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Rent-A-Center Franchise ProfileIndustrial Franchises > Equipment Rental |
What is the Initial Investment for a Rent-A-Center Franchise?
To open a Rent-A-Center franchise, the initial investment ranges from $355,268 to $560,225. This includes a franchise fee of $35,000. Potential franchisees should also be prepared for ongoing costs such as a 5.50% royalty fee and a 3% marketing fee. A cash requirement of $95,000 to $130,000 and a net worth of $300,000 to $500,000 are also necessary to ensure financial stability during the startup phase.
What Are the Average Revenues and Profitability Metrics?
Rent-A-Center franchises can expect an average annual revenue of approximately $100,816,578 per unit, with a median revenue of $80,032,531. The gross profit margin stands at about 20.6%, which indicates a healthy return on investment. With the right management, franchisees may achieve a breakeven point within 24 months and an overall investment payback period of around 32 months.
What Are the Typical Expenses for Running a Rent-A-Center Franchise?
Operating a Rent-A-Center franchise involves various expenses, including rent, which can range from $42,000 to $103,500 annually. Other costs include utilities ($5,000 - $9,000), advertising ($20,000 - $25,000), and employee salaries ($95,000 - $130,000). The total annual running expenses can range from $205,350 to $321,300, making it crucial for potential franchisees to budget effectively.
How Has Rent-A-Center Expanded Over the Years?
Rent-A-Center has shown consistent growth in its franchised units, increasing from 213 in 2018 to 399 in 2020. The total number of units, including corporate-owned locations, has also remained substantial, with 2,490 total units in 2018 and 2,331 in 2020. This growth trend highlights the brand's resilience and the potential for franchisees to tap into a growing market.
Rent-A-Center Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
Rent-A-Center Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2018 | 2019 | 2020 |
|---|---|---|---|
| Total Units | 2490 | 2356 | 2331 |
| Net Change YoY | -134 | -25 | |
| Franchised Units | 213 | 305 | 399 |
| Net Change YoY | 92 | 94 | |
| Corporate Units | 2277 | 2051 | 1932 |
| Net Change YoY | -226 | -119 |
Initial Investment
The initial investment for a Rent-A-Center franchise ranges from $355,268 to $560,225. This includes a franchise fee of $35,000, which is required to secure your franchise rights. Aspiring franchisees should also be prepared for additional costs related to equipment, inventory, and location setup, which can vary based on specific market conditions.
Financial Requirements
To qualify for a Rent-A-Center franchise, you need a minimum cash requirement of $95,000 to $130,000 and a net worth of $300,000 to $500,000. These financial metrics ensure that franchisees have the necessary capital to support their business operations and cover initial expenses as they launch their franchise.
Revenue Potential
Rent-A-Center franchises have a strong revenue potential, with an average annual revenue of approximately $253,548 per unit. The median revenue stands at $80,032,531, showcasing the brand's ability to generate significant income. However, revenue can vary widely, with some units reporting as low as $19,086,811 and others reaching up to $1,000,000 annually.
Operational Costs
Franchisees should be aware of ongoing operational costs, which can include rent, utilities, employee salaries, and marketing expenses. For instance, rent can range from $42,000 to $103,500 annually, while employee salaries typically fall between $95,000 and $130,000. Understanding these costs is crucial for effective budgeting and financial planning.
Breakeven and Payback Period
The breakeven time for a Rent-A-Center franchise is estimated at 24 months, meaning that franchisees can expect to cover their initial investment within this timeframe. Additionally, the investment payback period is around 32 months, allowing franchisees to recoup their initial capital and start realizing profits relatively quickly.
Franchise Growth
The Rent-A-Center franchise has shown consistent growth over the years, increasing its franchised units from 213 in 2018 to 399 in 2020. This growth reflects the brand's expanding market presence and the increasing demand for rental and leasing services. The total units have also seen fluctuations, indicating a dynamic market environment for franchisees to navigate.
Frequently Asked Questions
The initial investment for a Rent-A-Center franchise ranges from $355,268 to $560,225, which includes the franchise fee of $35,000 and other startup costs.