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Mokafé

Mokafé Franchise LLC
https://www.mymokafe.com
1-917-523-8395
1022 Main Street, Paterson, New Jersey 07503

How much does Mokafé cost?

Initial Investment Range

$324,250 to $690,000

Franchise Fee

$35,000 to $60,000

Mokafé franchisees provide a unique offering of specialty drinks, coffee, shakes, and tea drinks.

Enjoy our partial free risk analysis below

Unlock the full risk analysis to access 9 more categories covering 100+ risks.

Mokafé March 20, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: August 19, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
2
2
6

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor is a newly formed entity with a net loss and negative equity as of its first financial statement. Item 21 financials and the explicit "Financial Condition" warning on page 5 raise questions about its ability to fund its support obligations without relying entirely on new franchise fees. This financial weakness poses a significant risk to your investment and the long-term viability of the system.

Potential Mitigations

  • Your accountant must conduct a deep analysis of the franchisor's financials, including the negative equity and lack of revenue.
  • A business advisor can help you assess if the franchisor has sufficient capitalization to survive and support franchisees.
  • Consulting with your attorney about the explicit financial risk warning is essential to understand potential implications.
Citations: Item 1, Item 21, FDD Page 5, Exhibit D

High Franchisee Turnover

Low Risk

Explanation

Since the franchisor has no history of franchised outlets as per Item 20, this specific risk of high franchisee turnover was not identified. However, high turnover in a franchise system can be a critical red flag, often indicating issues with profitability, franchisor support, or the overall business model. It is a key area to monitor in a system's future FDDs.

Potential Mitigations

  • In any franchise, a business advisor should help you evaluate the franchisee turnover rates disclosed in Item 20.
  • Your attorney can help you frame questions for former franchisees to understand why they left the system.
  • Regularly review future FDDs with your accountant to monitor for any emerging trends in franchisee turnover.
Citations: Not applicable

Rapid System Growth

Low Risk

Explanation

This risk was not identified, as Item 20 indicates no franchised outlets have opened yet. In general, excessively rapid growth can strain a franchisor's ability to provide adequate support. You should monitor the pace of franchise sales and the franchisor's corresponding investment in support infrastructure if you decide to proceed.

Potential Mitigations

  • Engaging a business advisor to assess a franchisor's support capacity relative to its growth rate is a prudent step.
  • Your accountant can review a franchisor's financials to see if resources are allocated to support functions during growth phases.
  • It is wise to ask existing franchisees about the quality of support as a system expands.
Citations: Not applicable

New/Unproven Franchise System

High Risk

Explanation

The franchisor is a startup, formed in May 2024 with no history of operating franchises. This is explicitly stated as a "Short Operating History" risk in the FDD. An unproven system carries higher risks related to the viability of the business model, the effectiveness of training and support, and overall brand recognition. Your success depends on a franchisor that has not yet demonstrated it can support franchisees.

Potential Mitigations

  • A business advisor should help you conduct extensive due diligence on the founders' and managers' experience in both the coffee industry and in franchising.
  • Scrutinizing financial projections with your accountant is critical, given the lack of a franchisee performance track record.
  • Your attorney might be able to negotiate more franchisee-favorable terms to compensate for the higher risk you are assuming.
Citations: Item 1, Item 20, FDD Page 5

Possible Fad Business

Low Risk

Explanation

This risk was not identified, as the business model of a specialty coffee house is well-established and not typically considered a fad. However, any business concept's long-term success depends on its ability to adapt to changing consumer tastes and economic conditions. A lack of demonstrated innovation could pose a future risk.

Potential Mitigations

  • Assess the long-term market demand for the specific coffee and lounge concept with a business advisor.
  • Evaluate the franchisor's plans for innovation and brand evolution as disclosed in Item 11.
  • An accountant can help you analyze the financial sustainability of the business model beyond any current trends.
Citations: Item 1, Item 11

Inexperienced Management

Medium Risk

Explanation

Item 2 shows that the management team has prior experience operating similar coffee businesses through an affiliate since 2022. However, their experience in managing a franchise system, which involves different skills like training and supporting independent owners, appears limited as the franchisor entity is new. This could present challenges in providing effective franchisee support.

Potential Mitigations

  • Thoroughly vet the management team's background with your business advisor, focusing on any prior franchise system experience.
  • Inquire directly about the systems and personnel in place to support franchisees, as distinct from managing company-owned stores.
  • Your attorney can help you ask for specific, contractual support commitments.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD. Item 1 does not indicate that the franchisor is owned by a private equity firm. Generally, private equity ownership can introduce a focus on short-term returns over the long-term health of the franchise system, which is a risk to be aware of in the franchise industry.

Potential Mitigations

  • A business advisor can help you research a franchisor's ownership structure and the track record of any parent company.
  • Consulting with your attorney is important to understand how a potential sale of the franchise system could impact your agreement.
  • If a system is PE-owned, asking existing franchisees about changes since the acquisition is a prudent step.
Citations: Not applicable

Non-Disclosure of Parent Company

Medium Risk

Explanation

This risk was not identified. The FDD discloses the existence of an affiliate, Mokafé Corp., that has operated similar outlets. However, the franchisor, Mokafé Franchise LLC (Mokafé LLC), is a newly organized, thinly capitalized entity. The financials provided are for Mokafé LLC, not the more established affiliate, which could obscure the overall financial health of the enterprise behind the brand.

Potential Mitigations

  • Your accountant should review the provided financials and note that they represent a new entity, not the operating affiliate.
  • It is important to ask your attorney whether financials for the operating affiliate should have been provided for a complete risk picture.
  • A business advisor can help you assess the potential risks of dealing with a newly formed franchisor entity.
Citations: Item 1, Item 21

Predecessor History Issues

Low Risk

Explanation

This risk was not identified. Item 1 of the FDD states that Mokafé Franchise LLC has no parent or predecessor company. In franchise systems with predecessors, it is important to review their history for any signs of trouble, such as litigation or bankruptcy, as these could indicate underlying issues with the business model or brand.

Potential Mitigations

  • Your attorney should always carefully review any predecessor information disclosed in Items 1, 3, and 4.
  • A business advisor can help you research a predecessor's track record if one is identified.
  • Asking long-term franchisees about their experience under any previous ownership is a valuable due diligence step.
Citations: Not applicable

Pattern of Litigation

Low Risk

Explanation

This risk was not identified, as Item 3 states that no litigation is required to be disclosed. A clean litigation history is a positive sign. However, you should be aware that franchisors are only required to disclose litigation that meets certain criteria, and this status can change over time.

Potential Mitigations

  • An attorney can help you understand the types of litigation that must be disclosed in Item 3.
  • It is wise to perform independent online searches for any news or legal filings related to the franchisor.
  • You should always ask current franchisees about their relationship with the franchisor and if they are aware of any widespread disputes.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
4
4
7

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

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3

Financial & Fee Risks

Total: 10
4
4
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

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4

Legal & Contract Risks

Total: 16
6
6
4

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

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5

Territory & Competition Risks

Total: 5
3
2
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

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6

Regulatory & Compliance Risks

Total: 10
4
3
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
2
1
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
3
7
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
9
8
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 2
1
1
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.