If you’re a coffee lover and starting your own coffee shop seems to be a mountain impossible to climb, then franchising could be the best option for you. You could be asking yourself, “What is franchising exactly?” In simple terms, it’s owning a location of an already existing brand of coffee shop.
Here are the basic components to consider when pursuing to open a coffee shop franchise.
- The types of coffee shop franchises
- Analyzing each element of the investment table for the best cost of everything related to running the shop
- Factors to consider before opening a franchise
Franchising is an extremely popular option to go with when thinking of opening up your own coffee shop. There are some specific chains that actually don’t allow franchising, so it is suggested to do some research to find out which allow and which don’t in your area. On the note of your area it is also suggested to look at what is around you. Places like the Midwest have a coffee chain, called Caribou Coffee, that you can franchise; you generally won’t find these chain shops outside of the Midwest. Then, there’s places like Dutch Bros Coffee which is popular in the Pacific Northwest but can’t be found in the Midwest. You also want to consider why you want to franchise versus other options, such as owning your own independent coffee shop.
There’s a lot less freedom in franchising, but there is also a lot more stability. There’s a much lower risk of the business failing, unlike if you were to open up your own shop. The brand name of whichever shop you choose is already well known, so your marketing tasks will have taken care of themselves for the most part. There’s already an established business model for you and your staff to follow making everything much less stressful. In addition to that, training is generally set in place along with customer support, employee support, and for a lot of questions you may run into, chances are someone already knows the answer.
On the note of training, you actually don’t need any prior coffee house experience before taking on a franchise. They will set up all the training necessary to get you set up for the position. You will already have an established customer base whether they come in for the brand specifically over others or because it’s popular and well known so therefore is more trusted. Lastly, you can make a ton more money and the company’s growth is often continually going up on the chart making natural stresses about money and profit go down drastically.
Now the question is, how much is a coffee shop franchise? The price may vary, but here is a small guide that will help you get close to exactly what you’re looking for. However, you will need capital ranging from $20,000 on the lower side up to $1 million on the higher side. This is how a franchise works:
- You are the franchise.
- You buy the rights to market.
- You distribute the goods and services of the franchise and/or another company for a specified period of time.
Types of Coffee Franchises
There are a number of varieties of different types of franchises, though the most common type of franchise is represented by the coffee shops. Some of the available franchise types include the following:
This type of franchise allows you to start a kiosk in a shopping mall that sells mostly coffee and other products like sandwiches, cakes, and smoothies. You can also own a stand-alone coffee shop like we mentioned earlier. A lot of the time, a coffee shop franchise may require leasing a retail space which is more expensive as compared to other types of coffee franchises. Planning is one of the basic requirements since choosing a location and designing the appearance are vital to helping you make yourself visible. Your overhead coast will go up in case you have to hire more employees but you’re also making more money than you would at a kiosk in a mall, especially if the stand-alone shop has an operating drive-thru.
Coffee distribution franchises
With this type of franchise, you’ll have to provide the actual coffee products and machines to coffee shops in your territory. This means you can work from home then travel to various restaurants and coffee shops to meet your potential clients. This will help you save on the cost of hiring staff since you will be in full control over everything.
Mobile coffee franchise
This is a van-based business which delivers coffee together with other assorted goods directly to customers. Most of these coffee vans travel to high-traffic events and workplaces during lunch hours in local areas or even farther away. The advantage you get when operating this kind of business is flexibility; you can work from home and set your own working hours. When doing this, you don’t have to worry about leasing or renting a space and you can use this money for maintaining your van.
Assuming you’re from one of the states in the US, this is how much a coffee shop franchise will cost in Ohio:
- Date of incorporation: 2005
- Franchising since: 2005
- Headquarters: Ohio
- Business and description
Ongoing cost for a single unit:
Factors to Consider Before Buying a Franchise
- Before starting any business, you need to research if there is a demand for a particular product or service that you wish to offer. Take your time to study the market.
- Check the company’s franchising record
- Track the record of the particular company that is offering you a franchising opportunity, it would be great if you go for a successful franchisor.
- Unlike when starting your own business, most of your money will go into other fees like for training licensing rights and equipment.
- Are you ready to face the competition, and how well are you prepared for it?
- When you want to franchise a well-known brand, you must be prepared for those franchises that are already within your vicinity. Other rivals might also be around, and you should know how to handle them to make sure you stay on top. Check what the franchiser is willing to give in exchange for the franchise fees and calculate the period it will take before you start earning a profit in order to determine if it’s really worth your time and money.
- Most – if not all – franchisers will impose some restrictions on how they would want you to run their franchise. They would require you to strictly follow their guidelines and standards which may include but not be limited to operational hours, prices, store design, and product offering.
- One of the advantages of franchises is that they offer training. If you’re planning to start your business but you don’t have any entrepreneurial skills, you need to choose one of those franchises that offer substantial training. The type of training will tell a lot about the success of your franchise.
The cost of a coffee shop franchise will largely depend on a number of factors, some of which we presented in the article. All you need to do is some research on variously available franchisors to be able to choose the best one for you.
Frequently Asked Questions
Starbucks is not a franchise. If you open a Starbucks store, it will not be in your name like if you were a franchisee. You can still open a licensed Starbucks location. Opening a licensed Starbucks costs about $315,000.
It will cost $25,000 to open a Caribou Coffee location. There are over 600 locations currently in operation.
To learn more on how to start your own coffee shop checkout my startup documents here
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Hi! I’m Shawn Chun
My adventure in coffee began when I first launched my first coffee shop back in the early 2000s. I had to figure out so many things on my own and to make it worse within 2 years of opening two large corporate coffee chains moved in just blocks away from me!
As I saw smaller and even some larger coffee shops in the neighborhood slowly lose customers to these giant coffee chains and slowly close up shop, I knew that I had to start getting creative…or go out of business.
I (like you may be) knew the coffee industry well. I could make the best latte art around and the foam on my caps was the fluffiest you have ever seen. I even had the best state-of-the-art 2 group digital Nuova Simonelli machine money could buy. But I knew that these things alone would not be enough to lure customers away from the name brand established coffee shops.
Eventually, through lots of trial and error as well as perseverance and creativity I did find a way to not only survive but also thrive in the coffee/espresso industry even while those corporate coffee chains stayed put. During those years I learned to adapt and always faced new challenges. It was not always easy, however, in the end, I was the sole survivor independent coffee shop within a 10-mile radius of my location. Just two corporate coffee chains and I were left after that year. All told the corporate coffee chains took down over 15 small independent coffee shops and kiosks and I was the last one standing and thriving.
Along the years I meet others with the same passion for coffee and I quickly learned that it is not only “how good a barista is” that makes a coffee shop successful, but the business side of coffee as well.
Hence why I started this website you are on now. To provide the tools and resources for up and coming coffee shop owners to gain that vital insight and knowledge on how to start a coffee shop successfully.
Stick around, browse through my helpful blog and resources and enjoy your stay! With lots of LATTE LOVE!