Starbucks has grown into the largest coffeehouse company in the world. As of 2019, the coffee shop chain has over 30,600 stores globally, with around 15,000 retail stores in the United States. This is three times the number of stores its closest competitor, Dunkin, has around the world.
Because of its popular brand name and loyal fan base, investors may see this as a good store to franchise. So, if you’re searching the internet for the Starbucks franchise fee or how much a Starbucks franchise is, I’m here to tell you that the total cost of franchising a Starbucks is a whopping $0.
Why? Because Starbucks does not franchise in the United States.
Why Doesn’t Starbucks Franchise?
All the Starbucks stores you see in the United States and Canada are under the direct management of Starbucks Coffee. This keeps every coffee shop under its total control, allowing the Seattle-based coffee chain to maintain product quality according to their standards.
Starbucks franchises outside of the US and Canada are more common. But if you’re within North America, it’s highly unlikely that you’ll ever be approved for a franchise.
However, this doesn’t mean that investors cannot find a way to profit from Starbucks’ popularity. This is where licensing comes in.
What Is Licensing?
Think of licensing a store as a limited way of franchising. Through licensing, you receive the right to handle the company’s trademarked items up to a certain degree, but they retain full control.
The best way to explain it is through McDonald’s and Disney. If McDonald’s tries to sell Happy Meals that come with trademarked Disney character toys without Disney’s permission, Disney can sue McDonald’s for trying to profit off a trademark that isn’t theirs. So, McDonald’s must first get licensing from Disney to sell these toys.
Once McDonald’s gets licensing, it means Disney has allowed them to use their trademark to sell. But Disney cannot control McDonald’s’ business operations except for the trademark that is theirs. They cannot control things like what’s in the Happy Meal that comes with their toy or how many posters of their toys will be printed and distributed.
Licensing a Starbucks
Licensing a Starbucks store is a bit like that. People who license a Starbucks store already own a business location where Starbucks would want to open. They then contact Starbucks for licensing. It’s the business owner who will shoulder the cost of the location and setting up a Starbucks in that area.
Think of it in the position of someone who owns a mall. They have a good business going, but they think that adding a Starbucks in their mall will drive more customers to come and spend money on coffee and pastries. Starbucks sees that it can be a profitable venture for them, so they allow you to license their store and open a Starbucks inside your mall.
Starbucks has control over the store design, menu, equipment, training, food, and promotions. As the licensed Starbucks investor, you will profit from the store, but you have very little to no control operations-wise.
In the United States, 6,250 stores, or around 41 percent of Starbucks stores are licensed. On average, a person would need to have at least $315,000 to open a Starbucks licensed store. This is on top of the other businesses or locations they should already have to get Starbucks’ approval to license the brand.
Who Can License a Starbucks?
Because of the many costs and requirements to license a Starbucks, this isn’t an accessible or affordable option. For those with smaller capital to invest or those looking for cheaper franchising fees like that of Subway franchises, this may not be the best option for you.
Ideally, Starbucks licenses its business to a person, company, or concessionaire that can provide their business with good retail space. Of course, you as the space owner will profit from it as well by paying the licensing fee.
Is Starbucks Profitable?
Should you choose to license a Starbucks store, you’re tapping into a brand with a huge base of loyal customers from around the world. And in the United States, Starbucks is leading the coffee chain industry, trumping even Dunkin’, Tim Hortons, and other coffee shops around the world.
If you don’t believe it, just look at the numbers. Over half of Starbucks’ stores are based in North America, where most of Starbucks’ revenue comes from. In 2019, Starbucks generated $26.52 billion in revenue, $16.65 billion of which came from North America. This means that the average revenue of one Starbucks store is $2.6 million.
How to Apply for a Starbucks Licensed Store
Visit the Starbucks website and register for a licensed store. You will also have to write out a formal application indicating your business location, assets, liabilities, and liquid assets. You will be contacted by the licensing team to discuss further details.
How to Apply for Starbucks Franchise Outside North America
For those outside North America, it may be possible to franchise a Starbucks. In Asia, most Starbucks are franchised rather than company-owned. But for those in North America, your chances of getting approved for a franchise is very low.
For those looking to franchise, you must also meet the following criteria:
- Pay at least 550,000 Euros ($650,000);
- Experience in the food and beverage industry;
- Must be an owner or high-level manager in a business or restaurant;
- Must be willing to open multiple Starbucks locations in a short amount of time;
- Must be willing to be assisted in finding a location and be supervised for compliance.
Starbucks Franchise Costs and Profits
For those looking to franchise, Starbucks’ numbers promise high returns. An average Starbucks franchise owner makes $120,000 in a year with one outlet and $2.4 million with 20 outlets.
Of course, the success of your franchises depends on plenty of factors that affect sales and profits. If you’re feeling a little lost deciding on a franchise, it’s always best to consult a franchise consultant. But because of Starbucks’ loyal fan base and a constant need for coffee from the working population, it’s highly likely that a Starbucks branch can perform well compared to other coffee brands.
So, Is a Starbucks License or Franchise Worth It?
For American investors, a Starbucks licensed store is only feasible if you have the business location where it can be beneficial for a Starbucks store to establish itself. Smaller investors or first-time investors may not be approved for a license. But if you think you can qualify, you can profit from your own Starbucks store and how it appeals to the varied consumers in the United States.
But for those outside North America, it is possible to buy a franchise of the business. But it entails opening more than one outlet, so first-time investors and those with smaller capital may find it practical to invest their money elsewhere.
