Want to know how much it costs to open a Starbucks franchise? If the answer is yes, here is everything you need to know about Starbucks royalties and franchise costs. Starbucks began selling high-quality roasted coffee beans in 1971, until Howard Schultz acquired the company and transformed it into a chain of coffee shops selling ready-to-drink lattes, cappuccinos, Frappuccino’s, and various other beverages and snacks.
Today, Starbucks has more than 25,085 stores in more than 100 countries around the world, with sales of billions of dollars. Although Starbucks does not provide franchise rights, if you want to be part of the network, you need to apply for a license from them. This is a step-by-step guide on how to do this.
Why Doesn’t Starbucks Franchise?
Every Starbucks store you see in the United States and Canada is directly controlled by Starbucks Coffee. Starbucks Coffee has full control over all stores, so the Seattle chain can maintain product quality according to their standards.
Starbucks franchises outside the United States and Canada are more common, but North America is unlikely to allow you to obtain franchise rights. However, this does not mean that investors cannot find a way to take advantage of Starbucks’ popularity. This is where licensing comes in.
Cost of Licensing Starbucks Franchise
The average cost of opening a licensed Starbucks store is $315,000. The company has approximately 4,400 authorized sales outlets around the world. In order to better control its sales outlets and product quality, the company prefers licensing rather than franchising.
Only one-fifth of the European, Middle Eastern and African markets are company-run. In Asia, where Starbucks is currently targeting growth, almost half are company-operated.
How To Apply for Starbucks Franchise?
To apply for Starbucks license, please do the following:
- Visit the Starbucks website and register to apply for a licensed store.
- Then you need to write a formal application stating your preferred place of business, assets and liabilities, and cash.
- Submit your request and wait for a response from the licensing team.
Steps To Open Starbucks Franchise
Although Starbucks does not currently offer franchise rights, the company has had franchise rights in the past. Starbucks opened its first franchise store in Liphook, East Hampshire. To open a Starbucks franchise, you must live in Europe, preferably in France or the UK.
Before you can start a Starbucks franchise, you must meet the following conditions. Please note that these are requirements because Starbucks is still a franchise company:
- There must be approximately 500,000 in liquid assets. This money will be used to build a suitable Starbucks structure for you.
- If you have gained extensive experience in the food and beverage industry and should own or operate a multiplier company or restaurant. The restaurant he runs should be the size of Starbucks.
- You should be ready and able to open a lot of Starbucks immediately. You must be able to open at least 20 offices within 5 years of starting your business. You should know that only 9 franchisees own the top 45 Starbucks franchise stores. Each owner owns an average of 5 Starbucks. After the initial nine franchise rights, Starbucks believes that it already has enough franchise rights.
- Starbucks will help franchisees find a suitable location, and the company’s development team will be on standby at any time to ensure that franchisees comply with all rules.
Documents Required to Open Starbucks Franchise
Here are all the documents you need to open or license Starbucks franchise:
- Commercial and Liability Insurance
- Medical Examination Certificate
- Tax Number
- Catering Vendor Certificate (Whether the identity certificate of the catering manager of the county or service center meets the operating requirements of the shopping center)
- Supporting license copy of the service center and/or new test report
- Fire Safety Certificate
- Kitchen Insurance
- Registration Certificate
- Business License
- Business Plan
- Confidentiality Agreement
- Employment Agreement
- Employee Management
- LLC Operating Agreement
- Construction Permit
- Music Permit
- Franchise or Brand Permit
Insurance is another important part of operating a Starbucks franchise because it must cover basic responsibilities related to your property, business and employees. Insurance to consider when opening a cafeteria in the United States or other countries:
- General Insurance
- Liability Insurance
- Kitchen Insurance
- Workers Compensation
- Overhead Insurance
- Group Insurance for Entrepreneurs
How Much Does Starbucks Make in a Day?
Revenue depends on traffic and customer purchases, however, according to a survey of national sales in the United States, Starbucks’ average revenue is $540,000 per year, $45,000 per month, and $1,500 per day.
It is said that 80% of Starbucks’ sales come from its 15,000 coffee shops worldwide. Therefore: (26.5 billion USD x 0.80) / 15,000 / 365 days a year = 3,800 USD per day for company-owned stores (most stores). In other words, each store has a daily profit of $520 (an average increase of 13.6%).
Is Starbucks Franchise Worth It?
When you choose to license Starbucks business, you are acquiring a brand with a large and loyal customer base from all over the world. In the United States, Starbucks leads the coffee industry, outperforming Dunkin‘, Tim Hortons and other coffee shops around the world.
If you don’t believe us, look at the numbers. More than half of Starbucks stores are located in North America, and North America is the source of most of Starbucks’ revenue. In 2019, Starbucks sales were 26.52 billion U.S. dollars, out of which 16.65 billion U.S. dollars came from North America, which means that the average sales of Starbucks stores were 2.6 million U.S. dollars.
For American investors, only a Starbucks franchise store that has a commercial centre and opens a Starbucks store in it is possible. Smaller investors or inexperienced investors may not be eligible for a license, but if you think you are, you can take advantage of Starbucks’ own business and the way it attracts diverse American consumers.
But for people outside North America, you can buy a commercial franchise, but this requires opening multiple branches, so beginners and people with insufficient funds may find it wise to put their money elsewhere.