Hardware stores have long been considered an essential retail store in every small town. In fact, in 2020, hardware store sales have reached $35.39 billion in the United States which is an increase from $29.36 billion in 2019.
One hardware store that’s known globally is Ace Hardware. For over 90 years, Ace Hardware has been selling tools and materials to repair and fix homes. The business started in Chicago and is now known all over the world. Ace Hardware caterers to a variety of customers: DIY folks, gardeners, repair professionals and construction workers.
How much does it cost to open Ace Hardware? You’ll be happy to learn Ace Hardware is open to franchising. To start, a liquid capital of $250,000 and a net worth of $400,000 is needed. The initial investment for an hardware store chain is $292,000 – $2,119,230 with a franchise fee of $5,000.
Still interested in learning more about Ace Hardware and how to franchise them? Continue reading this guide to find out the detailed costs and revenue opportunities of this business model. Take our 7-minute franchise quiz to be matched with a hardware store opportunity that’s right for you.
Financial Requirements and Fees
Below are the financial requirements and fees that Ace Hardware is looking for in a qualified applicant.
|Fees / Expenses
|$292,000 to $2,119,230
One thing that Ace Hardware offers that catches most interested franchise applicants’ eye is that they offer no ongoing franchise and royalty fees. This is considered a good thing since most big franchises charge ongoing fees, which can cut into profitability even if you have strong sales.
Average Sales / Revenue per Year
Ace Hardware saw a total of $8.6 billion in revenues for the fiscal year of 2021. This is considered an increase of 10.7% or $831.5 million from their revenues in 2020.
Ace Hardware Franchise Facts
|Miscellaneous Retail Businesses
Ace Hardware started in Chicago in 1924 when Richard Hesse, Oscar Fisher, Frank Burke, E. Gunnard Linquist, and William Stauber got together and formed Ace Stores, Inc. In just a couple of years, Ace Stores Inc. turned into a wholesaling organization. With such inventory, they were able to sell items for low prices that appealed to not only customers but also prospective franchisees.
By the 1940s, Ace Hardware was in seven states and with over 133 locations. It was in 1975 when they branched out internationally making Guam their first location outside of the United States. Fast forward to right now, Ace Hardware has over 5,500 locations around the world.
Ace Hardware is known to sell a lot of hardware items and tools that involve fixing, repairing, and maintaining homes. But through the years, they’ve also added more to their roster which are patio furniture, paints, storage and organization items, décor, gardening tools, grills and smokers, and even appliances. Not only do they offer hardware items but they also offer handyman services that can be scheduled.
If you’ve noticed the franchise details above, Ace Hardware doesn’t have any ongoing franchise and royalty fees. Royalty fees are usually required to keep the corporate company going. But with Ace Hardware, they don’t charge franchise or royalty fees and you might be wondering how this is possible. This is because Ace Hardware uses a co-op business model. This means that the franchise owners are the company’s shareholders as well.
You can sell wrenches.
Once the franchise owner opens a store, they buy shares. They then purchase products from Ace Hardware’s warehouses and then receive dividends from the purchases that they make. If you notice, not all Ace Hardware stores have the same prices because owners have a say in the pricing of items.
Ace Hardware has won numerous awards and has been featured many times for their business franchise. They’ve been featured on Entrepreneur’s 2021 Best of the Best Franchise. J.D. Power recognizes them as the Highest in Customer Satisfaction with Home Improvement Retail Stores. Temkin Experience Rating notices Ace Hardware tied for the top position in the retail category, and is also ranked 7 overall across all industries. They’re number 4 in Franchise Times Top 400 and number 9 on Franchise Direct Top 100 Global Franchises.
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To franchise or open a new Ace store, you’ll start with their preview and qualification process wherein you’ll be learning about the business’s values and culture. You’ll also be learning about the Ace Convention which is an annual convention held by Ace Hardware where new products, new trends and business plans are introduced. You might be invited to go there prior to your decision in becoming an Ace Hardware franchisee.
The next step is identifying your market for your potential Ace store. This includes site selection and sales forecasting. Once you’re in line with this you’ll head on to the next step which is applying for a new Ace store. You’ll take a look at their Franchise Disclosure Document (FDD) and if things are to your liking, you’ll sign a franchise agreement and make an investment.
Once everything is in place, store development follows. You’ll be involved in the store planning and store set up. You’ll also be opening stock orders to get from the warehouse. And finally, when everything is all accounted for, you’ll have your very own Ace store near you.
You also don’t need to open a brand new Ace store if you already have an existing hardware store. You can convert your store into an Ace Hardware if you like. According to Ace’s data, hardware stores that convert into an Ace store see 15% more in retail sales and realize an 11% increase in gross margin.
