Johnstone Supply Franchise in 2024: Costs, Fee & FDD
Discover the strengths and potential challenges of investing in Johnstone Supply. Our in-depth analysis uncovers key insights for prospective franchisees. Is this the right opportunity for you? Read on to find out.
Table of Contents:
Johnstone Supply is a heavyweight in the HVACR (Heating, Ventilation, Air Conditioning, and Refrigeration) industry, with roots tracing back to 1953 when John Shank first founded the company. What started as a modest operation in Oregon has evolved into a significant player in the wholesale distribution of HVACR equipment, parts, and supplies. The company’s journey is marked by a strong commitment to customer service, which has helped it grow into one of the largest cooperatives in the industry. Today, Johnstone Supply is recognized for its extensive product catalog and the close-knit network it has built with its franchisees.
At its core, Johnstone Supply offers a vast range of HVACR products, including air conditioners, furnaces, refrigeration equipment, and all the accompanying parts and tools needed by professionals in the field. Beyond these essentials, they also supply ancillary products such as plumbing supplies and tools, making it a one-stop shop for HVACR contractors. Their primary customer base consists of HVACR contractors and service technicians who rely on Johnstone Supply for high-quality, reliable products and exceptional customer service. The franchise serves both residential and commercial markets, with a strong focus on providing the latest technologies and sustainable solutions.
The scale and scope of Johnstone Supply are impressive, with over 400 locations spread across the United States and Canada. The cooperative model allows franchisees to have a say in the business while benefiting from the collective buying power, which is crucial in maintaining competitive pricing. Each day, thousands of customers, including independent contractors and large service companies, depend on Johnstone Supply for their operational needs, which speaks volumes about the trust and reliability the brand has established over the decades.
As a franchisee, you’re not just joining a business; you’re becoming part of a well-supported network. Johnstone Supply offers comprehensive training programs designed to equip franchisees with the knowledge and skills necessary to run a successful operation. From initial onboarding to ongoing support, they cover everything from product knowledge to business management. Additionally, franchisees benefit from marketing support, technology tools, and a robust supply chain that ensures timely delivery of products. The franchise’s cooperative structure also means that franchisees can influence the direction of the company, making it a unique and appealing opportunity for those looking to invest in the HVACR industry.
Johnstone Supply Franchise Insights
- Johnstone Supply has a network of over 100,000 contractors who regularly depend on their products, ensuring a steady and loyal customer base.
- The franchise operates more than 400 locations across the U.S. and Canada, giving franchisees access to a massive and established market.
- Johnstone Supply’s cooperative model allows franchisees to benefit from collective purchasing power.
- The company is also forward-thinking, with a significant investment in e-commerce platforms.
Johnstone Supply Franchise Key indicators
Unit Growth YOY (%)
-2%
vs industry 4%
Total U.S. Franchised Units
419
3-Year Failure Rate
<1%
vs industry 5%
Total Investment
$808K-$3.4M
How much does it cost to open a Johnstone Supply franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Johnstone Supply franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Johnstone Supply franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a Johnstone Supply below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Application Fee | $1,000 | $1,000 |
| New JS Business Owner Distributor Fee (Main Branch) | $11,000 | $11,000 |
| Additional Set Up Fee (additional Branch) | $0 | $5,000 per Branch |
| Operating Fee (Main Branch) | $60,000 | $60,000 |
| Operating Fee (each additional Branch) | $0 | $40,000 per Branch |
| Fixture, Furniture, Signage, Equipment | $15,000 | $200,000 |
| Real Property | Variable | Variable |
| Opening Inventory (single Branch) | $200,000 | $2,000,000 |
| Insurance | $10,000 | $15,000 |
| Compatible Computer Systems | $300,000 | $600,000 |
| Vehicles | $1,200 | $45,000 |
| Deposits/Licenses | $10,000 | $15,000 |
| Misc. Opening Costs | $0 | $10,000 |
| Additional Funds - 3 Months | $200,000 | $400,000 |
| TOTAL | $808,200 | $3,402,000 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
For a franchise like Johnstone Supply, specific financial requirements such as the required capital, liquid assets, and net worth are typically determined by the cooperative and can vary based on the location and market conditions. However, for franchises in the HVACR distribution industry, it’s common to see the following financial requirements:
- Initial Investment Opening a similar franchise could require an initial capital investment ranging from $808,000 to $3.4 million. This estimate includes franchise fees, equipment, inventory, and other startup costs. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets It’s generally recommended to have liquid assets of at least $100,000 to $200,000. This ensures you have the necessary cash flow to cover initial operating expenses and any unexpected costs.
