CBD American Shaman Franchises Closing at Alarming Rate (2023)
Written by: Vetted Biz Franchise Research Team
Last Updated by
Ailen Faiad: January 24, 2023
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This article is based on its 2022 FDD.
CBD American Shaman Franchise offers certain “Industrial Hemp Derived” based products. When his uncle was diagnosed with stage 4 lung cancer, Vince Sanders started looking into CBD. He developed a proprietary method for producing CBD oil from ethically sourced, high-quality hemp. Soon health food stores, clinics, and spas saw the potential of his products and began offering them to customers. In 2016, Sanders opened the first store in Kansas City, Missouri.
In 2018, CBD American Shaman became the first-ever CBD franchise in history. With more than 300 stores and counting, CBD American Shaman is one of America’s fastest-growing CBD franchises.
Contents
How Much Is a CBD American Shaman Franchise?
The initial CBD American Shaman Franchise Fee is $10,000. You have to pay this upfront fee when opening.
CBD American Shaman Franchise Cost
The estimated total investment necessary to begin the operation of a CBD American Shaman franchise ranges from $34,625 – $131,802. The following costs are part of the upfront costs included in the initial investment for a CBD American Shaman. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a CBD American Shaman franchise in 2022.
| Type of expediture | Amount | To Whom Payment Is to Be Made |
|---|---|---|
| Initial Franchise Fee | $10,000 | Us |
| Travel and living expenses while training | $1,000 – $2,500 | Various third-party vendors |
| Real estate/rent and deposit | $1,000 – $5,000 | Landlord |
| Construction or remodeling of an in-line facility or pad site | $5,000 – $35,000 | Various third parties (construction co. architect, etc) |
| Leasehold improvements | $5,000 – $15,000 | Various third-party vendors |
| Furniture, fixtures and equipment | $2,500 – $10,000 | Various third-party vendors |
| Signage | $3,500 – $10,000 | Various third-party vendors |
| Opening inventory | $15,000 | Us or our affiliates |
| Grand opening | $1,000 – $2,500 | Various third-party vendors |
| Utility deposits, security deposits, business licenses, insurance, etc | $500 – $1,500 | Various government entities, utility companies |
| Additional funds – 3 months | $10,000 – $25,000 | Us or our affiliates and various third-party vendors |
| Uniform – Shaman-branded polo shirts | $25 each | Us or our affiliates |
| Total | $34,625 – $131,8025 |
Ongoing Fees
Royalty: Up to 6% of Gross Sales
Marketing Fee: $800
Local Individual Store Marketing Fee: $750 / month
Technology Fee: $200 / month
How Much Do CBD American Shaman Franchise Owners Make?
Since the franchisor does not disclose any franchise-focused financials, we calculated AUV for CBD American Shaman locations at $120,000 per location
CBD American Shaman Median Franchise Sales: $120,000
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $83,213 | 10% | $12,000 | 8.5 years |
| 15% | $18,000 | 6 years | |
| 20% | $24,000 | 5 years |
Based on the median sales provided by CBD American Shaman’s franchise locations, at an average of a 15% profit margin it will take around 6 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin, which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store, such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace; the presence of other Cannabis stores; and the extent of market penetration and brand awareness that CBD American Shaman stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is the Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for CBD American Shaman franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.33
When you go to sell a CBD American Shaman franchise based on the median multiple of .33 and net sales of $120,000, it would sell for $39,600. This is significantly lower than the midpoint investment of $83,213.
Here is an example of an American Shaman franchise for sale:
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
(Franchisor) Income Statement Key Insights
American Shaman Franchise System, LLC Statement of Income For The Year Ended December 31, 2019
| Revenue: | |
| Franchise Fees | $4,674,780 |
| Royalties | $2,569,603 |
| Conferences | $39,913 |
| Buildout | $24,750 |
| Other franchise income | $24,073 |
| Total Revenue | $7,293,119 |
| Direct expenses | $(103,682) |
| Gross Profit | $7,189,437 |
| General & administrative expenses | $9,434,775 |
| Net Loss from Operations | $(2,245,338) |
| Other income/(expense) | |
| Interest Income | $86 |
| Interest Expense | $(365) |
| Total other income | $(279) |
| Net Loss | $(2,245,617) |
CBD American Shaman incurred a loss of $2,245,617 in 2019 and has not disclosed any other financials for any other years.
How Many CBD American Shaman Units Have Opened and Closed?
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2016 | 0 | 0 | 0 |
| 2017 | 0 | 0 | 0 | |
| 2018 | 0 | 127 | 127 | |
| 2019 | 127 | 353 | 226 | |
| 2020 | 353 | 300 | (53) | |
| 2021 | 300 | 242 | (58) | |
| Company-Owned | 2016 | 0 | 0 | 0 |
| 2017 | 0 | 0 | 0 | |
| 2018 | 0 | 2 | 2 | |
| 2019 | 2 | 17 | 15 | |
| 2020 | 17 | 43 | 26 | |
| 2021 | 43 | 48 | 5 | |
| Total Outlets | 2016 | 0 | 0 | 0 |
| 2017 | 0 | 0 | 0 | |
| 2018 | 0 | 129 | 129 | |
| 2019 | 129 | 370 | 241 | |
| 2020 | 370 | 343 | (27) |
Over the last couple of years, the company has been in decline. Franchising units have decreased. This might be an effect of COVID and it remains to be seen whether the system will expand further or keep shrinking.
Conclusion
CBD American Shaman is breaking into an industry that is new to the USA and has the potential to grow rapidly. The franchise brand appears to have grown too fast with significant franchise closings in the prior couple years
We recommend talking to 3 – 5 franchisees before investing in any business.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Cannabis industry.
