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KOA Franchise ProfileMoving & Storage Franchises > Self-Storage Facilities |
What Are the Initial Investment Requirements for a KOA Franchise?
To open a KOA franchise, you should prepare for a significant initial investment. The franchise fee is set at $40,000, with total startup costs ranging between $108,000 and $16,141,775. Additionally, you will need to demonstrate a cash requirement of $40,000 to $4,050,000 and a net worth of $500,000 to $4,050,000. This financial commitment is essential to ensure you have the resources needed to establish and operate your KOA location successfully.
What Ongoing Fees Should You Expect as a KOA Franchisee?
As a KOA franchisee, you will be responsible for ongoing fees that contribute to the brand's marketing and operational support. This includes an 8% royalty fee on gross sales and a 2% marketing fee. These fees are standard in the franchise industry and help maintain the brand's presence and support network, which can be vital for your franchise's success.
What Is the Average Revenue Potential for a KOA Franchise?
The revenue potential for a KOA franchise can be quite promising. The average annual revenue per unit is reported at $4,487,862, with a median of $703,232. However, revenues can vary significantly, with the lowest annual revenue being $165,808 and the highest reaching $2,008,317. Understanding these figures can help you assess the financial viability of your investment and set realistic expectations for your business.
How Long Will It Take to Break Even with a KOA Franchise?
New KOA franchisees can expect a breakeven period of approximately 24 months. This timeframe is crucial for planning your financial strategy and understanding when you might start seeing a return on your investment. Additionally, the investment payback period is estimated at 33 months, allowing you to gauge how long it may take to recoup your initial costs and begin generating profit.
KOA 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:
KOA Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2021 | 2022 | 2023 |
|---|---|---|---|
| Total Units | 493 | 494 | 477 |
| Net Change YoY | 1 | -17 | |
| Franchised Units | 451 | 442 | 426 |
| Net Change YoY | -9 | -16 | |
| Corporate Units | 42 | 52 | 51 |
| Net Change YoY | 10 | -1 |
Investment Overview
The KOA franchise offers a wide range of initial investment options, with costs ranging from $108,000 to $16,141,775. The initial franchise fee is set at $40,000, while ongoing royalty fees are 8% of gross sales, along with a 2% marketing fee. Potential franchisees should have cash reserves between $40,000 and $4,050,000, and a net worth of $500,000 to $4,050,000 to qualify for ownership.
Revenue Potential
Franchisees can expect significant revenue opportunities, with average annual revenues per unit reaching approximately $4,487,862. The median revenue stands at $703,232, while units can generate anywhere from $165,808 to $2,008,317 annually. This diverse revenue range highlights the potential for profitability across different locations and market conditions.
Breakeven and Payback
The KOA franchise has a breakeven time of approximately 24 months, allowing franchisees to recover their initial investments relatively quickly. The average investment payback period is estimated at 33 months, providing a clear timeline for financial expectations and planning.
Franchise Growth
The KOA franchise network has seen fluctuations in unit counts, with 451 franchised units in 2021, decreasing to 426 by 2023. The overall total units have also declined from 493 to 477 during the same period, indicating a need for strategic growth initiatives to stabilize and expand the franchise footprint.
Financial Performance
Recent financial data reveals challenges, with the cost of goods sold exceeding revenue, resulting in a negative gross profit margin. Operating expenses are significantly high, which may impact overall profitability. Franchisees should carefully analyze these figures to understand the financial landscape and plan accordingly.
Operational Support
KOA provides extensive operational support to franchisees, including training programs, marketing resources, and ongoing assistance. This support is crucial for new franchisees navigating the complexities of running a business, ensuring they have the tools and knowledge needed to succeed in a competitive market.
Frequently Asked Questions
The initial investment for a KOA franchise ranges from $108,000 to $16,141,775, depending on various factors such as location and size of the operation.