- Net Worth Franchisees in this industry typically need a minimum net worth of around $500,000 to $1 million. This demonstrates financial stability and the ability to sustain the business over time.
These figures are estimates based on industry standards, so I recommend directly contacting Johnstone Supply or a similar franchise for the most accurate and current financial requirements.
How much does a Johnstone Supply franchise owner make?
Calculating the salary of a Johnstone Supply franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Johnstone Supply franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Johnstone Supply Revenue & Gross Sales
While specific revenue figures for Johnstone Supply franchises are not publicly disclosed, the franchise is recognized for its robust financial performance due to its essential product offerings and established reputation in the HVACR industry. Typically, franchises in the distribution sector like Johnstone Supply can achieve strong sales figures, especially when located in markets with high demand for HVACR services and supplies. By focusing on operational efficiency and leveraging the cooperative’s buying power and extensive product range, franchise owners have the potential to generate substantial revenue and achieve solid returns on their investment.
Which key factors impact the average revenue performance of Johnstone Supply franchisees?
The performance of U.S. franchisee median gross sales for Johnstone Supply this past year likely benefited from several key factors. First, the ongoing demand for HVACR services, driven by both residential and commercial needs, has remained strong, particularly with the increased focus on energy efficiency and sustainable systems. Additionally, the cooperative’s investment in e-commerce and technology has likely contributed to higher sales, as more customers shift towards online purchasing. Economic conditions, including a stable housing market and the continued need for HVACR maintenance, have also played a role in sustaining demand. Moreover, the brand’s emphasis on comprehensive training and support for franchisees may have improved operational efficiency, further boosting sales performance compared to the previous year.
Johnstone Supply Franchise Operational Costs
If you’re considering opening a Johnstone Supply franchise, the key primary ongoing operational costs to keep in mind include:
- Inventory Management Regular replenishment of HVACR products, parts, and tools is crucial. The cost of maintaining a diverse and well-stocked inventory will be one of your most significant ongoing expenses, especially given the wide range of products you’ll need to carry.
- Employee Salaries and Training Ensuring your team is knowledgeable and well-trained in both product offerings and customer service is vital. This includes salaries, benefits, and ongoing training programs to keep staff up-to-date with industry advancements.
- Facility Costs Operating a distribution center involves substantial facility-related expenses such as rent, utilities, and maintenance of the warehouse or retail space. Ensuring that your space is efficiently organized and well-maintained is crucial to smooth operations.
- Logistics and Transportation Efficiently managing the logistics of receiving and distributing products is essential. This includes the cost of transportation, whether through third-party logistics providers or maintaining your own delivery vehicles.
- Technology and Software Investing in robust inventory management systems, point-of-sale (POS) systems, and e-commerce platforms is necessary for streamlining operations and maintaining competitive service levels.
- Marketing and Customer Acquisition While not a general franchise-related cost, localized marketing efforts and customer acquisition strategies specific to your territory will require ongoing investment to maintain and grow your customer base.
In summary, opening a Johnstone Supply franchise presents a compelling opportunity within the HVACR industry, backed by a strong support system, extensive product offerings, and a well-established brand. By carefully considering the ongoing operational costs and leveraging the cooperative’s resources, you can position yourself for success in this essential and growing market. Whether you’re looking to build a solid business foundation or expand into a new market, Johnstone Supply offers the tools and support you need to thrive. If you have any more questions or need further insights, I’m here to help you make the most informed decision for your investment.
Johnstone Supply Franchise Fees
Here’s a breakdown of some key ongoing fees you should consider if you’re looking to open a Johnstone Supply franchise:
- Application Fee $1,000, due with the application. This fee is required when opening new branches, transferring branches, or assigning a distribution agreement, including any change of control that occurs post-conversion.
- New Branch Fee $10,000 per branch, due 30 days prior to opening. This fee applies to new branches established after conversion and is necessary to secure your branch’s place in the network.
- New Branch Setup Fee $5,000 per branch, due 30 days prior to opening. This fee covers the setup costs for all new branches, including transferred ones, but it’s limited to a single charge if multiple branches are transferred in one transaction.
- Additional Fees There might be additional fees not listed here, so it’s important to review the franchise agreement carefully to fully understand all potential costs.
