Published on 18 Apr 2022 Time 9 min read Last update by 29 May 2024

Can You Open a Dollar General Franchise in 2024?

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This article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel.

Dollar General (NYSE: DG) is one of the largest discount retailers in the United States by number of stores. Across the United States, it has 18,190 stores, most of them located in the southern and eastern parts of the nation. Dollar General franchise sells a broad selection of merchandise. Ranging from consumable items to apparel to seasonal items, at everyday low prices – typically under $10 per item. Strong leadership and planning, especially under current CEO Todd Vasos, has resulted in 31 consecutive years of positive same-store sales growth between 1990 and 2020.

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Dollar General… Franchise?

Dollar General’s large domestic presence and history of profitable growth has prompted questions about whether or not investors can own and operate a Dollar General franchise. Unfortunately, Dollar General stores are not available for franchising. All of their units are company-owned and operated, meaning that profits stay within the company and do not go to outside operators.


Nevertheless, prospective franchisees who intend to explore franchising opportunities in the discount consumer goods market should assess comparable businesses in the industry, such as Dollar General. This article will analyze Dollar General’s annual report, the 10K, for 2021. Also, examine the financial health and viability of the Dollar General business, including potential investment catalysts, risk factors, and their outlook on the future.

dollar general franchise

Basic Company Overview

Founded in 1939 in Kentucky, Dollar General has expanded across the United States with a simple business model: providing customers with their everyday needs at low prices in convenient, small-box stores.

Dollar General franchise offers basic merchandise with the idea that customers can address most of their shopping needs in one trip. To this end, the company offers four types of goods:

  • Consumables are the largest category and include cleaning products, packaged foods, snacks, and health products;
  • Seasonal products include holiday items, toys, cards, phone accessories, gardening, and home office supplies;
  • Home products include kitchen supplies and small appliances; and
  • Apparel includes basic apparel for a wide demographic of individuals.

You can see the percentage of net sales over the past three years below.

Dollar General Franchise Net Sales

2021 2020 2019
Consumables 76.7 % 76.8 % 78.0 %
Seasonal 12.2 % 12.1 % 11.7 %
Home products 6.8 % 6.5 % 5.8 %
Apparel 4.3 % 4.6 % 4.5 %

Dollar General stores form the backbone of the company. Many are small stores in small towns, – the average building consists of 7400 sq ft of selling space, and 75% of stores are located in towns with less than 20,000 people. Stores have low operating costs and limited maintenance capital, driving operating costs down. Dollar General has also experienced net growth in the total number of stores operated, which is a reflection of the company’s success in locating suitable markets.

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Dollar General Franchise Units Opened & Closed

Year Stores at Beginning of Year Stores Opened Stores Closed Net Store Increase Stores at End of Year
2019 15,370 975 67 908 16,278
2020 16,278 1,000 101 899 17,177
2021 17,177 1,050 97 953 18,130

Dollar General operates in the discount consumer goods market, which is a highly mature and competitive market with respect to price, customers, location, quality, and market share. The direct competitors are other small-box discount retailers, namely Family Dollar, Dollar Tree, and 99 Cents Only. Dollar General also indirectly competes with larger mass merchandise retailers such as Walmart, Target, CVS, and Rite-Aid. Executives at Dollar General believe they stand out in this market by consistently offering low prices in a convenient, small-store setting.

There is the possibility to build a Dollar General and lease the space to Dollar General. You could even sell the property to a REIT (real estate investment trust) to recoup your investment faster.


Investment Catalysts

Dollar General’s future outlook is largely based on two ideas: increased store expansion into new and existing markets and the expansion of the pOpshelf store.

Regarding the former, Dollar General currently operated 18,190 retail stores in 47 states, with the largest presence in Texas, Georgia, Ohio, and North Carolina. As mentioned above, Dollar General has seen net growth in the total number of stores operated in the United States.

Additionally, Dollar General franchise has launched pOpshelf as a new store brand in 2020. pOpshelf addresses the emerging consumer trend for a treasure-hunt experience in stores and features flashy, cheap items like toys and home decorations. It currently has 53 stores, with plans to expand to 1,000 stores by 2025. Scaling up to this range is incredibly reasonable for Dollar General given their existing nationwide distribution and store networks.

