Want to buy a vape shop franchise? Read our article before investing any money!

When getting ready to open a vape shop many would be owners may find it appealing to purchase a franchise of an established brand rather than invest the time and money building up their own brand. Vapor shop franchises also attract non-vaper investors and entrepreneurs looking to capitalize on the e-cigarette craze. This article is going to be more for the average person than the large venture capital group as we will be looking at several franchises who offer very low startup costs and don’t have too many requirements.

Benefits of Buying an E-Cigarette Store Franchise

  1. Business plan already established – Somebody has put all of thought into the venture for you. All you have to do is follow their recipe for success.
  2. Support – When you invest thousands of dollars with a company you expect a certain level of support and most franchising groups will provide top tier support for your vape business.
  3. Known Brand – You are buying into an already known brand. This means you don’t have to spend as much time and money getting your name out.
  4. Easy Product Selection – Franchises will have a list of all products you should stock. Part of your initial investment with the company will go towards your inventory.
  5. More Buying Power – You can often leverage the power of your franchise partners to get volume discounts from wholesale companies.

Drawbacks to Buying an E-Cigarette Franchise

  1. You Have to Follow a Line – Because the business plan is already in place, you are limited by your franchise agreement as to what you can and cannot do. Many marketing initiatives must go through the corporate office to be approved which can take time. Your creativity might be stifled.
  2. Many to Choose From – Any vape shop owner can start selling franchises. Be careful who you partner with and do your research. You don’t want to give $80k to some guy living in his mother’s basement.
  3. Product Limitations – Some franchise groups will strictly control what products you can carry. This can be bad because sometimes the corporate headquarters might not be up to date on the latest devices and trends.
  4. Red Tape – During franchising you will encounter lots of red tape and paperwork. It is your responsibility to complete the due diligence on the contracts that you will sign.
  5. One Sided Agreements – Many franchise agreements are extremely one sided (not in your favor), and offer no guarantee of success. If your business fails you will bear the entire responsibility and if sales are slow you are going to be limited as to what you can do from a marketing standpoint.

Franchise Profile

A Florida e-cigarette business is selling franchises for $55,000. According to the sales page they have an in-store eliquid mixing system that reduces your cost to around $.85 cents per bottle. That’s pretty darn good! They offer training at their corporate headquarters, they help you pick out a great location, and they even distribute products directly to you so that you don’t have to wire money to China. It all sounds really great until you think about the margins…

You have to fork over 6.5% of your gross sales to this particular franchise group. Let’s do a scenario: Suppose you can buy an authentic Smok X Cube for $43.00 wholesale from Eternity Clouds in Shenzen. Many local B&Ms would sell this item for around $100. You would be giving up $6.50 every time you sell one. It may not seem like much but it really adds up. Let’s say your franchise is wildly successful and you do around $35,000 per month in sales. You would be giving your franchise group $2,275 that month. Now, if your cost of goods averages around 45% of your gross sales, labor 15%-20%, operating costs 10%, and franchise fees 6.5%, your net profit would only be $6500 based on the above scenario. If you have not involved a franchise, your net profit would have been close to $9,000.

Moral of the Story

While it may be appealing to have all the hard work building a recognized brand done for you, you are definitely paying a price for it. One way to tell if a franchise group is good or not is to see if they are willing to sell you a franchise in a low population area. Good franchise companies will only allow new stores to open in very large markets where they feel that a new store will be successful. Franchise groups like this care about their image and if one of their franchisees goes belly up, they know it will affect their brand and their ability to sell more franchises.

When it’s all said and done franchising pays big time – to the franchise group. There are some respected brands out there such as VaporShark who will sell you a franchise and really bring something to the table. Another good group is Vapology Story, who just brought their operation from France to the USA. Vapology Story is a boutique that caters to a higher end niche market.

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