Starbucks Franchise Cost in 2020: For many small business people, owning a franchise can be a very profitable path to small business ownership, with some crucial benefits not found when starting a business from scratch. This article is going to provide you with up to date information on the cost of acquiring a Starbucks Franchise in 2020.
When you buy a franchise, you are buying into an recognized brand with a record for success; you get to manage the daily tasks of running the business, while the heavy lifting of setting up active procedures, researching and launching new menu offerings, managing huge advertising expenses and budgets, and even the real estate and construction management are all controlled by the encouraging “big brother” in your new business.
If you’ve spent any time lately in a mall, at an airport, on a college campus, or virtually anyplace else on planet Earth, you’ve perhaps sipped a $6 Triple Venti Half-Sweet Soy Caramel Macchiato from Starbucks and wondered about how you can get involved in this high-margin business. Starbucks’ business and product remains to be extremely strong and a proven earner, as the firm plans expansion by more than 12,000 stores worldwide by 2021.
Who is going to foam around here to get your hands on a Starbucks franchise?
Regrettably, if you’re living in the United States or Canada, the answer is pretty simple: You perhaps can’t. Like Chick-fil-A, In-N-Out, Panda Express, and Chipotle, the Seattle-based coffee chain does not function its stores on a franchise classical. In a 2003 interview in Entrepreneur with Starbucks then-CEO Howard Schultz, the coffee giant explained why:
“We believed very early on that people’s contact with the Starbucks experience was going to define the success of the brand. The culture and values of how we connected to our customers, which is reflected in how the firm relates to our [employees], would define our success. And we thought the best way to have those kinds of worldwide values was to build around company-owned stores and then to offer stock options to every employee, to give them a monetary and psychological stake in the firm.”
Schultz continued, “I always observed franchising as a way to get access to capital, because you’re using other people’s money to grow, basically. And we were dealing with a premium product — something that can be hard to learn, that you have to describe to the customer that needs an educated staff. It would have been hard to provide the level of sensitivity to customers and knowledge of the product needed to create those Starbucks values if we franchised. You can be just as entrepreneurial and experimental in a company-owned model.”
If you’ve still got your eyes on running your own Starbucks, or if that green mermaid makes your heart fluster every time you look at her, you’ve got a few options:
Open a Starbucks Licensed Shop
Instead of a more traditional franchise agreement, many Starbucks stores are functioned under a license from the parent firm. This means that if you already own a business, such as a supermarket, shopping center, or even a hospital, and you have a demographic that would be a good fit for Starbucks; you may be able to persuade the firm to open a store in your location.
This is a much more common structure for a Starbucks store than you may think. Giving to Statistics, there were 13,930 Starbucks places in the United States as of October 2017, and 5,708 of those locations were licensed stores, which is about 41 %. A Starbucks licensing agreement aids store owners with many of the same aspects of running the business as in a traditional franchise agreement, plus store design, the Starbucks menu, equipment, training and support, food, promotions and onsite visits.
Starbucks does not make its standards for choosing candidates for a licensed store publicly available, but if you already own a business that could sensibly suit a Starbucks location, you can visit the Starbucks Branded Solutions website to get started and send an investigation.
Relocate to China
For its overseas, global operations, Starbucks DOES function its stores using a franchise model, so if you’ve always dreamed of selling coffee in warm, tropical locales where you don’t understand the language, this may be a choice that makes sense for you. The firm has been increasing outside of North America since 1996, when it opened stores in Japan and Singapore.
Currently, it functions in at least 62 countries, with roughly 12,000 stores located outside of the United States. The firm sees the most potential in its second-largest market, China, where income is charting most positively and a new Starbucks opens roughly every 15 hours. Starbucks is also watching an expanded presence in India, where it owns just 75 high-performing stores and which is expected to be productive ground for the firm’s specialty tea brand, “Teavana.”
Open a Dunkin’ Donuts instead
With over 11,300 Dunkin’ Donuts places spread across 41 states, Dunkin’ may be a much better choice for anyone concerned in opening a franchised coffee location, since it actually IS a franchise. Unlike Starbucks, Dunkin’ Donuts functions strictly under the franchise model; every single one of its stores is self-sufficiently owned and operated, with no privately-held locations in the United States. The firmrate #3 on Entrepreneur‘s annual Franchise 500, thanks to its steady growth, profitability and history of cooperation and leadership between Dunkin’ Donuts and its franchisees.
Getting a Dunkin’ Donuts with your name on a slight plaque next to the front door doesn’t come cheap, however. If you live in the Northeast, you’re maybe out of luck: Locations in Maine, New Hampshire, Vermont, Delaware, Maryland, Massachusetts, Connecticut, Rhode Island, New York, and New Jersey, are all reserved for surviving franchisees (though you may be able to get lucky and buy an existing store).
If you’re interested in opening a Dunkin’ Donuts in any part of the country or universally, be ready to break into your piggy bank. You’ll need to pay a first fee of somewhere between $40,000 and $90,000, and have a net worth of at least $250,000, with at least $125,000 of that liquid and ready to pour into the business.
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