Coffee Shop Startups: Franchise or Create Your Own Brand?

When you dream of being a business owner and providing delicious pastries and beverages to your local community—what is the logo on the cup? In your pursuit of a coffee shop startup, you’re going to have to make a game-changing consideration: is it one you make yourself, or a trusted brand that your potential customers will already know? Today we’re here to talk you through the pros and cons of starting a franchise versus creating your own coffee brand. Spoiler alert: there’s a third option that might just be perfect for you.

The Franchise Route

There’s nothing wrong with wanting to plug into an established business model, but before doing so you’ll need to be aware of the highs and lows that come along.

Pro: Established Brand Awareness

One of the hardest parts of starting any business is getting your name out there. When you go the franchise route, your potential customers will likely have already heard of you, and could already be searching for you by name, all you’ll need is an active Google Business Profile.

Con: Fees and Royalties

Franchises know the value of what they have to offer, and they are going to charge you for it. Fees, royalties, and marketing costs are standard in the industry and can eat away at your coffee shop’s profit margin. The system is designed to be cost-effective as the corporation's goal is almost always to expand, but that doesn’t mean that what’s left in your pocket at the end of the month is what you were dreaming of.

Pro: Support and Training

If this is your first coffee shop startup, then there is going to be a learning curve. Most franchises offer extensive training and support, from store setup to staff training, as they need your coffee shop running smoothly to get a piece of the pie. This can be a relief for owners who might not have done all their homework, but there are other ways to get support even if you’re starting from scratch, like with consulting from trusted experts.

Con: Limited Creativity 

Creativity and coffee go hand in hand, so if the craft is what sparked your interest in a coffee shop startup, you might find franchise life to be underwhelming. From menu to decor, you could be strictly limited to the point that you might not even be able to create your own drinks or provide local baked goods. 

Building Your Own Brand 

It’s not always a walk in the park, but building your own brand from scratch can come with great benefits compared to coffee franchises. 

Pro: Full Creative Control 

The possibilities that come with creating your own brand are only limited by your imagination, and maybe your startup budget. You get to make every decision, from the bulk coffee beans you serve to the shop's overall aesthetic and vibe. Create an experience that is entirely your own, or carefully curated for the neighborhood, and attract customers that wouldn’t dare dunk or buck. 

Con: It Can Feel Like You’re on Your Own 

The operational support and training that comes with opening a franchise can really make a difference for a lot of folks, as it's not always a smooth road when pursuing a coffee shop startup. Obviously, you’re missing out on those specific benefits, but you can also feel a lot more alone on your journey. It’s imperative you do your research on coffee shop worker training and retention strategies. 

Pro: Share Your Story 

In industries with a focus on authenticity, the brands that have the most life to them tend to see the greatest reception. When you build your own brand, you get to dictate your story and values. That might be your own personal coffee story or one that grows with the community over time.  

Con: Scaling Can Be Tricky 

Starting a franchise and hitting the limit of what you were looking to achieve has an easy next step: open another franchise. When you’ve built your own brand, taking it to another level isn’t always clear. Like we said though, there are kind folks in the industry that can help, and with someone on your side, this can actually be one of the most exciting factors. 

Crunching (or Grinding) the Numbers

Costs can make or break any new business, and there are unique considerations for franchises and independent startups, no question.

Comparing Coffee Shop Startup Costs

Most franchises basically come with a playbook for how to get things off the ground, and they are very transparent about upfront costs. This makes it easy to know when you’ve saved or raised enough cheddar to get things started, but it also makes you wonder how much of that total is really needed to get things going. You’ll know exactly that with an independent brand, but it's common for costs from out of the blue to be the reason shops don’t succeed. Thankfully, you do have the freedom to start as small as you’d like and work your way up.

Profit Margins and Return on Investment

With the lower risk associated with franchises comes lower coffee shop profit margins. Sometimes those margins are so low that you need to own as many as four or five franchise locations for the numbers to make sense. With an independent shop, you get to decide how much goes back into the business, and how much you take home at the end of the day. Curious about how much owners are paying themselves? Check out our article on that.

The Best Of Both Worlds? Dilworth Licensing Program

If neither a full-blown franchise or going solo sounds ideal, there’s a middle ground that might just be perfect for you. With Dilworth’s Licensing Program, you can enjoy the benefits of a recognized brand without the strict control of a franchise. You’ll get training, support, and a solid brand foundation while keeping the freedom to run your shop your way—like setting your own hours, customizing your menu, and picking your own location.

Drop us a line today and get going on your coffee shop startup.