The formal definition of retail is “the sale of goods to the public in relatively small quantities for use or consumption rather than for resale.”
By that definition nearly anything can be considered a retail franchise, even though most tend to think of retail stores (and online outlets) in terms of clothing, consumer products, and the like. Within franchising specifically, the International Franchise Association and FRANdata include the following non-food sectors in the retail food, products and services category, per the most recent Franchising Economic Outlook report:
- Furniture and home furnishings stores
- Electronics and appliance stores
- Building-material and garden-equipment and supplies dealers
- Health and personal-care stores
- Clothing and general merchandise stores
- Florists and gift stores
- Consumer-goods rentals
- Photographic services
- Sporting goods stores
- Motor vehicle and parts dealers
- Book and music stores
The Book and Music Store Franchises Industry
As seen above, book and music store franchises are part of the expansive retail franchise industry. Bookstores and music stores provide customers with entertainment and education and are highly valued by communities.
Bookstore franchises may also specialize in selling newspapers and magazines. Some of these businesses are referred to as “newsstands.”
E-books and online retailers are the main source of competition for brick and mortar bookstores. However, bookstore franchises have enticed readers back into their locations with additions such as cafes, book readings, author signings, and other creative endeavors that are exclusive to a physical location.
Traditional music store franchises sell CDs, DVDs, records, and music equipment. Nowadays, music stores commonly sell or lease musical instruments and related equipment.
The digital age has also proved a staunch adversary for the physical music store. Stores only selling CDs, DVDs, and records have been forced to evolve due to competition from digital downloads. Streaming services have also lessened the need to purchase physical copies of music. However, modern music stores have found their niche by selling special edition CDs and records, as well as doing physical location specific events, similar to what was mentioned above for bookstores.
In addition, bookstores and music stores are commonly combined to diversify and increase their income potential.
Two Big Factors for Retail Franchise Success
Marketing Isn’t Just for Looks
We’ve already mentioned how big the retail industry is – and the size means more competition. How do you make customers choose you over the others? Marketing. Beyond the surface layer, typically businesses that are good at marketing know who their primary markets are, how to reach them, as well as have the knowledge base to keep track of their customers’ evolving habits and tastes.
“Nothing is more exciting to a group of franchise candidates than market research with intimate knowledge of the behavior of their future customers,” wrote Jim Bender, president and owner of Franchise System Builders, in a Franchise Update magazine editorial.
“Nothing builds more leadership credits for the franchisor than raw marketing knowledge. [Franchisees] can buy equipment and inventory and rent real property [independently], but success is not made of equipment alone. To sell the inventory they now own, they need the market research, test marketing, marketing agencies, and the years of experience the franchise company can provide.”
If Opening a Physical Location, Find the Right Spot
One of the most important factors in retail franchise success for franchises that have a physical premises is the selection of a location. Up above we touched on ways bookstore and music store franchises optimize their efforts against online competition, but those things won’t mean much if you’re not in the right place for your franchise.
The first thing in location selection is knowing your target market, especially important because quantity doesn’t always mean quality. A common thought amongst people opening a business for the first time is that the more people that are around, the more people that will automatically shop in their store. Not necessarily. According to business intelligence company Pitney Bowes, “Even thinly settled areas may achieve vibrant performance if a sufficient quantity of targeted customers resides in that area.”
When searching for a prime location for your retail franchise lean on all of your avenues for knowledge, including yourself and, particularly, your potential franchisor.
Franchisors have tons of data about what places will work best for their franchise brand. Furthermore, most franchises require franchisees to locate their franchise within a specific, franchisor-approved area—an area they already believe, and data to suggest, their franchise system can be successful in.
Initial Investment and Opening Costs for Book and Music Store Franchises
The amount necessary to open a franchise varies depending on the unique business system and execution requirements. The initial investment required for a bookstore or music store franchise can range from a low in the tens of thousands to a high in the hundreds of thousands of dollars, mostly dependent on the kind of real estate required for the franchise.
Our franchise profiles will present you with a basic range for the initial investment or minimum cash required to open a franchise. But when it comes to finding out the details of an initial investment, the FDD is the best place to look. Franchisors offer itemized estimates in their FDD based upon their experience establishing, and in some cases operating, units.
Keep in mind these estimates are just that, though—an estimate. Prospective franchisees should review the figures presented with a business advisor, taking into consideration their unique circumstances, before making the decision to enter into a franchise agreement.
Ongoing Costs for Book and Music Store Franchises
Don’t forget about the additional costs required for nearly all franchise businesses. This includes expenses such as royalty fees, marketing fees, software fees, training fees, and more.
The most common is the royalty fee. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes, along with certain types of operational support. In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training.
It’s important to note that while many initial and ongoing costs are detailed in the FDD, there are some costs inherent to business ownership, like employee wages or utility costs, that aren’t.