Is Haraz Coffee House?
Hamzah Nasser founded Haraz Coffee House in Dearborn to share Yemeni coffee culture through a modern cafe. The brand describes its mission as blending tradition with modern tastes, and its name points to the Haraz mountains of Yemen, a historic coffee-growing area.
The menu. The cafes are built on organic Yemeni coffee that is freshly roasted and served at every location. Signature drinks include Harazi coffee infused with cardamom, saffron and pistachio lattes and Adani chai. Ask the franchisor which food items are required, because a larger food menu means more refrigeration and prep space.
The format. Yemeni coffee houses are traditionally places to sit and talk over coffee, not only grab-and-go counters. Confirm the franchisor’s required space size, seating and hours, because they affect the lease you sign, the cost of furniture and finishes, and your staffing plan.
How lenders view the brand. Coffee houses have modest kitchens and steady daily traffic, which lenders like. Haraz is also part of a fast-growing Yemeni coffee category, and lenders will want to see that your site has the population and traffic to support the cafe. Because the franchise system is young, borrower strength matters a great deal.
Haraz Coffee House Franchise Costs
Ask for the current FDD and get your own landlord and contractor quotes.
Initial franchise fee. Item 5 lists the fee and any multi-unit pricing. We could not verify it from the franchisor’s own materials.
Real estate and build-out. Most owners lease retail space, and busy corridors, college areas and dense neighborhoods are typical targets for a coffee house. The build-out covers plumbing, electrical, a coffee bar, seating areas, restrooms, finishes and signage.
Equipment. Expect espresso machines, grinders, brewers for traditional Yemeni coffee, kettles, water filtration, ice machines, refrigerated display cases, freezers and point-of-sale systems.
Opening costs and working capital. Budget for opening inventory of coffee, spices, milk and packaging, permits, insurance, training, grand opening marketing and payroll during the ramp-up.
Total investment. Item 7 shows the estimated initial investment as a range. Look for line items such as:
- Initial franchise fee
- Lease deposits and rent before opening
- Leasehold improvements and coffee bar construction
- Coffee and beverage equipment
- Furniture, seating and decor
- Signage
- Point-of-sale and ordering technology
- Opening inventory
- Training travel and expenses
- Licenses, permits and insurance
- Grand opening marketing
- Additional funds for the first months of operation
Make sure the line items add up to the stated total.
Ongoing Fees and How They Affect Your Loan
Royalty. Item 6 lists the royalty, usually a percentage of gross sales, which lenders deduct before measuring repayment ability.
Marketing and technology fees. Expect a brand fund contribution, local marketing and fees for ordering, loyalty and point-of-sale systems.
Coffee supply. Ask whether you must buy roasted coffee and spices from the franchisor or an approved source, and how pricing is set. Imported coffee costs can move.
How lenders factor these costs in. Lenders model sales by daypart, then subtract cost of goods, labor, rent, royalty, marketing and loan payments. A cafe that stays busy into the evening may have a different labor model than a morning-only coffee shop, so show your hours and staffing plan.
Franchisor Requirements for New Owners
We could not verify published net worth, liquid capital or experience requirements from the franchisor’s own materials. Ask for them in writing. Expect the franchisor to look for owners who will be involved, follow its recipes and represent the brand’s hospitality.
The process typically includes an inquiry, an FDD review, discussions with current owners, site approval, training and opening support.
Ways to Own a Haraz Coffee House
A new cafe. Most owners open a new location, so lenders underwrite on projections, the lease and the borrower. See our franchise business start-up financing options.
Buying an existing cafe. A resale offers sales history, and the franchisor must approve the transfer. Our article on buying a coffee shop covers what to check.
Multiple cafes. Some owners plan several locations in a market. Lenders finance them one at a time based on performance.
Financing Options for a Haraz Coffee House Franchise
SBA 7(a) loans. Because the brand is on the SBA Franchise Directory, an SBA 7(a) loan can fund the franchise fee, build-out, equipment, opening costs and working capital, subject to approval.
SBA 504 loans. An owner who buys a building can use an SBA 504 loan for the real estate and long-lived improvements.
Conventional term loans. Experienced operators may use conventional business loans, especially for additional cafes.
Equipment financing. Espresso machines, grinders, refrigeration and display cases can be financed or leased separately. Learn more about restaurant equipment financing and leasing.
Working capital and lines of credit. A line of credit covers inventory, payroll and slower months. Explore restaurant working capital.
Seller financing on resales. A selling owner may carry part of the price, which reduces the size of the Haraz Coffee House franchise loan you need. Seller notes are typically subordinate to the senior loan, and SBA rules may limit them.
SBA Loans for Haraz Coffee House Franchisees
The SBA Franchise Directory lists brands whose franchise documents have been reviewed for SBA eligibility. A listing does not approve any borrower; each loan is underwritten on its own merits.
