You can’t be an American and not know about Walmart, one of the biggest retail and wholesale stores is the US. It contains everything you’d look for in a store, from grocery items to clothing. On top of this, Walmart is also known for having some of the lowest prices on its products, coupled with great deals that you can find almost daily. Inside the store, you will also find appliances, crafts, clothing, outdoor gadgets, toys, and even electronics, among others.
And Walmart is a global company as well, with over 10,560 stores in 24 countries, growing at a very fast rate. Walmart is currently the world’s largest company based on its revenue, with over $550.000 billion. it is also the largest private employer on the planet, having over 2.2 million employees. With this being said, Walmart looks like an appealing opportunity for most franchisee owners because of the immense amount of profit and notoriety of Walmart. But to know if Walmart would be a smart business venture, keep reading to take a closer look into this business.
So having such incredible popularity, it might have made you consider the possibility of owning a Walmart franchise, especially considering its status as the world’s biggest company, when it comes to revenue. So how much does a Walmart franchise cost?
How Much Does it Cost to Open a Walmart Franchise?
The first thing we want to point out is that Walmart doesn’t offer franchise opportunities per se. Its branches and warehouse stores are actually company-owned and operated. This also means that you can’t buy a Walmart hypermarket. Even so, you can still try to “own” and make money off part of the retail monster, if you buy Walmart stocks instead, as Walmart is a publicly traded company.
You can also try to get a franchise of businesses that are set up within Walmart’s shops. This is basically the closest you will most likely get to having a franchise related to this retail giant when it comes to Walmart franchise opportunities.
Of course, trying to capitalize on Walmart’s impressive reach and appeal is a great idea, even though you won’t be a Walmart franchisee. You can do this by putting up a franchise shop or other type of business in front or inside one of the many Walmart shops.
It goes without saying that if you want to run a business inside a Walmart location, you have to prepare for some big financial investments, as costs related to franchise requirements like rentals and other expenses are bound to be pretty high.
Costs Related to Doing Business with Walmart
As Walmart does not offer franchise opportunities, you won’t be required to pay a Walmart franchise startup fee. But, as you can surely understand, just being mentioned in the same phrase as Walmart is a big pro for your business and could mean a big increase in revenue.
Among the many advantages you will have when getting a business inside one of the many stores owned by this company are:
- High-traffic area
- Less competition in your niche
- A captured market
Also, Walmart specialists would also be able to help you get the best place for your business inside their walls. This type of support would surely have an incredible impact on your revenue as depending on your needs, you might be placed in an area with high foot traffic. This will help Walmart’s more devoted customers notice your shop.
The usual costs for franchise start-ups are somewhere between $50,000 and $250,000. Of course, there are cheaper franchises, that have initial costs of just around $10,000, while on the more expensive side of the spectrum would be franchises that cost $5 million or more to launch. Here are the start-up costs of businesses, based on the markets they operate in:
- Fast food restaurants: $250,000 to $1 million.
- Home-based or mobile idea: $10,000.
- Car repair and maintenance shops: $200,000 to $300,000.
- Full-service restaurants: $750,000 to $3 million.
These startup costs are usually followed by a franchise fee. Paying this fee would enable you to not only use the brand of the franchisor but also get additional support to get your location going and make it successful.
You are likely to spend $20,000 to $50,000 on franchise fees for most franchises out there. This is just the average, as the most popular brands out there will likely charge $100,000 or even more, especially if you get the sole right to deal in a specific location or you get a master franchise and not just one shop license.
Fast Food Franchises
Inside most Walmart shops, you will find a combination of the most popular and successful franchises in the world, including Subway, Dunkin Donuts, and McDonald’s.
Below, you will find some of the most important details related to each of these fast-food franchises:
A coffee bar is usually just below a fast food restaurant on the list of future business owners considering franchises. So have you ever asked yourself how much would starting a Starbucks franchise cost?
- Initial Subway franchise fee of $15,000 (just $5,000 for satellite locations).
- Start-up costs of anywhere between $100,000 to $350,000.
- An ongoing royalty fee of 8% of gross sales.
- Marketing fee of 4.5% of gross sales.
Dunkin’ Donuts expenses
- Initial Dunkin’ Donuts franchise fee of $40,000 to $90,000
- Site development costs of as much as $325,000
- Building costs of $20,000 to $600,000
- Ongoing franchise fee of 5.9% of gross sales
- Ongoing marketing fee of 5% of overall gross sales
- The franchise term is usually twenty years
- Start-up costs between $1,300,000 to $2,400,000 (although part of it can be paid through financing, 40% will have to be in cash form).
- Initial McDonald’s franchise fee of $45,000.
- Month-to-month service fee which will be equivalent to 4% of gross sales.
- The franchise term is normally twenty years for standard locations.
You should also keep in mind that you will have to comply with whatever minimum financial requirements the franchise model you want to work with, has. Before they even consider your application, most of the big-name companies will need you to have a certain net worth and a number of liquid assets. In the case of the Subway franchise, for example, you will have to have liquid cash prerequisites of over $30,000.
