R1 - Simple Retail Franchise Business
“People need it and come to you”
Examples: McDonalds, Burger King, Subway, Supercuts,
Great Clips, HR Block, Liberty Tax, Snap Fitness
Simple Retail Franchise Business' offer a product or service. Customers come, buy and leave. The products or services are from a predetermined menu. Most Employees are typically entry level, or lightly skilled. The buildout and leased space - typically 1500 - 3000 square foot. Depending on the market, timing and landlord, Tenant Improvement Dollars or (IT) Allowance. This is a reimbursement from a landlord.
Having a nationally recognized franchise and a qualified investor with high business acumen increases not only the chance of getting more TI, but also better terms on your lease because you are more desirable in most cases than your typical start-up. All in initial investment can range from $100K - $2 Million
For 2 Million, Think McDonalds, where the real estate is stand alone and part of your initial investment.
There are a lot of really great options in the $150-$300K range.
R2 - Sophisticated Retail Franchise Business
“You provide a skilled service that people need”
Examples: Meineke, Midas, AAMCO, MAACO, Hand &
Stone, Massage Envy, Fast Signs, SignArama, Medical
Weight Loss Clinics, Urgent Care franchises
People come to you. Semi-customize inventory/ menu. You need trained people to do the work
That "next step up" job or some employees may need licensing or schooling, certifications or licensing.
The buildout and leased space - 3000 up to 9000 square foot. Depending on the market, timing and landlord, again,
Tenant Improvement Dollars or (IT) Allowance. That reimbursement from a landlord
Range of costs can vary greatly. There are lots of options in the $300,000 - $750,000 range
And then there are some emerging franchises, kind of a hybrid of R1 and R2, but we can discuss that some other time.
Retail Pros and Cons - CONS
First the Cons
These can be expensive to open and operate.
Fixed costs may be higher.
Can’t take the people out of the people business
We need people – people cause problems
Isn’t that always an issue for some people?
People I tell ya
Retail Pro and Cons - PROS
These are scalable and replicable business models
Financing tends to be straightforward – banks are
lending again and they tend to like to lend to
companies they have heard of.
Again, another PRO for Franchising!