Franchises have been around since the 1920s. But it wasn’t until the late 1950s and 1960s that the idea of franchises really took off. It sounds like a great idea; use existing clientele instead of starting from scratch, own a brand that people are already familiar with, and carry the same products as the original store.
In the 21st century, there are franchises for pretty much everything. But the newest craze comes in the form of CBD franchises. But what exactly is a CBD franchise? Where do you start? What obstacles might you need to overcome? Let’s take an in-depth look at all of these questions and more!
What is a CBD Franchise?
A franchise is “an authorization granted to an individual or group enabling them to carry out specified commercial activities,” according to Lumen Learning.
A CBD franchise allows literally anyone with capital to create a branch of an existing company in a particular location.
The original CBD store owner must grant permission to the new branch to set up shop, and provide wholesale prices to the new store owner. Once the store is fully licensed, stocked, and operational, a percentage of the profits go to the original owner and the new owner must continue to operate under the same practices and guidelines as the original store.
Are CBD Franchises Legal?
CBD franchises are legal as long as the products sold within are legal. The 2018 Farm Bill requires CBD products to contain 0.3% or less THC. However, there are many confusing and specific laws that vary by state.
For example, some states require that the CBD-infused gummies must come in square shapes, like sugar cubes. Other laws that aren’t met specifically, even ones the owners may not be aware of, can result in hefty fines or even shutdowns!
However, there are many guidelines in place to help navigate the stressful startup process, from protection to liability.
How Much is a CBD Franchise?
Opening a CBD Franchise will require a decent amount of capital, starting with a minimum of $30,000, according to FranchiseOpportunities.com. Once all the equipment is purchased, license fees are paid, and regulations met, the total cost of opening a CBD franchise ranges between $80,000-$100,000.
While this might seem like a huge chunk of change, keep in mind that some franchises like Dunkin’ Donuts and 7-Elevens cost upwards of $1 million.
Are CBD Franchises Profitable?
CBD franchises have the ability to be very profitable, as long as your markup is reasonable. For example, if a bottle of tinctures costs you $30 and you sell it for $45, that $15 profit is yours! But you’ll need to sell quite a few bottles to enjoy that profit.
You should be selling as many CBD options as possible, including topicals, edibles, tinctures, flowers, etc. Certain products will sell better than others (such as CBD oils), so you should document which products sell more and at what price point. Depending on the area you live, rural or commercial, you have more freedom to experiment with your markup.
Remember that while CBD is a popular conversation topic, many people don’t fully understand what it is. You should be prepared to explain what a particular product is, the benefits of said product, and why the price is priced as such.
Benefits of a CBD Franchise
Now that we’ve gone over the initial costs and legalities of starting a CBD franchise, it’s time to get to the exciting stuff: the benefits! There are several benefits of utilizing a CBD franchise instead of starting from scratch.
People will gravitate towards what they know rather than experiment with something new. Instead of starting from the ground up, you will have a clientele already developed by the existing brand. Having a franchise encourages repeat customers to frequent your location.
If you open a franchise of a well-known CBD shop, word of mouth will spread quickly. Loyal customers may travel to your location because it’s closer or because your customer service is better. Your pricing may be better than other locations and you may be able to offer certain products that other locations don’t consistently stock.
Support Instead of Competition
CBD franchises are also a great way to support existing teams. Instead of starting your own brand and trying to take customers away from the competition, you join forces to create a unified front. You have resources and information from the original company on how to best serve your franchise and customer’s needs.
If you’re interested in the cannabis industry and have the capital to start a business, a CBD franchise is a wonderful opportunity. With an existing team, you will be able to glean valuable information on both the business side and the cannabis industry itself. Instead of relying solely on your personal information of the CBD world, a franchise can help guide you through the tricky rules and regulations of opening up a CBD shop.
Investing in a Booming Industry
An excellent benefit to starting a CBD franchise is that CBD is a booming industry. Its popularity has exploded in the past decade as more and more people are discovering its benefits. By investing in a CBD franchise, you can take advantage of the growing profits made by CBD products. There are so many reputable brands and products available that you can easily educate and sell CBD products to enhance your business.
Steps to Start a CBD Franchise
Now that we’ve gone over a few things about starting your own CBD franchise, you probably have questions on where to start. The first thing to do is to find a CBD company that you’d like to franchise.
For example, Elevated Wellness offers a complete list of things to do in order to franchise with them. Once you’ve filled out an application, your application will be reviewed and an interview will be scheduled.
Next, you’ll need to attend an interview, either in person or via a remote meeting. In that interview, your qualifications and application will be discussed. Questions will be fielded on both sides to help you on your journey. If your application is approved, you’re well on your way to becoming a CBD franchise owner!
Once the company is ready to move forward, a franchise representative will bring you to the corporate headquarters, where detailed information will be presented on the business model, team support, and other marketing tools you may need. You will be prepped and trained on how to run your CBD franchise according to their business practices.
If you ever wanted to own a business but you aren’t sure where to start, consider a CBD franchise. Starting a business is hard and many new businesses fail within their first few years. But that doesn’t mean you shouldn’t give up on the idea of owning your own franchise.
With a CBD franchise, you have access to a supportive team and you can expound on your current knowledge of CBD. You don’t have to start from the ground up, but rather build on what someone else has already started and succeeded with. You’ll have access to an established customer base with verified products that your customers already know and love. You have the opportunity to educate others on the importance and health benefits of CBD.
CBD franchises are more affordable than other franchise options and have the potential for great success in such a booming industry.