Dollar General Franchise Risk Factors

There are a couple of major risks associated with investing in a Dollar General franchise. Broadly speaking, they can be broken down into business/strategic risks and operational risks.

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First, the Covid-19 Pandemic has impacted Dollar General’s financial performance and will continue to do so in the future. The pandemic has brought about supply chain disruptions, capacity constraints, reduced availability of certain products, increased transportation costs, delayed store openings, and temporary store and distribution center closures. While none of these factors have resulted in an adverse impact on the financial business of the company, the uncertainty with regards to how the pandemic will continue to evolve means that these factors may continue to plague Dollar General, as well as the company’s competitors in the discount consumer goods industry.

Additionally, adverse economic factors may reduce consumer spending, which in turn results in decreased sales and profits for Dollar General. Many Dollar General customers have low incomes; factors that could lower their disposable income could shift the demand for Dollar General goods downwards. These factors include high unemployment, inflation, raised interest rates, and high fuel and energy prices. While these factors are incredibly general and impact many consumer goods companies, these factors have been aggravated in recent months due to the impact of COVID-19 on financial markets and the Russian invasion of Ukraine.

Lastly, intense competition is always present in the consumer goods industry and will continue to be so. With many competitors, Dollar General has a limited ability to set prices and must change prices to maintain a competitive advantage, which reduces margins and profitability. Large retailers, such as Walmart and Target, have vastly greater financial and distribution resources. And may attempt to push Dollar General out of the market.


Dollar General is cognizant of the fact that significant delays in store openings, relocations, and remodelings will impact the financial performance of the company. Store expansion is a key component of the company’s future plan; delays in store expansion, then, will pose a challenge to future growth. Dollar General has not disclosed whether previous store expansions have experienced delays; however, due to the COVID-19 pandemic, it may be implied that the company has experienced issues with this in recent years.

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Financial Statements

You can see Dollar General’s three financial statements here (all numbers in thousands)

Dollar General Franchise Balance Sheet

January 28, 2022 January 29,2021
Current assets:
Cash and cash equivalents $ 344,829 $ 1,376,577
Merchandise inventories 5,614,325 5,247,477
Income taxes receivable 97,394 90,760
Prepaid expenses and other current assets 247,295 199,405
Total current assets 6,303,843 6,914,219
Net property and equipment 4,346,127 3,899,997
Operating lease equipment 10,092,930 9,473,330
Goodwill 4,338,589 4,338,589
Other intangible assets, net 1,199,750 1,199,870
Other assets, net 46,132 36,619
Total assets $ 26,327,371 $ 25,862,624
Current liabilities:
Current portion of operating lease liabilities $ 1,183,559 $ 1,074,079
Accounts payable 3,738,604 3,614,089
Accrued expenses and other 1,049,139 1,006,552
Income taxes payable 8,055 16,063
Total current liabilities 5,979,357 5,710,783
Long-term obligations 4,172,068 4,130,975
Long-term operating lease liabilities 8,890,709 8,385,388
Deferred income taxes 825,254 710,549
Other liabilities 197,997 263,691
Commitments and contingencies
Shareholders’ equity:
Preferred stock
Common stock; $0.875 par value, 1,000,000 shares authorized, 230,016 and 240,785 shares issued and outstanding at January 28,2022 and January 29,2021, respectively 201,265 210,687
Additional paid-in capital 3,587,914 3,446,612
Retained earnings 2,473,999 3,006,102
Accumulated other comprehensive loss (1,192) (2,163)
Total shareholders’ equity 6,261,986 6,661,238
Total liabilities and shareholders’ equity $26,327,371 $25,862,624

dollar tree

Income Statement

January 28, 2022 January 29,2021 January 31,2020
Net sales $34,220,449 $33,746,839 $27,753,973
Cost of goods sold 23,407,443 23,027,977 19,264,912
Gross profit 10,813,006 10,718,862 8,489,061
Selling, general and administrative expenses 7,592,331 7,164,097 6,186,757
Operating profit 3,220,675 3,554,765 2,302,304
Interest expense 157,526 150,385 100,574
Income before income taxes 3,063,149 3,404,380 2,201,730
Income tax expense 663,917 749,330 489,175
Net income $2,399,232 $2,655,050 $1,712,555
Earnings per share:
Basic $ 10.24 $ 10.70 $ 6.68
Diluted $ 10.17 $ 10.62 $ 6.64
Weighted average shares outstanding:
Basic 234,261 248,171 256,553
Diluted 235,812 250,076 258,053
Dividends per share $ 1.68 $ 1.44 $ 1.28