Did you also know that you can franchise an Ace Grocery? Ace Hardware also has a grocery store option wherein they’re a hardware store and a grocery store in one. They sell fresh produce and grocery items alongside hardware items. At present, the President and Chief Executive Officer of Ace Hardware is John Venhuizen.
How Much Does Ace Hardware Make in Profit?
According to Ace Hardware’s 2021 financial results, the brand earned a gross profit of $932.6 million the fiscal year of 2021. This is considered an increase from their fiscal 2020 report of $53.5 million.
Advantages of Ace Hardware Franchise
You’re almost there in deciding to open an Ace Hardware franchise. Here are some more reasons for you to open a store near you.
Variety of Items
Ace Hardware is a one-stop shop for all hardware needs. If you need simple handy tools, they’ll have it. If you also need the heavy duty ones, they have that too. Not only do they have items needed to repair your homes but they also have patio furniture and a wide variety of paints to help spruce up your living quarters.
The service that they offer also goes beyond just providing tools. They offer handyman services so customers don’t need to do the fixing anymore. They’re that convenient.
It’s always a great opportunity to work with a franchise that gives you options on how to start your business. In Ace Hardware’s case, you can either open a new Ace Hardware store or you can convert present hardware store into an Ace.
That gives you two options that are flexible to your needs. You also get to join their Ace Convention which updates you on the latest trends in the hardware business that can help you increase your sales in your location. You can meet with other franchisees as well to get to know them and talk about the business.
Around The World
Ace Hardware is located in 70 countries around the world. They may have started in the United States but the brand has gained traction internationally with 407 new stores opening globally the past 2 years. It doesn’t matter where you live in on the planet there are consumers who need to complete home repair projects.
No Ongoing Franchise and Royalty Fee
As mentioned above, Ace Hardware does not collect ongoing franchise fees and royalty fees. And this can be a big help knowing how these ongoing fees can add to the expenses. With these fees gone, you are free to use the additional cashflow to grow the business, reinvest into expansion or save the money.
Challenges of Ace Hardware Franchise
Franchising Ace Hardware sounds too good to be true. Are they really everything they say? Here are some challenges you can expect when franchising Ace Hardware.
Most of the reviews for Ace Hardware are on a good note but you can’t totally ignore negative ones. A lot of them are rude managers but a couple of them are bad customer service. One complaint by a customer said that they ordered items online only to find out upon loading on their car that they were the wrong model because the staff already sold the ones he reserved. Another one claims that the loyalty program that Ace Hardware has is no use because instead of saving up on items, they were more inclined to spend more.
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These complaints may not be more than the positive reviews that Ace Hardware receives but it would also be great if the brand looked into them and offered a more intense training for Ace Hardware staff so as to avoid a lot of negative reviews.
Ace Hardware isn’t the only hardware store in the United States and in the whole world. There’s also Home Depot, Lowes, Tractor Supply Company, and True Value to name a few. There’s also some tough competition between Ace Hardware and True Value through the years wherein the two brands are always tied for customer satisfaction especially in the areas of price and merchandise sales.
Aside from competing with other brands, Ace Hardware also seems to compete with fellow Ace Hardware stores. As mentioned above, prices in Ace Hardware stores differ from store to store. Some prices may remain the same but others aren’t. So it’s like competing with the neighboring Ace Hardware stores. And with over 5,500 locations, some areas may have an Ace Hardware near yours.
Of course there’s also disruptors like Amazon to consider. Amazon is projected to generate $729.76 billion in 2022 alone. The company offers deep discounts that many retailers can’t compete with. There’s also the free 2-day shipping that helps the company stand out. Even though the competition from Amazon is worth noting, it hasn’t impacted Ace Hardware’s bottom line yet.
Is the Ace Hardware Franchise Right For You?
So is Ace Hardware the business franchise you’re looking for? Ace Hardware isn’t your typical franchise wherein the business model they follow is a co-op style. If you don’t mind this kind of set up, and would even think this business model is the one for you then Ace Hardware is worth taking a closer look at.
What is an alternative Ace Hardware franchise?
If it’s a hardware store you’re looking for that’s also well known around the world, True Value is the store you’re looking for. True Value has been around since 1948 and has grown to over 4,500 locations worldwide. They provide all the tools and gadgets needed to repair homes and offices as well as offer services such as key duplication, glass and plexiglass cutting, blade sharpening and the like.
To franchise True Value, they require a franchise fee of $2,500 and an investment range of $545,000 to $987,050.
So are you ready to franchise an Ace Hardware store near you? Always read the fine print of the Franchise Disclosure Document they provide as well as ask around franchise owners for their reviews and experience. May this guide help you in franchising your very own Ace Hardware store soon.