Walmart Ghost Food Franchises
Recently, Walmart started to swap the old, popular food chains like McDonald’s and Subway with less-known brands, the less popular ghost kitchen brands. These are virtual kitchen businesses that don’t offer the in-dining services you’d normally get, but just a place where customers order from their favorite brands online.
Currently, Walmart has only added ghost kitchens to its stores in Canada, although it is in talks to open more in the future. Walmart is planning to have popular franchises like Slush Puppie, Saladworks, Rocky’s Italian, Pepe’s Perogies, Monster Cupcakes, and The Cheesecake Factory inside its stores as soon as possible. So let’s go over just some of the franchises that might end up being a part of the Walmart family.
One of the more popular sandwich franchises is Quiznos, which aside from sandwiches, also sells soft drinks and soups. This is a company coming from Denver, that only started to offer franchises in 2018. Expect an initial franchise fee of roughly $10,000 at Quiznos. Also, this franchise requires a minimum investment of $215,000 and a maximum of $320,000. This sum will usually cover material signs, construction, equipment, as well as the development fee.
Expect a development fee of $20,000 or more, depending on the number of restaurants you want to open, the sum being the same as the initial investment based on the Multi-Unit Development Agreement. The leasehold improvements represent another major cost, as they can range between $65,000 and $100,000, tax not included. Even so, most of the expense will go toward the building itself, which will have to be set up in Walmart if it is opened inside it.
Opening a ghost kitchen might mean that you might get away without paying roughly $120,000, representing material signs, construction, and equipment costs. You might still need appliances and kitchen supplies, another pricey expense, so don’t neglect those when figuring out the budget.
Saladworks is another restaurant option to own in a Walmart store, a chain that is known for selling custom-made salads, sandwiches, soups, and wraps. Saladworks is a company that started out in New Jersey, in 1986. You will pay an initial franchise cost of $35,000. A single restaurant will likely require an initial investment of around $185,000 to $520,000, depending on how you design the store, which makes it a lot more expensive than your average Quiznos. Most of this money will go towards millwork, equipment, and leasehold improvements.
Leasehold improvements alone can cost anywhere between $50,000 and $250,000, just like for Quiznos. The needed equipment will likely cost $37,000 to $90,000, although these costs would be smaller for a ghost kitchen.
There are also service-based franchises you can consider, like Cellairis, for example. This is one of the many companies that have made a strong business relationship with Walmart. Its shops provide repair work services for mobile phones and electronic devices.
The cost of purchasing a Cellairis franchise will be:
- Start-up expenses of around $37,000 for a cart to $375,000 for inline or full-store.
- The initial franchise fee for a kiosk: $20,000.
- The initial franchise fee for an inline or complete shop experience: $25,000.
- The initial royalty fee for a kiosk and inline: $800 monthly or 3% of gross sales.
- The initial royalty fee for a complete shop experience: 4% of gross sales.
- Liquid money requirement of $50,000 or you can get financing of a minimum of $80,000.
If you have a newer business, that is still unknown to most people, getting a branch of it inside a Walmart store can be a great way of bringing in a lot more sales and making yourself known in the process. One great example is the case of Seva Charm, a company that offers services related to facial hair removal, waxing, and eyebrow shaping.
- Start-up costs of $55,000 to $215,000.
- Initial franchise cost: $25,000.
- Walmart entryway charge: $10,000.
According to a franchisee, getting individuals to patronize its service was a bit tough in the beginning. After all, threading, at that time before it went into Walmart, was not a familiar specific niche. Nevertheless, it helped that he had actually set up a branch in Walmart.
Its positioning made it simple for consumers to get in the shop and see what services it provides. It was also a plus as Seva already had a strong relationship with the retailing business.
Sub Shops Franchises
Aside from establishing a franchise in Walmart, you can also purchase sub-stores stationed inside the store.
Among the platforms to offer franchises for sale is BizBen.com. For example, the site has a list of sub-stores in San Diego sold for anywhere between $34,000 and $375,000. The main list consists of:
- Yogurtland: $375,000
- Asian Fusion Quick Service Restaurant: $34,000
- Upscale Coastal Juice Bar Café: $375,000.
- Frozen Yogurt and Sandwich Shop: $59,000.
Companies also continue to partner with the retail business. For example, Philly Pretzel Factory actually started a business in Walmart areas in Virginia in 2014. 5 of the locations are situated in the Richmond location.
The business has been franchising since 2005 and has around 110 shops open in Walmart supermarkets.
Another franchise that just recently partnered with Walmart is Marco’s Pizza. The shop can be found at the Urbana Walmart Supercenter and has actually been running since September 2016.
The first processes of obtaining a location in front or inside Walmart will be:
Evaluation of the Landlord and Tenant Handbook. You must first make sure that your company abides by basic operating requirements.
Evaluation of the available spots. Walmart Realty has a list of available renting spots you can pick from. Many of the rates are flexible and can be further negotiated.
Submission of the brand-new tenant company summary form. You need to provide the business with your franchise information. You would then send your completed form to firstname.lastname@example.org.
If you have a vending machine, Walmart also provides an area for that. The business’s Automated Customer Services group would ensure you’d get a vestibule area that has high traffic.