IKEA Franchise Startup Cost, Profit & Opportunities
When mentioning some of the world’s largest home furnishing companies, IKEA easily comes to mind.
With over 460 stores spread across 63 countries and counting, IKEA is one attractive brand in the home goods and decorating industry you might be interested in doing business with.
Regarding investment, franchising remains an attractive model many investors will gladly join. So, does IKEA have such a program?
In other words, does IKEA franchise? These and many similar questions have been discussed in detail below. All you have to do is read along for more information.
About IKEA Franchise
As stated earlier, IKEA is an international furniture retailer known for its quality and durable products, mostly home furnishings.
Examples of broad product categories include dressers & storage drawers, armoires & wardrobes, shelving units, bookcases, and sideboards.
More categories include buffets & sofa tables, utility & storage carts, and display and storage cabinets, to mention a few. In your quest to join the IKEA franchise program, you must understand that it has strict criteria.
This means all prospective franchisees must meet minimum set requirements to qualify.
Is IKEA a Franchise?
It’s always important to ask the right questions as such will help better understand the subject of discussion. In answering the question, IKEA isn’t a franchise in the traditional sense.
Franchises are typically business models in which an individual or company known as the franchisee is granted rights to the full or limited use of another company’s products, names, services, and trademarks.
Now, IKEA is known to offer limited franchise opportunities to individuals and companies.
The vast majority of its franchise holding is company-owned. In other words, IKEA owns and operates a significant portion of its over 400 stores or outlets.
While true, depending on availability, individuals and companies can still be offered franchise opportunities.
The IKEA Franchise Opportunity
At IKEA, opportunities for investment or partnership are available to qualified candidates.
Of course, the benefits are significant and include having a strong network of franchisees to share ideas, an established brand to work with, as well as comprehensive support provided.
What more? The IKEA brand has grown significantly to become a significant force in furniture retailing. Franchisees can leverage their global recognition, which translates to higher sales and profits.
Cost to Join IKEA Franchise
While there’s no specific information on the cost of joining IKEA’s franchise program, it’s essential to understand why. Now, the investment cost is determined by a variety of factors.
In other words, no single cost or investment amount applies to all investors.
There are several cost factors, including territory size, equipment and inventory, staffing costs, and competition.
Other factors include time to profitability, lease or real estate costs, location, and the country of operation. Let’s discuss some of these as follows:
i. Territory Size
Like all franchise operations, IKEA has operational regulations, including granting exclusive territory rights to franchisees.
Now the size of the territory is likely to determine the cost of investment. More significant parts may attract higher prices. Please do not take our word for it, though. Contact the franchisor for details.
ii. Equipment & Inventory Costs
Your store size will determine the equipment as well as the inventory required. To understand cost implications clearly, it’s best to contact IKEA to discuss its franchise offering.
iii. Staffing Costs
What are the staffing requirements of IKEA? It’s common to find franchisees having minimum staffing requirements.
Depending on your store size and the number of outlets, you might have a much larger staffing requirement than franchisees with small IKEA stores and vice versa.
iv. Competition
It’s important to note that many other home furnishing conglomerates have robust expansion plans. This mostly leads to competition.
Now, when there’s stiff competition within your area, it’s likely to impact profitability. This consideration will determine the cost of the franchise.
v. Time to Profitability
As a prospective franchisee, the time to profitability is one of the things you should be interested in. In other words, you want to know how long it will take to become profitable.
The faster it is to become profitable, the more likely the investment cost will be higher.
vi. Country of Operation
We stated earlier that IKEA has global operations in several countries. This means your preferred country of operation will likely determine the required investment amount. First, you must decide if IKEA operates within your select country.
vii. Location
Location is one of the cost factors you’ll have to factor in when applying for an IKEA franchise.
While this is true, this franchisor assists its partners in finding the best location for their store. Such areas are mostly considered commercially viable.
You’ll need to discuss with IKEA’s franchise development team for details.
viii. Lease or Real Estate Costs
As a prospective IKEA franchisee, you should pay close attention to the real estate or lease cost.
Here, physical locations will attract leasing or real estate purchasing fees. Such costs will vary significantly depending on where you establish your operations.
IKEA Franchise Profit Potential
As a prospective franchisee, understanding the profit potential is of primary importance.
Every franchisee or investor must know that their investment has an appreciable ROI. In the case of IKEA, the brand has remained attractive to investors due to its profitability potential.
While that is true, investors are likely to have varying expectations about how much ROI is considered enough. All such expectations should be realistic.
For details on this and more, it’s best to discuss with an IKEA franchise representative for comprehensive information on profit potential.
How to Join IKEA Franchise
Are you interested in IKEA’s franchise model?
If you are and wish to explore the opportunity further, you’ll do well to contact the franchisor. There are provisions for inquiry on its site. All requirements and franchise availability will be communicated to you upon request.
The information above has been comprehensive enough for prospective franchisees to follow. The IKEA franchise opportunity is one home furnishing company you can leverage.
However, you’ll need to determine its availability, amongst other things.
