The coffee industry is one of the most robust in the world, with the public’s ever-increasing demand for superior quality and better-grade coffee. The practice of drinking coffee is no longer simply a household morning routine; it has become a regular part of everyday work and leisure. There is thus no shortage of entrepreneurs trying to find their way into the industry through franchising opportunities.
With over $7 billion in annual revenues, Starbucks is one of the leaders in the industry. But, for those looking to join the Starbucks family, the franchising opportunities are limited. Unfortunately, it is not possible to own a Starbucks franchise as an individual entrepreneur, and the almost 9,000 Starbucks outlets around the world are privately owned by the company. While the Starbucks franchise is not up for sale, there are other options for those looking to get involved.
Starbucks restricts its dealings to corporations, companies or groups of people. It engages primarily in joint venture and licensing agreements with stores where it did not originally have the ability to create its own store outlet. For instance, it first made such an agreement with Marriott Host International, allowing a Starbucks outlet to be placed in various airports throughout the U.S. It also signed a deal with Aramark Food and Services to allow Starbucks stores on its associated university campuses. Similar to what would have happened with a Starbucks franchise, every Starbucks outlet that was licensed out still had to follow company operating and training procedures.
Another strategy that the company uses to expand instead of selling the Starbucks franchise is through providing Starbucks products to various retailers, restaurants, airlines, hotels, businesses, country clubs, hospitals and hotels. The company created a specialty sales group to manage these operations. For example, in 1995, Starbucks signed an agreement with United Airlines to serve their coffee to the over 20 million passengers who fly United each year. Similar arrangements were made with Nordstrom, Barnes & Noble and Wells Fargo Bank. This division of specialty sales now makes up roughly 15 per cent of Starbucks’ total revenues.
As the company began to expand internationally, it decided that here, too, selling the Starbucks franchise was not its preferred business model. Instead, it entered into similar agreements as in the U.S. In Canada, Starbucks began selling its products at Chapters and Costco nationwide. Outside the continental U.S., Starbucks began licensing agreements with local companies who were already established in the desired market who could then develop and operate the new stores. Starbucks Coffee International was created to oversee this expansion via licensing agreements.
Thus, although it is not possible to purchase outright a Starbucks franchise, there are still agreements that interested parties can seek out. The company is always searching for additional opportunities to increase distribution of their products, whether through licensed stores, business alliances or specialty sales. So, you can’t buy a Starbucks franchise, but that doesn’t have to be the end of the story. Keep those business ideas brewing!
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