How to Buy a Dollar Store Franchise

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Buy a Dollar Store Franchise
Buy a Dollar Store Franchise

How to Buy a Dollar Store Franchise. The dollar store industry is the fastest growing retail sector in America. Sales of multiple $1 items total more than $16 billion annually, beating the music store industry by millions. The vast selection of goodies in most dollar stores makes impulse buying hard to resist. Buying a dollar store franchise is an excellent way to cash in on this hot retail market opportunity.

Things You'll Need

  • Spreadsheet software
  • Legal and financial advice

Research Franchises

Visit a few dollar stores in your area to get a feel for how this retail sector operates. Make notes about the pros and cons that you may need to remember later.

Conduct market research to determine if your area has enough customers to support your entry into the market. Find out how many franchised or private competing businesses are already in your local market. Use this information to decide which franchise opportunity best suits your proposed market.

Review independent ratings of franchise business opportunities at a trusted website, the International Franchise Association (see Resources below). Find contact information and request information from at least five franchisers.

Review each franchiser's Universal Franchise Agreement (UFO). Note the features, costs, training, support and any other terms in the proposed contract. Compare agreements by using a spreadsheet to track expense and income information, along with other data that you find useful.

Discuss the franchise disclosure document and contract terms with an attorney and accountant to get clarification of your legal and financial obligations as a franchisee.

Select a Franchise

Find the most current financial reports for publicly traded dollar store franchisers at the Hoovers website (see Resources below). Access company information with a limited free trial. Many public libraries provide access to company financial records through online databases.

Set a realistic budget for your franchise investment. This includes the franchise fees, taxes, licenses, payroll and employee benefits for at least one year. Expect to invest a minimum of $75,000 to a maximum of $250,000, depending on the size of the store. Also consider funds for the lease and utilities, furnishings, inventory, equipment and other expenses.

Use the Small Business Administration's Franchise Registry to find franchisers that are approved for expedited franchise loan application processing if you plan to take out a loan to finance your dollar store.

Get as much information as possible about the franchiser's history, number of franchisees, training and tools provided and the skills needed to run the business.

Talk to current and former franchise owners about their experience with your potential franchiser. Find out if the franchise program met their expectations. Ask what problems they experienced and how they were resolved.

Select the dollar store franchise that fits your market, skills, budget and income requirements after carefully considering all of the information.

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