How to Start Your Own Starbucks Franchise 

 October 25, 2021

By  Matthew King

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Becoming a franchise owner is a great way to step into the entrepreneurial world. Many investors have an interest in owning a Starbucks franchise. They dream of capitalizing on the brand’s popular drinks, sandwiches, sweets, and more.

There seems to be a Starbucks on every corner. And they are just as popular and busy as ever.

Unfortunately, Starbucks owns and operates the majority of its stores, and owning a franchise isn’t an option in the U.S. at the moment. But there is another option to consider.

Here’s a look at how you can capitalize on the Starbucks brand and open a licensed Starbucks store of your own.

Franchise Licensing

Licensing a store is a limited way of owning a franchise. You can license the rights to handle a company’s trademarked items, but the company retains its control.

Capitalizing on a popular brand can be a profitable business decision. An established brand often has a recognizable logo, loyal following, and good reputation. And there’s no brand more popular or recognizable than Starbucks.

People all over the world of all ages visit Starbucks on a regular basis. It’s not unusual for there to be long lines of people inside at the counter and outside in the drive-through.

Licensing a Starbucks

Starbucks offers entrepreneurs the opportunity to start a licensed store. If you own a business that can attract Starbucks’ demographic, you may be able to add a Starbucks to your location.

Starbucks helps business owners with various aspects of owning a licensed store, including:

  • The store design
  • Menu
  • Food
  • Equipment 
  • Training and support
  • Promotions
  • Onsite visits

The business owner shoulders the costs of setting up a licensed store. If you have a successful large or small business, adding a Starbucks can boost your profits and attract new customers.

Although Starbucks retains control, you profit from ongoing sales of Starbucks products. In the U.S., around 41% of Starbucks stores are licensed locations. You’ll need at least $315,000 to open a licensed store.

Starbucks is careful about who they allow to license a store. They want to ensure you have the right location and the business experience to run a store at a profit.

Keep all these things in consideration before registering for a license.

Who Is Eligible

In most cases, people who license a Starbucks store already have a business in a favorable location. It must be a location that Starbucks approves.

Due to the costs involved in opening and running a licensed store, it’s not an affordable option for all aspiring entrepreneurs. If you have less capital to invest or are looking for cheaper franchising fees, consider a more practical franchising venture.

Typically, Starbucks approves licensing for individuals or companies that operate a retail space. As the space owner, you purchase the licensing fee and profit from sales of Starbucks branded products.

Profitability of Starbucks Licensed Stores

If you decide to license a Starbucks store, you’ll benefit from a huge fanbase of devoted customers. Starbucks is the leading coffee chain in the U.S., trumping the ever-popular Dunkin Donuts and many other successful coffee brands.

Headquartered in Seattle, Starbucks is known for its excellent coffee made from roasting high-quality beans. Their quaint coffee shops provide a friendly, inclusive space for people to meet, communicate, or conduct business.

Company executives are open about their political views and commitment to equality and diversity. They strive to add a human touch to their service.

What Makes Starbucks Unique

All of these characteristics, along with a familiar logo and color scheme, make the Starbucks brand unique. Starbucks customers are loyal, paying $6 for their favorite beverage is often a daily occurrence.

In North America, the average yearly revenue of one Starbucks store is $2.6 million. In North America alone, Starbucks generates over $16 billion in profits annually.

Starbucks continues to be a strong and proven earner. The company plans to continue its worldwide expansion into the foreseeable future.

How to Apply for Licensing

You can apply online to register a Starbucks licensed store. You’ll need to complete a formal application and answer questions about your business location, liabilities, assets, and liquid assets.

The Starbucks licensing team will contact you to discuss your application and further details.

For investors outside North America, it may be possible to franchise a Starbucks if you meet certain strict criteria. But for those in North America, store licensing is the only option at this time.

Costs of Operating a Starbucks Store

If you’re wondering how much it costs to own a Starbucks franchise, the question is really how much it takes to open a licensed store. Becoming an owner isn’t an accessible or affordable option for everyone.

You must have a favorable location and the resources needed to open and run a Starbucks.

Startup business costs for a licensed store average $315,000. Although a Starbucks store can be a profitable business venture, it’s out of reach for many young entrepreneurs.

Choose a Good Location

Every licensed Starbucks store is in a competitive location. To make a consistent profit, you need a spot where Starbucks products are in demand.

You want a high-traffic location among other successful businesses. Opening a store in a hotel, hospital, grocery store, mall, or college setting is ideal. In some cases, larger companies like Walmart or Target operate licensed stores.

These workers may be employees of the controlling company. But they must adhere to the standards of their licensing agreement with Starbucks.

Apply for a License

To start the licensing process, you must first register online with Starbucks’s Branded Solutions. Once you register, you may begin the application process.

They will want to know about your business, your location, and the types of products you want to offer. You must justify why you think you’ll be successful as a licensed store owner.

They provide space for you to argue your case. You should provide evidence showing how your store will be competitive in the coffee market. Starbucks is choosy about who they approve.

Take all of this into consideration when making your case to become a licensed owner.

Challenges Of Operating a Starbucks Store

Like any business, the coffee business has its challenges. And Starbucks is no exception. The expensive license fees, high-priced menu, and customer challenges are some of the bigger issues.

Not everyone is a fan of Starbucks’ high prices. They prefer to drink their coffee at home or patronize a less expensive coffee shop.

If you plan to operate in a large city, there’s an issue with public bathrooms and allowing the homeless to access these facilities. Currently, Starbucks allows anyone to use their restrooms.

You want to be inclusive without inconveniencing your paying customers. It’s a difficult balancing act for many licensed store owners.

Is a Starbucks Store Right for You

Although Starbucks is popular worldwide, not every area needs or wants a Starbucks. It’s important to do your research and understand if consumers in your area would enjoy having access to a Starbucks store.

If you feel you have a great location and the capital you need to get started, a Starbucks store can be a profitable investment.

Alternative Coffee Ventures

There are other options to consider if a Starbucks store is beyond your budget right now. Dunkin Donuts has a new franchise fee of $40,000 to $90,000.

They have a popular line of baked goods, coffee, tea, energy drinks, and smoothies. A second option is Dutch Bros., another well-known coffee brand. Although they have fewer products available, the company is an established brand with a solid following.

You can sell Starbucks branded items without the expense of a licensed store. Choose a few select products to sell in your current place of business.

Items like pre-made coffees, packaged beans, and teas are popular with Starbucks consumers. The requirements for product sales are much lower than operating a licensed store.

Although you wouldn’t be a Starbucks store owner, you could reap the financial benefits of selling their branded merchandise.

Consider a Licensed Starbucks Franchise

If you’re hoping to invest in a Starbucks franchise, you’ll have to consider opening a licensed Starbucks store instead. A steady stream of loyal customers will help make your Starbucks franchise successful.

Many investors find licensing a Starbucks store well worth the time, effort, and startup costs.

Starbucks will only approve licenses that benefit their brand and their profit margin. If you have the capital, the right location, and the desire to benefit from the iconic Starbucks brand, it’s worth the effort to apply.

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