For many people, the idea of opening a Starbucks franchise is incredibly appealing. The chain is extremely well-known, and it remains highly popular, so most cafés have a suitable amount of earning potential. However, actually securing a Starbucks franchise isn’t as simple as it seems. If you’d like to operate a Starbucks location, here are six lesser-known key steps you’ll need to take to successfully journey toward Starbucks franchise ownership.
Prepare for a Licensing Deal
Technically, Starbucks doesn’t have a franchise system in the United States. Instead, every US location is company-owned. However, Starbucks does license some of its stores, and the arrangement from an operational standpoint is highly similar to running a franchise.
Still, prospective owners do need to understand that a licensing deal may have restrictions that you may not encounter with a more traditional franchise. As a result, you need to ensure that the overall arrangement works for you.
Secure Around $1 Million
The cost of licensing a Starbucks is steep. Along with a licensing fee of about $315,000, you’ll also need a stunning $700,000 in liquid assets. Otherwise, the company won’t consider your application. Taken together, that means having about $1 million in funding available.
Now, where the funding and assets can come from may vary. For example, you may not have to pay the licensing fee with savings. Additionally, Starbucks may consider some investments – suggesting they involve heavily traded shares that are easy to sell – as liquid assets. However, what qualifies can be at the discretion of the corporate office of Starbucks, so keep that in mind.
Have a High-Traffic Location
When it comes to licensing a Starbucks, having a high-traffic location readily available significantly increases your odds of getting a Deal. The company prefers to partner with individuals who have access to an already busy spot, at times preferring to place Starbucks cafés into existing successful businesses.
For example, it’s easier to convince Starbucks to license a café in an existing high-traffic hotel than it is to convince them to try an unproven location. The only exception may be reliably high-traffic areas, like popular roadways near proven businesses, where a new standalone café will likely get suitable attention.
Have Prior Relevant Experience
Starbucks doesn’t allow just anyone to secure a licensed location. Instead, you need relevant prior experience operating a business, preferably in the restaurant industry. As a result, aspiring licensees who aren’t familiar with food service operations may need to gather that experience before submitting an application. Otherwise, their odds of being rejected are incredibly high.
Sell Yourself as a Good Choice
During the application, you’ll need to show Starbucks exactly why you’re an excellent option and should become a licensee. Along with demonstrating you meet the financial requirements, you’ll have to outline why the location you’ve selected is perfect for a new café. So, be prepared to functionally sell yourself as a good choice, as missing the mark here on your application could mean rejection.
Get Ready for Involvement by Corporate
As mentioned above, licensing a café is different from securing a franchise, and that’s mainly because licensees have less control over specific aspects of the operation. Starbucks aims to create a consistent experience, so corporate is highly involved in the store design, menu, promotions, and other facets of how a location looks and operates.
However, it does also mean that licensees get more support than some franchisees may. Corporate will assist with training management and staff members, for example. Additionally, they may help with equipment acquisition. As a result, you may be able to create a streamlined (and successful) location faster.
Are you aware of anything else people should know about opening a Starbucks franchise? Do you think that being a franchise owner is a smart move or a risky venture? Share your thoughts in the comments below.
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Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
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