Is Starbucks a Franchise?

The Starbucks coffeehouse chain has gone from a single shop in Seattle, Washington, to thousands of locations all over the world, and that expansion hasn’t happened by accident. Unlike other businesses, though, many people are under the impression that Starbucks has franchised most of its shops rather than owning them itself. The truth is more complicated than that, but it can be explained here in this article on whether or not Starbucks is a franchise.

Is Starbucks a Franchise?

Indeed, you don’t have to own your local coffee shop (like I do, with Dunkin Donuts) to enjoy their delicious caffeinated beverages. Is Starbucks a franchise? Well… sort of. They don’t operate like your typical franchise, though. The official name for their business model is conventionally franchised stores and there are over 20,000 of them throughout 74 countries around the world! Pretty impressive stuff!  

What is a franchise?

A franchise is an arrangement in which one company grants to another company, called a franchise, (or simply a franchise) a license to use its brand and associated intellectual property (IP), as well as its operating methods, to sell goods or services under that brand. The franchisor can also be referred to as a franchised distributor or franchise operator. A single individual can own multiple franchises; he or she might own several Dunkin Donuts locations.

Does Starbucks use franchising?

Although there is some debate surrounding whether or not Starbucks uses franchising as part of its business model, it is considered a franchise company. Here’s why: A corporation that owns multiple locations under one name is most likely using franchising as part of its business model. The franchisee pays royalties to a corporate entity on each sale made in one of their stores.

The relationship between franchisor and franchisee

There is a contractual relationship between the franchisor and the franchisee. The exact nature of the relationship varies depending on how much authority, assistance, and support that franchisor is willing to provide. If nothing more than a brand name is being licensed, then there is no employment or agency relationship between the franchisor and the franchisee.

Conclusion

Most people assume that companies like Starbucks or McDonald’s are franchises. They aren’t. They aren’t even corporations in most cases. To understand what they are, you need to understand how businesses are organized in America today and how these business entities impact your day-to-day experience with these companies. I hope you enjoyed today’s post on Starbucks, a franchise, and I look forward to hearing from all of you! If there is anything else that you would like to see covered on corporate structures as it relates to popular brands/businesses, please leave a comment below! Also, be sure to check out some of my other posts.

FAQ’s

  1. Is Starbucks a franchise or corporation?
  • The answer is neither. The company was founded in 1971 and has since expanded to include over 20,000 stores worldwide. In addition to its mainstream locations, Starbucks also operates licensed shops through outlets like grocery stores and universities; these are called Starbucks Coffee Traders or Starbucks Coffee Specialists. Together with its affiliates (which include Seattle’s Best), they function more as franchisees than franchises themselves. Is Starbucks Corporation publicly traded? On March 1, 2012, Howard Schultz announced that he would be stepping down from his role as chairman at Starbucks. He retained his seat on their board of directors, however, and it seems likely that he will remain actively involved in corporate decisions for many years to come.
  1. How much does it cost to own a Starbucks franchise? 
  • It’s difficult to say precisely since costs vary by location. In general, though, experts estimate that entrepreneurs can expect to pay around $625K in start-up costs; they’ll also need $60K-$150K in liquid assets. These figures will likely grow slightly if you have prior experience in a related field. Are there franchise opportunities at other chains like Dunkin’ Donuts or Jamba Juice? Yes! They range from 99-105 franchises per year for Dunkin’ Donuts, depending on your area of interest, and 90-110 units per year for Jamba Juice franchises. Of course, these are just estimates and they are subject to change without notice. That said: if you’re interested in getting more information about franchise ownership with any of these companies please feel free to contact us using our online form so we can send you some additional details about franchising and what it’s like!
  1. Is owning a Starbucks profitable? 
  • Again, it varies by location and competition. If you’re thinking about opening your shop, however, it’s good to remember that running one isn’t cheap. Many coffee chains go bankrupt after just a few years in business; in 2012 alone, more than 200 coffee shops shut their doors for good. So: if you’re serious about owning a franchise, be sure to take every step possible to ensure its long-term profitability—otherwise, you might find yourself out of luck with no way back in!
  1. What are the requirements to open a Starbucks franchise? 
  • Some of these vary by location, but in general: you’ll need about $200K in liquid assets and at least $125K in start-up costs. In addition, if you plan on opening your shop before 2017, be sure to apply for a non-traditional store license; after that date, all new shops will be required to obtain traditional licenses. 
  1. Are there any employee benefits with owning a Starbucks franchise? 
  • This, too, depends on your location. In general, however, employees at licensed shops (such as grocery stores) will receive better benefits than those at stand-alone locations. Some of these include: 
  1.  Medical insurance 
  2.  Dental insurance 
  3.  Vision coverage · Disability coverage 
  4.  Paid vacation days 

Is Starbucks a Franchise?

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