Family Dollar is a treasure trove of low-priced personal items, food, beverages, snacks, cleaning supplies, and more. You’ll find an isle or two of options for only $1 as well. The company has thrived for more than 60 years, proving it can do well in good economic times as well as bad.
How much does it cost to open a Family Dollar franchise? The idea of opening a dollar store seems fun but unfortunately, Family Dollar is not up for franchising at this time. If you’re looking for an alternative opportunity, check franchise business quiz to find your perfect opportunity.
But don’t let this stop you from reading through the guide. There are plenty of alternative dollar store concepts you can invest in. We’ll still provide you with more information on Family Dollar’s revenues, facts, advantages, and challenges so can compare this concept to similar stores. And in the event Family Dollar decides to accept franchise applications in the future, you’ll be ready.
- Financial Requirements and Fees
- Average Sales / Revenue per Year
- Family Dollar Franchise Facts
- How Much Does Family Dollar Make in Profit?
- Advantages of a Family Dollar Franchise
- Challenges of a Family Dollar Franchise
- Is the Family Dollar Franchise Right For You?
Financial Requirements and Fees
As mentioned above, Family Dollar does not allow franchising of their stores. Their parent company, Dollar Tree, also does not allow franchising either.
But if you’re looking for an estimate, let’s take Liberty Dollar for example. Their 1,000 square feet store that sells $1 items can be franchised for $77,900. The franchise requirement goes up depending on the size of the area and the items you would like to sell. The price range for items can go as high as $10 or less.
I’ll discuss more about these other alternative stores later. But with that estimate, you can safely anticipate $77,900 – $400,000 of capital required to start the business. Variable costs to open this type of business include the size of store you plan to lease, the city / state you plan to operate, business licenses / permits, labor, and of course initial inventory.
Average Sales / Revenue per Year
The average net profit of a Dollar Tree store that owns Family Dollar was $1.6 million in 2020 across the United States and Canada. Gross profit is the amount of profit left over after subtracting the cost of goods sold (COGS) in a store. Keep in mind you’ll still need to factor in expenses like taxes and interest paid on debt.
According to Dollar Tree’s financial reports ending on May 1, 2021, Family Dollar’s sales decreased by 2.8%. This is in comparison to their previous year’s first quarter sales which saw an increase of 15.5%. In 2020, the annual revenue for Family Dollar was reported to be $25.51 billion.
Family Dollar Franchise Facts
|Total Units||Over 8,000|
|Incorporated Name||Family Dollar Stores Inc.|
|Franchising Since||Does Not Allow Franchising|
Family Dollar may not be the first dollar store in America but they’re one of the biggest ones. Initial success of the brand is credited to Leon Levine who, at age 21, already knew the ropes in running a retail business due to growing up in his family store. After his visit to a dollar store in Kentucky, he decided to put up his own. And thus began Family Dollar in 1959 in Charlotte, North Carolina.
The concept of Family Dollar at that time was simple: to sell high-quality merchandise under $2. Levine also wanted the business to be all about making customers happy so store managers were dedicated to providing excellent customer service. By the end of 1970, Family Dollar had 27 stores and annual sales reaching $5 million.
Family Dollar had its ups and downs. During the mid-70s, Family Dollar sales saw a decline due to the layoffs of workers in the tobacco, textile, and furniture industries. But the business picked up as it adjusted to the economic changes. Family Dollar increased the price range of the items they were selling which were priced at no more than $3. The company was able to pull through and became so profitable that by 1990, Family Dollar was able to reach sales of $1 billion.
Today, Family Dollar is still still a significant retail powerhouse with over 8,000 stores in the United States. The products that they sell are:
- Household appliances and essentials
- Cleaning aids
- Food and beverage
- Personal care
- Office and School Supplies
In 2010, Dollar Tree acquired Family Dollar and the merger has only strengthened the Dollar Tree brand. Dollar Tree also owns Dollar Giant, Deal$, and Dollar Bills, making them the largest dollar store conglomerate in America. Family Dollar is recognized on Fortune 500, a list of America’s most profitable companies and corporations. They’re also considered an essential business which was why they were open during the pandemic to cater to customers’ needs for food, cleaning agents, and household products.
Since Family Dollar is owned by Dollar Tree, the latter’s net worth has grown. In 2014, Family Dollar was known to be worth $8.5 billion. Now, Dollar Tree’s net worth is $25 billion.
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Family Dollar is also all about supporting philanthropic activities. They support non-profit organizations and even have two organizations that they help run: Family Hope and the Dollar Tree Associate Disaster Relief Fund. They are also known as the national charity partner for Boys & Girls Clubs of America (BGCA).
Since Family Dollar is not available for franchising, you can still do business with them by leasing or selling a property for their future stores. It’s not the same as running an actual Family Dollar but at least you can partner with them in some way.
