Opening a franchise can be a thrilling experience in a lot of ways. It creates the opportunity for aspiring business owners to own something themselves without necessarily having to come up with a concept from scratch.
However, the options for opening a franchise are many, with McDonald’s, Chick-fil-A, and Subway coming to mind.
The reality is that before you get to open a franchise, you’ll need to review things like FDDs (franchise disclosure documents), failure rates, and more to make sure you’re choosing the right business to go for. If not, you likely will not be happy in your endeavors.
While we’ve done part 1, 2, and part 3 of opening a franchise, this portion will be a little bit different. In this section, we’ll take a look at some of the businesses that we mistakenly get asked about that don’t franchise in the conventional sense.
In addition, I’ll present you other options that you can seek out instead. While Starbucks and Chipotle often get searched for, they’re not franchises, so we’ll approach this article in a bit of a different way.
Starbucks
If you’re hoping to open a Starbucks in the US, you’re out of luck as they don’t franchise here. While some are occasionally licensed to operators, they’re not generally accessible to your average person. Instead, they may licensed to universities, airports, and more, if the stor e isn’t company-operated.
When you’e seeing a franchise inside a grocery chain like Target, they’re usually deals going to large companies rather than individuals. Hotels are another similar situation. However, for Starbucks to have an interest in such a partnership in the first place, you must own a location that gets a lot of foot traffic.
In situations where these agreements are made, the company operating the store will still need to pay royalties similar to a normal franchise. Managers of said locations are required to go to Starbucks’ training to make sure brand quality is preserved. When being able to get your hands on one of these partnerships, there are many of the same requirements actual franchising companies require, like buying through approved vendors and more.
You also cannot start selling items outside those officially approved by the company so as to ensure quality and service standards. In that sense, the company does operate in a similar way to other franchise companies I cover on this website, but with a very limited exposure to “franchisees”.
As a consequence, you typically cannot open a Starbucks “franchise” if you’re an average entrepreneur, so it’s not even something I encourage people to look into.
Chipotle
While I get asked about starting a Chipotle franchise all the time, the reality is that it’s not possible. Chipotle, much like Starbucks, is run by the corporate, which helps ensure a very high degree of consistent quality.
I typically never go to a Chipotle and think it’s bad. With its fast-casual approach, it’s a convenient option for consumers, but unfortunately not an option for aspiring franchisees.
The reality is you cannot buy a Chipotle franchise location nor can you franchise one. As per the time of which this post has gone up, there’s no indication that this is about to change.
It has even been reiterated by one of their corporate spokespeople. Chipotle keeps expanding, but they’re not doing so with the help of franchisees.
If you love Chipotle and want to be a part of the brand, you can always seek to move up the ladder internally.
While many people climbing the ladder there have had exposure on the ground floor, it’s not required to climb the corporate ladder at Chipotle.
Other, similar companies that franchise are Qdoba, Moe’s Southwest Grill, and Baja Fresh. Let’s get on a call if you’re curious about exploring those as franchising opportunities instead.
For instance, here’s what Qdoba’s FDD looks like.
Fast Food Franchises
There’s a wide range of fast food franchises you can seek to open, so this is just a brief look at some of the options. Whether you’re looking to sling burgers and fries or venture into a Mexican-inspired cuisine, the options are many.
What you need to know is that there are corporate controls present no matter the franchise you’re looking into, and significant amounts of capital are required (both liquid and net worth). Each company has its own requirements, but ranges from $1M to $2.5M is common to open a single unit.
Leasing land or converting an existing unit could be a cheaper option, but it’s generally not cheap to open a fast food franchise. On top of that, they usually come with a franchise fee ranging from $25k to $50k.
Fast food franchises can be a lucrative path to go down, but many are stringent in their requirements for an entrepreneur. Some even require that you divest other business interests.
Typically to get started, you’ll need a minimum of $500k liquid, so these options never end up on my list of recommendations for someone wanting to start a cheaper operation.
You’ll typically also be required to go through at least 8 weeks of training before you can get started.
