DIRECTLY OPERATED STORES VS FRANCHISE BUSINESS MODEL - A COMPARATIVE ANALYSE OF STARBUCKS AND DUNKIN’
DIRECTLY OPERATED STORES VS FRANCHISE BUSINESS MODEL - A COMPARATIVE ANALYSE OF STARBUCKS AND DUNKIN’

Summary/Abstract: The purpose of this article is to identify differences, similarities, advantages and disadvantages of directly operated stores and franchises. Both are successfulbusiness models. Differences can not only be described about traditionalvariables and context, such as capital structure and agency costs, but alsoabout new technologies and strategies.In addition to theoretical review, a comparative analyse was made through theexamples of Starbucks and Dunkin’s, showing that both models are successful,even with specific strength and weaknesses in relation with nowadays challengessuch as e-commerce encroachment and increased competition. Franchisinghas been constantly evolving in recent decades, with gradual evolution towardsthe dominance of multi-unit solutions and structured formats that can enableconsistent national and international replication. One of biggest challengesthat franchisors will face in the future due to the development of e-commerceis the alternative between establishing an “e-profit sharing” system andstrengthening the franchise or reducing the readiness for growth and thusinvesting more in directly operated stores.On the other hand, one important challenge of a premium price directly operatedstore like Starbucks comes from low entry barriers and price competition.

• Details
• Contents