Another option is becoming a vendor. You can be a Merchandise Vendor which means if you have products you would want sell at Family Dollar stores, you can apply. They also allow supplies and services if you’re not selling any merchandise.
How Much Does Family Dollar Make in Profit?
According to a report, Family Dollar’s gross profit in 2020 was $7.79 billion. This is an incredible volume of profit as the company reported more than $25.5 billion in sales the same year. The brand’s fiscal year revenue growth was 8.04%. This is incredible growth for a retail business and demonstrates the dollar store concept isn’t going away anytime soon.
This year, Dollar Tree announced that they were planning to put up 198 Family Dollar stores so expect to see even greater levels of revenue and profit as these new stores come online.
Advantages of a Family Dollar Franchise
Family Dollar is a big name in the dollar store industry so here are some advantages you can expect if you’re able to operate one of their stores in the future.
There are a lot of Family Dollars in the United States. Sure there are other dollar stores but many are familiar with this brand name seeing as it has been running since 1959. A loyal shopper would already know what the products are being sold here and would choose this store among the rest.
Being able to run a popular dollar store ensures you of customers knowing who you are and would give you a sense of pride that you’re part of this chain’s family. Due to selling practical products and food items that literally everyone needs, even small towns of 10,000 or less can support this business.
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A comparison done by The Penny Hoarder showed that shopping at Family Dollar was affordable. Items included in the comparison were toilet paper, cleaning spray, body wash, canned vegetables, pasta, spices, laundry detergent, trash bags, coffee, and cereal. Not all items may be affordable at Family Dollar compared to bigger grocery chains but if there isn’t a grocery store nearby, shopping at Family Dollar will suffice for the essentials.
Number of Locations
Family Dollar has more than 8,000 stores with 1,089 of them in Texas. That’s a huge presence in the Lone Star State. As mentioned, the company plans to open even more stores within the year. The growth is one factor that shows Family Dollar continues to be a success and if you franchise with them, you can feel confident that the company will perform well in the future.
Challenges of a Family Dollar Franchise
Dollar stores can be fun to start at. But how about running them on a day-to-day basis? From my perspective, here are some of the challenges associated with owning and operating a Family Dollar store.
Hotspots for Crime
Family Dollar along with other dollar stores and discount chains are usually located in working class and poor communities. This makes the stores a place where robberies or shootings happen because they’re the only big stores with cash around. This of course isn’t always the case.
Just make sure to conduct your research and open a store in a location that you know well and feel safe operating. Being careful about where you open can help reduce theft and attract employees because everyone wants to work in a safe environment.
Dollar stores sell food and Family Dollar is known to sell a lot it. But one has to be careful when choosing perishable foods to sell at dollar stores. For instance, if you find steak at a dollar store, it’s best to avoid it since it’s probably not the high quality. You could get better deals and better nutritional values in grocery chains.
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You can’t expect to be able to sell organic fruits and vegetables at a discount store like this. The margin is simply isn’t there. The food you are able to sell is going to be mass produced and pre-packaged. Foods that stay fresh on the shelves like bags of potato chips or hot dogs don’t contain much nutritional content. This is one of the criticisms of these stores. But you can’t blame the operators of these stores for that. The economics simply don’t make sense.
Prices Go Up
If you are able to franchise Family Dollar then be prepared for the prices to rise and possibly expect customer complaints about this. One reason prices are increasing now is due to inflation. As a simple definition, we’ll just say that when inflation hits each dollar you own will get you less stuff than it used to.
Not everything at a dollar store is strictly $1 but inflation has even hit dollar stores hard that there might be more items that will have to increase their prices from the usual. The lowest prices are around $1.25 or $1.50. But that could change.
In addition, Dollar Tree is opening up new stores known as Dollar Tree Plus which sells items at $3 or $5. Not much is known whether Family Dollar will follow suit. But seeing as Dollar Tree owns them, you can expect some price changes to happen.
With that being said, dollar stores aren’t the only businesses being impacted by inflation. Everyone from coffee shops to grocery stores to restaurants see a similar increase in prices.
Is the Family Dollar Franchise Right For You?
If you have a dream of opening a dollar store then don’t wait for Family Dollar to start accepting franchise applications. You could be waiting a very long time!
Is there an alternative Family Dollar franchise?
There are several stores you can check out if you still want a dollar store to run. Here are a few:
- Liberty Dollar Store
- Dollar Discount Store of America
For Liberty Dollar, the financial requirements for a store depend on the size and price of the items you wish to sell, and as mentioned above, this starts at $77,900. For Dollar Discount of America, the franchise fee starts at $18,000. Just-A-Buck store has a franchising fee of starting at $50,000.
When Family Dollar opens franchising someday, you’ll finally know what to expect when running this store. We hope you were able to learn a lot about the business operations from this guide and you can finally run a dollar store in the future.