How Much It Costs To Own a Starbucks Franchise
Starbucks doesn’t technically offer franchises, as all of the brand’s worldwide stores are company-owned. But if you’re interested in a Starbucks franchise, you’re not completely out of luck.
The company does license some of its stores, which from an operational standpoint is quite similar to being a franchise owner. Better yet, the Starbucks licensing opportunity is actually fairly large. Out of the more than 15,000 Starbucks outlets throughout the world, 6,497, or about 42%, were licensed as of 2021. If you choose to go this route, here are some of the costs — and hurdles — you should anticipate.
Initial Start-Up Funding
The average cost to license a Starbucks store is $315,000. You’ll also need $700,000 in liquid assets to be considered.
What Is the Concept Behind Licensing Instead of Franchising?
The idea that Starbucks would license rather than franchise its stores comes from its CEO Howard Schulz. The progressive and popular founder has long believed that the complexities of providing a quality Starbucks experience for customers, from the explanation of its products to the actual presentation and operation of its stores, was best controlled by the company itself. Thus, franchises are not part of the company’s business model.
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But the philosophy doesn’t end there. The company also leverages its licensing model by maintaining certain requirements meant to increase sales for the business. More specifically, it doesn’t simply offer licenses to anyone who applies. Rather, the company only accepts licensees who currently have thriving businesses in good locations that Starbucks can capitalize on. For example, the company actively seeks to add licensed Starbucks locations to these types of existing industries:
- Fine dining
- Government or military facility
- Hotel and lodging
- Travel and recreation
Reading through the list, it’s obvious how the Starbucks model makes sense. Adding a Starbucks to a high-traffic business or university destination, or a hotel in a popular tourist destination is almost a sure-fire way for the company to generate additional revenue. Plus, the company has the added benefit of working with a licensee who already has a proven track record in operating a business.
Is a Licensing Package Similar to Franchising?
For the start-up fee, along with ongoing expenses, Starbucks helps licensees operate a successful business. After all, that is why the company doesn’t offer franchises in the first place — it wants control over how the business appears, giving a consistent experience to customers everywhere. So, if you successfully get a Starbucks license, you can expect the company to help you with some or all of the following:
- Store design
- The Starbucks menu
- Training and support
- Onsite visits
In other words, you’ll receive a lot of the same type of support as a franchise owner with another company would.
What Is the Process for Licensing a Starbucks?
The details of obtaining a Starbucks license are extensive, but the basic outline of how to apply is simple. Here are the steps:
- Visit the Starbucks website and register yourself as a potential licensee.
- Complete a formal application.
- Indicate your preferred business location.
- Supply the company with your current cash position, along with your assets and liabilities.
- Add any supplemental information about why your location is particularly appropriate for a licensed Starbucks store.
- Submit your application and wait to hear back.
Obviously, these are simply the first steps in the process. If the company shows interest, you can expect a site visit and a detailed examination of your financials and your business process, along with associated paperwork.
A Crack in the System
While Starbucks doesn’t offer any franchises in the U.S., or indeed any part of North America, it does have a limited number of franchise outlets overseas, particularly in the U.K. If you reside overseas and are a successful business owner, there is a chance you may qualify for a Starbucks franchise that way. However, qualification standards are high. In addition to being an owner or high-level manager, generally in the food and beverage industry, you must have liquid assets of at least £500,000 (around $630,636), a stable financial situation and be willing to open numerous locations in a short period of time. In other words, unless you are a wealthy and successful business owner who lives overseas, has extensive experience in the industry and the capital required to open multiple locations, you’re likely out of luck.
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