You can't say The Vitamin Shoppe makes rash decisions. It's been in business 44 years and is just now getting into franchising. Why now, you might ask? The reason can be attributed to the same one given for many recent changes of late: COVID-19.
The Vitamin Shoppe CEO Sharon Leite says the pandemic has sparked consumer interest in health and wellness. And that, through its products, is what The Vitamin Shoppe aims to help its customers achieve.
The time is right
The franchise idea has been in the works for the past year. It means independent operators of The Vitamin Shoppe can now own their own businesses and that new franchise owners can jump in.
The time seems right for this longtime supplement store to expand through franchising, especially when you consider a report by Global Industry Analysts. It projects explosive growth in the dietary supplement industry -- from $170.4 billion in 2020 to a projected $298.5 billion by 2027. That represents a compound annual growth rate (CAGR) of 8.3%, which, for a large-cap company like The Vitamin Shoppe, is considered good.
About The Vitamin Shoppe
The Vitamin Shoppe carries vitamins, of course. It also carries supplements, proteins, digestion support, weight-management products, superfoods and groceries, natural beauty products, and natural drinks and snacks, all with the goal to provide customers with products that can benefit their health. Also, in December 2020, The Vitamin Shoppe paired with Martha Stewart to carry her CBD products.
The Vitamin Shoppe has over 715 retail stores in America and sells products online through VitaminShoppe.com and through its VShoppe app. The requirements to become a franchisee are as follows:
- The initial franchise fee is $40,000 and covers the right to use the trademarked name.
- The initial investment runs between $354,000 and $955,000, which includes the franchise fee plus all other costs associated with starting a business.
- A franchisee's net worth must be at least $750,000.
- A franchisee must have at least $200,000 in liquid capital.
- Franchisees pay a royalty fee of 5%.
- There's an additional 2% royalty fee that goes toward advertising.
- The franchise term is for 10 years, and it's renewable.
- Absentee ownership is allowed, meaning the franchise owner doesn't need to actively work in the franchise.
- There must be a physical storefront.
- The business is a full-time operation.
- There must be at least five employees.
- Exclusive territories are available.
Franchises are available in all U.S. states except Washington and Oregon, where the stores are called Super Supplements. It takes about six to eight weeks to complete the franchise ownership.
The Millionacres bottom line
The first franchises of The Vitamin Shoppe are slated to open later this year. CEO Leite says, "This new growth strategy is a capital-efficient way to grow our retail footprint in a favorable real estate market." Investors should watch this one. It sounds like a move coming at the right time.