Entrepreneurs interested in opening a location with a successful national franchise sometimes wonder or inquire about getting in on a Starbucks franchise. After all, franchising is a proven system for growth and profit. Brands such as McDonald’s, KFC, and many others have utilized the concept for many decades. But potential franchisees interested in opening at Starbucks may find there is nothing brewing.
You can’t. Starbucks Coffee doesn’t franchise. Even though franchising is a classic, successful growth strategy for myriad beloved, familiar brands, Starbucks does not grant franchises. It’s not because franchising isn’t a time-tested model for growth. Many companies offer franchises. Operators pay to build and operate a location of the franchise brand in return for a portion of the profits.
In other words, the franchisee operator is investing money in the company, and the company gets that investment as capital. Chains such as McDonald’s and Subway use the franchise system, allowing them to open increasing numbers of locations, and it works. So why does Starbucks not go the same route?
Starbucks CEO Howard Schultz wrote in his 1997 book, “Pour Your Heart Into It,” why he avoids franchising: he wants to maintain a “fanatical” level of control over his locations.
“To me, franchisees are middlemen who would stand between us and our customer,” Schultz wrote. “If we had franchised, Starbucks would have lost the common culture that made us strong. We teach baristas not only how to handle the coffee properly but also how to impart to customers out passion for our products. They understand the vision and value system of the company, which is seldom the case when someone else’s employees are serving Starbucks coffee.”
Starbucks does grant licenses for locations within hospitals, colleges, and other businesses, which are different from franchises. However, the company does not allow franchising of Starbucks store locations. As of October 2017, there were 13,930 Starbucks stores in the United States, according to Statista, and about 41 percent of those were licensed locations. Though Starbucks does help licensed stores with design, menu, equipment, training, and support, operating with a license may not be a good fit for everyone. The location must be in a spot Starbucks wants to open. Also, the licensee must have the resources to open the store. A licensed Starbucks is probably not the best option for a new operator to open as a first business or first big investment.
Many chain concepts, including successful coffeehouse brands, take advantage of franchising to achieve incredible growth. They do not share Schultz’s stance.
A franchise provides many built-in benefits for operators. This lets franchisees hit the ground running with an established concept, proven processes, and well-oiled support system. Being a part of a well-established franchise system offers all sorts of benefits. These include a low failure rate, instant brand recognition, established operational systems, buying power, ongoing support, protected territories, and a built-in network of other franchisees. Coffee concepts continue to rise in profitability. The love of quality coffee shows no signs of abating anytime soon, and there are plenty of opportunities to get involved.
Starbucks believes that owning all its locations is necessary to achieve adequate control over brand standards, but that isn’t necessarily true. Other franchise brands with well-developed systems are more comfortable with helping qualified franchisees operate; trusting those trained operators and their employees to carry out their detailed standards.
One such franchise coffee company is Scooter’s Coffee. Earlier this year Scooter’s Coffee announced the opening of its 200th store, and currently is up to more than 215 locations. As 2019 progresses, we continue to build on our success with retail expansion, toward the goal of having 1,000 stores open by the end of 2023.
Our trajectory is getting noticed, proving that corporate ownership of locations, like the Starbucks model, is not necessary for giving customers a world-class coffee experience. Scooter’s Coffee has garnered much recognition and accolades from many of the top names in the franchising and business world. This includes being named as a Top 50 for Franchisee Satisfaction by Franchise Business Review, a Top 50 Fastest-Growing Franchises by Franchise Gator, among the Top Franchises for Women by Franchise Business Review, a Top 5 Coffee Company and one of the Top 200 Food-Based Franchises by Entrepreneur, and in the Top 200 Franchises by Franchise Times.
A key reason we enter franchise agreements with operators, rather than insist on absolute control of all of our locations, is that our leadership believes in Scooter’s Coffee franchisees. It’s because we look for franchisees with leadership qualities. We trust those individuals to serve customers to our high brand standards and make sure their employees do, too. Think about it: a franchise chain that owns but does not franchise thousands of stores can’t have its corporate leaders present to oversee daily operations. So, granting franchise agreements to motivated leaders makes perfect sense.
Scooter’s Coffee empowers franchisees who have passion, self-confidence, developed communication skills, decisiveness, an eye for talent, perseverance, adaptability, and an eye toward the future. Franchising one of our locations is an ideal fit for someone with these traits who is interested in getting involved with an amazing coffee concept that is on the rise.
And we are making the experience more accessible than ever. We recently partnered with ApplePie Capital to help new and current franchisees access up to $20 million in debt capital to further expand Scooter’s Coffee. The coffee market in the United States produces an estimated $48 billion in revenues a year and is resistant to recession, and Scooter’s Coffee is striving to become the #1 drive-thru coffee franchise in the nation. Don’t wait for your chance to join an established and growing brand in the coffee industry. Reach out about how you can start your Scooter’s Coffee franchise today!