Cash Flow Statement

January 28, 2022 January 29,2021 January 31,2020
Cash flows from operating activities:
Net income $2,399,232 $2,655,050 $1,712,555
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 641,316 574,237 504,804
Deferred income taxes 114,359 34,976 55,407
Noncash share-based compensation 78,178 68,609 48,589
Other noncash (gains) and losses 191,040 11,570 8,293
Change in operating assets and liabilities:
Merchandise inventories (550,114) (575,827) (578,783)
Prepaid expenses and other current assets (47,471) (16,516) (14,453)
Accounts payable 98,735 745,596 428,627
Accrued expenses and other liabilities (37,328) 388,597 100,322
Income taxes (14,642) (6,522) (20,404)
Other (7,494) (3,611) (6,959)
Net cash provided by (used in) operating activities 2,865,811 3,876,159 2,237,998
Cash flows from investing activities:
Purchases of property and equipment (1,070,460) (1,027,963) (784,843)
Proceeds from sales of property and equipment 4,903 3,053 2,358
Net cash provided by (used in) investing activities (1,065,557) (1,024,910) (782,485)
Cash flows from financing activities:
Issuance of long-term obligations 1,494,315
Repayments of long-term obligations (6,402) (4,640) (1,465)
Net increase (decrease) in commercial paper outstanding 54,300 (425,200) 58,300
Borrowings under revolving credit facilities 300,000
Repayments of borrowings under revolving credit facilities (300,000)
Costs associated with issuance of debt (2,268) (13,574) (1,675)
Repurchases of common stock (2,549,669) (2,466,434) (1,200,376)
Payments of cash dividends (392,188) (355,926) (327,568)
Other equity and related transactions 64,225 56,467 22,104
Net cash provided by (used in) financing activities (2,832,002) (1,714,992) (1,450,680)
Net increase (decrease) in cash and cash equivalents (1,031,748) 1,136,257 4,833
Cash and cash equivalents, beginning of period 1,376,577 240,320 235,487
Supplemental cash flow information:
Cash paid for:
Interest $159,803 $128,211 $100,033
Income taxes $568,267 $721,570 $457,119
Supplemental noncash investing and financing activities:
Right of use assets obtained in exchange for new operating lease liabilities $1,778,564 $1,721,530 $1,705,988
Purchases of property and equipment awaiting processing for payment, included in Accounts payable $143,589 $118,059 $110,248

Dollar General Franchise Statement

From the income statement, we see that net income has fallen when comparing FY 2021 (year-end Jan 2022) to FY 2020 (year-end Jan 2021). Digging deeper, we see that while net sales increased in 2021, various costs, including cost of goods sold and general administrative expenses, increased at a disproportionately higher rate, driving down operating profit and net income. The increase in costs over the past year is not unexpected: supply chain shortages due to the pandemic will increase the cost of production, while high levels of inflation will increase administrative expenses.

Looking at the cash flow statement, we see that the total amount of cash held by Dollar General in 2021 ($344 million) was substantially lower than in 2020 ($1.38 billion), but that 2020 was an abnormally high year when compared to previous years. 2020 saw abnormally high changes in accounts payable and accrued expenses, which can be attributed to the disruption caused by the pandemic. Nevertheless, cash holdings in 2021 increased when compared to pre-Covid years, implying that Dollar General is still in a healthy financial position.


Dollar General is a solid, profitable company in the discount consumer goods industry. They experienced unprecedented growth during the early stages of the pandemic, and while that growth has mostly tapered off, Dollar General remains a profitable business.

Although Dollar General does not offer franchises, there are plenty of other consumer goods companies that you can explore on the Vetted Biz website.

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