These fees represent some of the initial and ongoing investments you’ll need to consider as you plan to open a Johnstone Supply franchise. It’s crucial to account for these costs in your budgeting to ensure a smooth launch and continued success.
Johnstone Supply Franchise Earnings
While specific earnings data for Johnstone Supply franchises is not publicly available, we can offer an informed overview based on industry norms and the franchise’s established presence in the HVACR sector. Johnstone Supply, with its extensive product range and strong industry reputation, has the potential to generate substantial revenue in the distribution and wholesale market. Key factors such as location, market demand, and effective management are crucial in determining a franchise’s financial performance.
Industry benchmarks for similar distribution franchises indicate that gross sales can vary, with well-situated and efficiently managed franchises achieving notable sales figures. When projecting potential earnings, it’s essential to consider the initial investment and ongoing costs associated with inventory, staffing, and logistics. Franchises like Johnstone Supply, which offer robust support systems and comprehensive training programs, are generally better positioned to achieve profitability.
Prospective franchisees should conduct thorough market research and consider factors such as local competition, market needs, and economic trends. By leveraging Johnstone Supply’s cooperative model and adhering to best practices, a franchise can align with the earnings potential seen in successful distribution businesses. Consulting with current franchisees and financial advisors can also provide valuable insights into realistic earnings expectations.
How to Open a Johnstone Supply Franchise
Becoming a Johnstone Supply franchisee involves a structured process designed to ensure that both the franchisee and the cooperative are well-prepared for a successful partnership. Here’s a step-by-step overview of the process, from initial inquiry to the start of operations:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Franchise Application If you decide to move forward, the next step is to complete a franchise application. This detailed application will require you to provide information about your background, financial status, and business experience. The application helps Johnstone Supply assess your suitability as a potential franchisee.
- Discovery Process Upon successful application review, you’ll be invited to participate in a discovery process. This typically includes meetings with key Johnstone Supply representatives, a visit to the corporate headquarters, and potentially touring existing franchise locations. During this phase, you’ll learn more about the company’s operations, culture, and support systems.
- Franchise Agreement If both parties agree to move forward, you will receive a Franchise Disclosure Document (FDD) outlining all the legal aspects, fees, and obligations of the franchise relationship. After reviewing the FDD, you’ll sign the franchise agreement, formally committing to becoming a Johnstone Supply franchisee.
- Site Selection and Approval Once the agreement is signed, the next step is to select a location for your franchise. Johnstone Supply will assist you in identifying and securing a site that meets their criteria. The chosen site must be approved by Johnstone Supply before you can proceed.
- Initial Training Before you begin operations, you’ll participate in an extensive training program provided by Johnstone Supply. This training will cover everything from product knowledge and inventory management to customer service and business operations. The goal is to equip you with the tools and knowledge needed to run a successful franchise.
- Store Build-Out and Setup With training completed and a site secured, you’ll move on to the build-out and setup phase. This involves preparing the physical location, ordering inventory, setting up systems, and hiring staff. Johnstone Supply will guide you through this process to ensure everything is up to standard.
- Grand Opening and Ongoing Support Once your location is ready, you’ll conduct a grand opening to officially launch your franchise. Johnstone Supply provides ongoing support during this critical phase, including marketing assistance, operational guidance, and continued training to help you build and grow your business.
Pros & Cons
Pros
Established Brand and Reputation: Johnstone Supply has been a trusted name in the HVACR industry for decades, providing a solid foundation and brand recognition that can attract a steady customer base.
Extensive Product Range: The franchise offers a comprehensive range of HVACR products and supplies, catering to a broad market of contractors and service providers, which can translate into consistent demand.
Cooperative Model: As a franchisee, you become a member of a cooperative, allowing you to have a voice in the business and benefit from collective purchasing power, which can lead to lower inventory costs.
Growth Potential: The HVACR industry continues to grow, driven by advancements in technology and increasing demand for energy-efficient systems, offering long-term growth opportunities.
Cons
Competitive Market: The HVACR distribution market is competitive, with numerous players vying for market share. Success may depend on your ability to differentiate your business and attract loyal customers.
Inventory Management: Maintaining a diverse and well-stocked inventory is crucial but can be complex and costly, particularly if market demand fluctuates.
Location Dependent: The success of your franchise can be heavily influenced by its location. Selecting the right market with sufficient demand for HVACR products is critical.
Economic Sensitivity: The franchise’s performance can be impacted by broader economic conditions, such as fluctuations in the construction industry, which may affect demand for HVACR supplies.
