The Pros and Cons of Self-Storage Franchising: Is It the Right Path for You?

A great article on The Pros and Cons of Self-Storage Franchising recently posted on  Inside Self Storage  this site is the best resource for our self-storage industry if you haven’t already been receiving their monthly magazine be sure to sign up now, information enhances everything!  SUBSCRIPTION INFORMATION:

Market conditions have made franchising a viable model for self-storage owners and investors. Explore the pros and cons to see if being a franchisee is the right choice for you.

Marc Goodin | Dec 17, 2019

For the direct link to the article click here or continue reading below.



An owner or investor looking to get into the self-storage business or expand his portfolio has a few options: build a project, buy an existing facility, or join an investment group that does one or the other. Now, there’s yet another choice on the table: franchising.

Franchising combines the expertise of a franchisor with the resources and entrepreneurial drive of a business owner to form a mutually beneficial relationship. The model provides an economic opportunity for each party based on talent, initiative, and dedication. Typically, a self-storage franchisee will own 100 percent of his business and run it under a licensing agreement. In this arrangement, you’re in business for yourself, not by yourself.

Franchising began more than 40 years ago with companies like Holiday Inn and McDonald’s, which enabled owners to build businesses quickly because they didn’t have to reinvent the wheel. It didn’t take long for many would-be owners to see that economy of scale, support systems, branding, training, and increased profit could all be obtained by owning a franchise.

By far, franchising is among the most successful business models used by entrepreneurs. Many people’s lives and fortunes have been changed for the better because of it. Today, there are nearly 1 million franchises in the U.S. This number grows every year, as more individuals seek business-ownership benefits that aren’t as easily obtained by starting their own ventures.

Franchising and Self-Storage

Franchising is a relatively new concept in self-storage. Twenty years ago, the need for industry franchises wasn’t as great because the competition was limited. Now, there’s a demand for ways to enter the field.

While self-storage is still one of the greatest businesses on the planet, it has many minefields and traps that must be avoided, on both the development and operational sides. A few simple mistakes can cost you hundreds of thousands of dollars. This has made franchising much more attractive.

Until recently, struggling owners had few places to get support. They could always sell, of course, or turn over their facilities to a third-party management company. Outside management is certainly an option for independent owners who are willing to accept a smaller share of profit and don’t wish to be involved in the day-to-day operation. Franchising, however, is a great alternative for those who want to actively run their business. Let’s look at the pros and cons of this alternative.

Franchise Pros

It’s easier to get financing. Lenders prefer to extend money to franchise operations vs. independents who have never previously built or owned self-storage. With a franchise, you even still qualify for loans under the Small Business Administration.

It provides essential infrastructure. An owner who partners with a successful franchisor has a higher likelihood of success than someone starting a business from scratch. In fact, there are many benefits to sharing strategies and solutions with a network of franchisees rather than stumbling down the path alone.

On the development side, a franchisor is an experienced partner that assists with the land search, design, construction, and lease-up. Not only can this save you from costly building mistakes, it typically reduces development time.

On the operations side, some owners simply aren’t equipped with the sales, marketing, customer service, and other necessary experience to make the business work. Many can’t keep up with ever-changing technology. A franchisor can provide operational systems to capture high market share at premium rates as well as a scalable platform capable of competing with and surpassing the competition.

It provides valuable mentorship. It’s difficult to beat the combination of a franchisor’s systems, platforms and knowledge and an owner’s excitement and commitment. The relationship offers the owner several layers of mentorship.

A good franchisor will provide written, step-by-step development and operational manuals, guidelines, checklists and, most important, regular communication and guidance to save you time and money. It should also help ensure your facility is equipped with the high-touch, high-tech feeling savvy renters require. Having an experienced franchisor on your team who’s designed, built, owned and managed multiple facilities can make a substantial difference. Imagine having experts, who’ve gained their experiences in the trenches, ready to personally help you succeed.

It offers a quicker rate of success. It’s natural to want to pit franchise fees against the value such an agreement provides. The bottom line is a franchisor should be able to help you earn profit you couldn’t make on your own as well as reduce risk, save time and make life more enjoyable. A franchisee with a high-end sales and marketing platform can typically set rental rates 10 percent higher than what most startups could command on their own. This should more than offset the cost fees.

Not only should you be able to charge higher rates with the help of a franchisor’s experience and guidance, but you should also be able to rent more units. It takes less than 20 extra units per year to pay a franchisor’s services a second time. Before you complete your first month of operation, you should be able to generate more than enough additional revenue to negate franchise costs, and it should only get better moving forward.

Franchise Cons

It requires a full buy-in. For your franchise to work, you must be willing to buy into someone else’s system—completely. If you believe only your way is the right way, then franchising isn’t for you. Ask yourself whether you feel the fees are well-justified and you’re willing to take guidance from others. If not, don’t become a franchisee.

You must actively participate. If you don’t want to have any part in managing a self-storage facility, then owning a franchise isn’t for you. Instead, hire a third-party management company.

It must be a good fit. Every franchisor has a business philosophy that may or may not match your own. While one model may be based on something very basic and inexpensive like a Motel 6, another may push for unparalleled service, sales and marketing like The Ritz-Carlton. It’s important to gauge whether you and a potential franchisor are a good match.

It takes commitment. Franchising isn’t for owners who plan to sell their facility upon obtaining a Certificate of Occupancy or shortly thereafter because franchises typically have a multi-year term. Make sure you’re aware of any early-exit policy.

When considering a self-storage franchise, consider what you envision for your operation. How much involvement and say-so do you wish to have? The best way to figure out the right path for you is to dig in and research. Franchising is a viable model in today’s market conditions. If you’re ready to take the plunge and have confirmed you’re a good fit for this model, get ready to be empowered for success!

Marc Goodin is president of Storage Authority LLC, a self-storage franchise, and the owner of three self-storage facilities that he personally designed, built and manages. He’s been helping others in the industry for more than 25 years. To reach him, call 860.830.6764, e-mail marc@storageauthority.com, visit www.storageauthorityfranchise.com. You can also purchase his books on facility development and marketing in the Inside Self-Storage Store.

#storageauthority #selfstoragedevelopment #selfstorageindustry #Franchise #selfstorage #InsideSelfStorage

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