Have you thought about buying a storage unit franchise, or you’re looking to just open a storage business? In today’s video, we’re going to go through the storage unit market, especially as it applies to franchises.
They offer people, businesses, a clean, safe, and secure place to store your goods. Storage unit industry is booming, especially with COVID. People are moving back between different areas. Maybe they’re living somewhere temporarily. Businesses are in flux in terms of moving office space, downsizing. Maybe they need to keep some equipment somewhere. So the industry is booming. It’s growing quite a lot.
And storage units, they do offer a convenient, cost-effective way to store your belongings for short term, long term. And franchisees rather benefit as many of these storage unit franchisors have proven business models, had some corporate locations that had success, and now they’ve been franchising anywhere from one year to 20 plus years. So it’s a good time to at least evaluate a storage franchise, especially if you’re looking for a business that’s pretty predictable. And you might be interested in getting some tax savings in terms of depreciating those assets and the equipment and the cost to build out your storage unit facility, as well as there’s one franchise concept that does storage units, but effectively it’s in the own person’s home. So we’ll go through with that.
A large franchise system that’s been growing is called Go Mini’s. The franchise fee is $45,000. Investment is $260,000 all the way up to $563,000. They have over 80 locations. Very small for sale rate. Franchisees are knocking them out of the system at just 2% over the last three years. And then the failure rate has been 9%, which is pretty standard for a three-year failure rate for franchises. They don’t disclose much in terms of financials, so you’re definitely going to want to talk to existing franchisees to see if that investment amount of $400,000, their midpoint, is worth it as the industry median is lower. It’s at $247,000 for the industry median for storage units. And for all franchises, the median is $272,000. So, definitely talk to existing franchisees to see if it’s worth it to invest in a Go Mini’s, and pay that premium an extra cost to open a facility.
Now, the next franchise, it’s storage. It’s called California Closets. The franchise is going to cost anywhere from $300,000 to $940,000 to open. Franchise fee, working capital, all of those costs are included in that. As of a couple of years ago, they had 46 franchise locations, 35 corporately owned and managed locations. The franchise for sale rate is 16% over the past few years, and then the failure rate is just at 4%. So pretty low failure rate over the past three years, less than half the industry failure rate, as well as for franchises as a whole.
And in terms of how much money they’re making, they have some franchisees that do $23 million in sales. They have a franchisee in York doing $23 million, California at $16 million, New Jersey $11 million. They have a few in Florida doing over $5 million. So they have franchisees that are doing really well. And the averaging of volume is over $5 million for this franchise brand. Profit margin is going to be less than 10% based on how the business and the cost to produce and the cost of service, etc., for opening up a California Closet franchise. But on top of those revenues, I mean, it’s a super attractive opportunity to consider if you’re looking to go on to the storage space.
So, Go Mini’s, probably going to be simpler, but with a simple business, you get generally simple profits. California Closets, it’s a more unique business, a lot more customer interaction. There’s a lot more moving parts with the products, installations, etc. So with that, it can be more headache for you as the franchise owner. but with those headaches should come additional profit.
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