The brand’s listing and its note. Haraz Coffee House appears under code S8339. The note says that when the real estate where the franchise operates will secure the SBA-guaranteed loan, the Lease Rider and Collateral Assignment of Lease may not be executed. In plain English, those documents are for owners who lease their space and give the franchisor rights in that lease. If you own the building and pledge it as collateral, there is no lease to assign, so they are not signed. Tell your lender early whether you will lease or own.
Program size. The SBA 7(a) program maximum is currently $5 million, though program rules can change.
Application tips. For a Haraz Coffee House franchise loan, prepare the FDD, the lease or purchase contract, contractor bids, equipment quotes, a personal financial statement, tax returns, a resume and monthly projections. Use the SBA loan calculator to estimate payments.
How Lenders Evaluate a Haraz Coffee House Deal
Credit and financial history. Lenders review credit, tax returns and your personal financial statement, and owners usually sign a personal guarantee.
Net worth and liquidity. Cash for the equity injection plus a reserve for the ramp-up period is important with a young brand.
Experience. Food service, coffee, hospitality or retail management experience helps.
Business plan and projections. Build sales from customer counts and average ticket by daypart, including evening traffic if you plan late hours.
The FDD and franchise agreement. Lenders review fees, term, transfer rules and whether Item 19 includes financial performance representations.
Site and lease. Parking, foot traffic, visibility, nearby universities and lease length all matter. The lease should run at least as long as the loan where possible.
Historical financials for a resale. Provide several years of sales reports, profit and loss statements and tax returns.
Build-Out and Equipment for a Coffee House
When a cafe is built for guests to stay, seating, lighting, finishes and restrooms carry more weight than in a drive-thru coffee stand. The coffee bar needs reliable espresso equipment, grinders and water filtration, plus service plans. Financing build-out over a longer term and equipment over its useful life keeps payments in line. Our article on restaurant build-out financing explains how construction costs are funded.
Multi-Unit Growth and Development Agreements
Owners who want several cafes may sign a development agreement with an opening schedule. Lenders still fund each cafe separately and want to see the first one perform. Read about area development agreement financing.
Real-World Scenarios
A first-time owner. A former retail manager leases space near a university and uses an SBA 7(a) loan for the build-out, equipment and working capital.
A family partnership. Relatives combine savings for the equity injection, with one partner running daily operations.
A building purchase. An owner buys a small retail building and pledges it as collateral, so the lease documents in the SBA note are not used.
Common Mistakes to Avoid
- Leasing too small a space for the seating your format requires.
- Underestimating furniture and finish costs.
- Ignoring evening labor costs when planning late hours.
- Skipping service plans for espresso equipment.
- Not telling the lender early whether you will lease or own.
Read more in our article on restaurant loan mistakes.
Next Steps to Finance Your Haraz Coffee House Franchise
Step 1: Get the current FDD. Review Items 5, 6, 7, 10, 17 and 19.
Step 2: Review with advisors. Have an attorney and an accountant review the agreement and lease documents.
Step 3: Choose a site. Check traffic, parking and demographics.
Step 4: Get quotes. Collect landlord, contractor and equipment quotes.
Step 5: Talk to a financing specialist. Decide how to split the build-out, equipment and working capital.
Step 6: Apply and close. Coordinate the closing with construction and training.
Haraz Coffee House Franchise Loan FAQs
How much does a Haraz Coffee House franchise cost?
Item 7 of the current FDD gives the estimated range. Space size and finishes drive much of the difference.
What is the franchise fee?
Item 5 of the FDD lists it. We could not verify it from the franchisor’s own materials.
What royalty does Haraz Coffee House charge?
Item 6 lists the royalty and recurring fees.
How much liquid capital do I need?
The franchisor sets its own requirement, and lenders expect an equity injection plus reserves.
Is Haraz Coffee House eligible for SBA loans?
Yes. It is listed on the SBA Franchise Directory under code S8339, subject to approval and the lease note.
Can I finance equipment separately?
Yes. Espresso machines, grinders and refrigeration can be financed or leased.
Can I buy an existing cafe?
Yes, if one is for sale and the franchisor approves the transfer.
Does the franchisor offer financing?
Item 10 of the FDD discloses any franchisor financing.
How long is the franchise term?
Item 17 lists the term, renewal and transfer rules.
Can a first-time owner get financing?
Yes, with good credit, enough cash and a strong site. Food service experience or an experienced manager helps.
Final Thoughts
A Haraz Coffee House franchise loan finances a distinctive cafe in a growing category. Get the FDD, choose a site that fits the brand’s format and keep enough working capital for the ramp-up.
US Professional Funding helps franchise owners and buyers finance start-ups, acquisitions, equipment, working capital and refinancing. Learn more about our franchise financing and restaurant financing solutions.
