Starbucks Franchise

Starbucks and the Coffee Franchise Market

Ah, Starbucks! What an incredible success story! If ever there was a testament to the power of franchising, this one is it…

…oh, wait! Stop the orchestra! Starbucks, it says here on the label, does not franchise! No, it clearly states on the starbucks.com website: “Starbucks does not franchise operations and has no plans to franchise in the foreseeable future.”

What? Are we entrepreneurial low-lifes not good enough for them or something? Starbucks, original in every other aspect, is also one of the few chain stores which runs exactly counter to the prevailing norm - every single one of them is a company-owned store.

The confusion that many people have about this arises from something that Starbucks does do - they contract with other businesses to share the same spot or other arrangements. Thus, in the same way that Subway sandwiches - which franchises like there’s no tomorrow - has locations in casinos and the Pentagon, you may find a miniature Starbucks wedged into a hospital, a military base, a college campus, an amusement park, or other such places. Walmarts also frequently host Starbucks in the front part of the store, which is even more confusing since Walmart has a similar deal with Subway. But, no matter where you find a Starbucks, the company owns and operates that location.

The mind reels at how they can keep this dizzy growth rate going without the franchise model, but in the meantime, even though Starbucks is turning their nose up at our skilled assistance, a dozen other coffee franchise businesses have arisen to take their place. Some notably franchise-positive establishments include:

* Dunkin Donuts - 100% franchisee-owned! They bill themselves as the world’s largest coffee and baked goods chain, serving 2.7 million customers per day at over 7,000 stores globally. They even allow the franchisees to vote in deciding matters such as advertising campaigns.

* Cuppy’s Coffee Smoothies and More - They have a hard drive on right now to attract franchisees. The American Association of Franchisees and Dealers has even awarded them in recognition of their highest score ever achieved for Fair Franchising Status. They’ve also gotten good write-ups in CNN Money, QSR magazine, and Forbes. That name is “Cuppy’s”, and it looks like we’ll be hearing a lot more about it later on.

* Maui Wowi Hawaiian Coffees & Smoothies - They tout the “Hawaiian experience” in their chain of stores, and aggressively seek franchisees. Such that they offer great flexibility in store design and scale, and also boast of not requiring royalties on sales of some products. For those of you scratching your head wondering what’s so Hawaiian about coffee, you must never have had a cup of Kona coffee. These light-roasted beans cultivated on the slopes of Mount Hualalai and Mauna Loa make the most sought-after brew in the coffee world. Kona is the champagne of coffees.

* The Coffee Beanery - Slightly more upscale, in target market and in price. They offer four different types of domestic franchise opportunities: the single unit, area development, area franchising, and master franchisee. Hey, you can start small and upgrade! The Coffee Beanery stores focus on the “coffee snob” - the person who really knows their beans. Somebody who knows a French-roast Arabica from a dark-roast Robusta.

Anyway, there’s your alternatives to Starbucks. Now, will the bright-eyed franchisees give the Starbucks empire what-for? Only time will tell!