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Will Franchising Help or Hurt Craft Beer?

Entrepreneurs are taking advantage of the skyrocketing interest in craft beer and attempting to insert it into a traditional franchising model.
Growler USA CEO and founder Dan White. Photo courtesy of Growler USA.

It's certainly not news that Americans are obsessing over craft beer. Its ubiquity is obvious by the increasing amount of shelf space retailers are dedicating to new brews, and the sharp rise in local breweries across the country. It's enough to have made several big beverage brands take notice and fight back (like Budweiser has for the last two Super Bowls). There's seemingly no way Big Beer and Little Beer could ever work together, as their business models are so incompatible.


Several entrepreneurs, however, are now taking advantage of the skyrocketing interest in these craft and microbrews and attempting to insert them into a traditional franchising model.

How can these two concepts with seemingly antithetical principles grow together? According to Dan White, the CEO and founder of Growler USA, a partnership between franchising and craft would actually combine the best of both worlds—franchising's systematic processes and models, alongside craft brewing's emphasis on uniqueness. Because of this, concepts like World of Beer, The Casual Pint, and Craft Beer Cellar are starting to pop up all around the US.

White, a self-described "serial entrepreneur," began Growler USA like any business man would—by running the numbers. "Looking at the statistics, the growth in the world of craft beer is unprecedented," White said. "But honestly, I'm most excited about partnering with local breweries during this process."

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Inside Growler USA. Photo courtesy of Growler USA.

The concept behind Growler USA is pretty straightforward. Franchisees choose a location with aid from corporate—there are currently two locations in Oregon and North Carolina, with more than ten locations slated to open this year—and then immediately start filling their bar with beers from national, regional, and local brewers.

The beer list at each location will be distinct, which theoretically offers benefits for both the franchise and the breweries. As the Growler USA website says: "From a market development standpoint, we need each other. These brewers need our taps; we need their product." Though according to White, it's more personal than that.


"All the breweries that we've talked to so far have been really enthusiastic about working with us," he said. "We are truly committed to forming relationships that will ultimately be beneficial for the breweries and will also give our customers the best selection of beers. We'll have tap takeovers every week, with at least one person from the brewery meeting and greeting customers."

Growler USA also has regulations set in place to ensure that while they are operating as a franchise (with more than 80 taps per location), guests will still feel like they are getting a craft experience; from how the beer kegs are handled to meticulously chosen glassware to the Cicerone-certified servers tending the bar.

Some people in the world of craft beer, however, are a little suspicious about how consistently a franchise can keep up these standards.

Troy Coll is a member of the craft beer advocacy group Raise Your Pints, which worked to change legislation regarding Mississippi's stifling Prohibition-era liquor laws.

"I've had mixed experiences with franchises like World of Beer and Flying Saucer. When they're well-managed, they can be wonderfully accessible places that introduce a broad selection of craft beer to audiences that might be intimidated or uncomfortable at 'serious' beer bars," Coll says. "Some of them, however, prioritize quantity over quality—any time I visit a bar with more than four dozen taps, I wonder how they can possibly serve that many beers while they're still fresh, keep their draft lines clean, and educate their servers and bartenders about what's available."


He goes on to say that while it's not always the case, he feels that craft beer chains are less likely to establish close relationships with brewers, distributors, and importers—meaning their expansive tap walls are mostly a static, safe selection of readily available beers. In his experience, their corporate mentality is less likely to foster homebrew clubs, bottle shares, and other groups that contribute to the growth of beer culture.

"There are exceptions, and there are certainly single-location beer bars that make the same mistakes," Coll says. "In the end, it comes down to the attitudes of ownership and management, and whether they prioritize sales volume or serving the best, most interesting beers they can get."

But what do craft brewers think—especially breweries with on-site restaurants or bars? According to brewer Sam Cruz of Against the Grain in Louisville, Kentucky, he doesn't feel particularly threatened, and in fact, finds the idea appealing.

"The practice of having beers sold in a chain of retail outlets is nothing new. However, post-Prohibition laws—including the introduction of the three-tier distribution system and banning of 'tied houses,' where bars have exclusive contracts with particular vendors—have made it very difficult to move forward with any one specific retailer, as they are often big box, off-premise stores," Cruz explains.

He says that with the introduction of these chain stores dedicated to craft, it is now easier to have similar successes as with the "tied house" while operating within the letter of the law. Cruz notes that these retail chains are a perfect conduit for brand exposure to a customer who is seeking specific products.

"The only better option there is selling across our own bar. Ultimately, it's a low-risk opportunity to have broad or mass exposure of one's brand in a focused retail outlet," he adds.

"We have faith [that] the experience we are sharing with our customers is so unique to us, that it will only be possible for chain establishments to showcase a small portion of our beer and story," Cruz says. "Whereas we are a living, breathing brand."