Why Starbucks Won’t Franchise

Franchising is a proven growth strategy for many iconic brands — from McDonald’s to Burger King, Dominos to Wendy’s. But not Starbucks. The largest coffeehouse in the world does not grant franchises.

The brand was launched in 1977 by English teacher Jerry Baldwin, history teacher Zev Siegl and writer Gordon Bowker at Seattle’s Pike Place Market. In the early ‘80s, the trio sold what was then a coffee bean store to Howard Schultz, who reportedly was inspired to turn the store into a coffee shop after a trip to Milan.

Under Schultz’s leadership, Starbucks rapidly expanded from 1986 to 2000, first in Seattle and then across the country. So why not experience further expansion through franchising? In his 1997 book, “Pour Your Heart Into It,” Schultz explained why he chooses to avoid franchising.

“To me, franchisees are middlemen who would stand between us and our customer,” Schultz wrote. “If we had franchised, Starbucks would have lost the common culture that made us strong. We teach baristas not only how to handle the coffee properly but also how to impart to customers our passion for our products. They understand the vision and value system of the company, which is seldom the case when someone else’s employees are serving Starbucks coffee.”

According to Lauren Coulter, director of franchise development for emerging brand Biscuit Belly, it doesn’t always make sense for a brand to franchise. “If you can grow from a corporate perspective, and you have the capital to support it, then you can probably expand without franchising,” she said. “Opening a Starbucks is probably a quarter of the price of opening a service restaurant, so that’s another reason why they were able to do it. It took them 40 years to do it, but for a brand that wants to get into new markets quickly, franchising is a way to do it.”

While Starbucks believes owning all of its locations is necessary to achieve adequate control over brand standards, that’s not necessarily true for every brand, said Corey Elias, director of franchise development for Franchise Captain. 

“If you grow without franchising, you are counting on a management-type model,” Elias said. “It’s hard to get people to treat your brand the same as their business. For a general manager at a Starbucks, it’s a job. But if they have skin in the game, like a franchisee, it’s a business.”

Certainly, part of Starbucks’ massive success as a non-franchise brand can be attributed to timing. The explosion of coffeehouse culture in the 90’s — as captured by hit TV shows “Friends,” where Central Perk coffeehouse was a major setting, and “Frasier,” where many scenes were shot in a Seattle coffeehouse reminiscent of the Starbucks Reserve Roastery — occurred just as Starbucks was blowing up across the country. For the coffee brand, it was a marketing dream come true, driven by something it couldn’t buy: popular culture.

While Starbucks doesn’t franchise, it does grant licenses for locations within hospitals, colleges and other businesses. The coffee brand helps licensed stores with design, menu, equipment, training and support, but the location must be in a spot Starbucks wants to open, and licensees must have the resources to open the store.

Interested in a coffee chain that does franchise? Check out our favorite coffee franchises to buy in 2021, featuring brands like BIGGBY® Coffee, Paris Baguette* and Dunkin’.