If you live on planet Earth, you certainly have already heard about IKEA, the worldwide leader in the sector of affordable furnishing and house items.
IKEA stores are big and always crowded; they are, therefore, extremely successful.
It’s no surprise that many entrepreneurs started wondering whether or not they could get into business with IKEA and maybe open a store as a franchise partner.
Is it possible to become an IKEA franchise partner? How much will it cost? Would it be worth it? In this article, we are answering all these questions about IKEA Franchise.
About IKEA
IKEA is a very well-known furnishing and household retailer. The brand is famous all around the world, and it’s often a synonym for cheap furnishing.
However, over the years, IKEA widened its offer, and today, it provides cheap products but also some more expensive and glamorous alternatives.
IKEA stores are always big stores where people go spend the afternoon during the weekend. Often, the stores also include a restaurant.
IKEA products are known all over the world, and the opening of a new store is always welcomed by the population because customers often drive for miles and miles to reach the closest IKEA:
History Of IKEA
IKEA was founded in 1943 by a seventeen-year-old boy. His name is Ingvar Kamprad, and his company was originally a mail-order sale business.
IKEA began selling furniture only five years later, and the first store was opened in 1958.
IKEA was founded in Sweden, and the first stores opened there. The first store outside the home country was opened in 1963 in Norway.
After that, new IKEA stores started appearing all over Europe: Denmark, Switzerland, West Germany… During the 70s, IKEA started expanding outside of Europe and, one year after the other, they opened stores in Japan, Australia, the United States, and the United Kingdom.
In 2010, IKEA entered South America.
Today, there are more than 400 IKEA stores opened all around the world.
Furthermore, users from any part of the world can order furniture and items from the IKEA website and have them delivered to their homes.
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IKEA Franchise Business Model
IKEA isn’t technically a franchise but de facto, the majority of IKEA stores are franchised, meaning that there is a third-party entrepreneur that pays a fee and opens the store, making a profit for themselves.
For you, it means that if you want to can open an IKEA store. You need to follow a precise path that starts with contacting the company and proposing your deal.
| Business Model | Furniture retailer chain |
|---|---|
| Initial Investment | $300,000 |
| Franchise | YES |
| Franchise Fee | 3% |
| Number of outlets | 445 |
| Annual revenue | €41.9 billion |
How Much Does It Cost To Open An IKEA Franchise?
Opening an IKEA store is a huge investment. They don’t require an initial franchise fee (they’ll take 3% of your profit as a franchise fee), but still, you need to purchase a very large location, hire many people to make it function, and most of all, purchase all the inventory, and that could be a huge expense.
As you know, IKEA sells a lot of different products, and you need them to be available in your store.
You need last-generation cashout systems, you need an online selling system, and you need security.
If you can invest at least $300,000, then you can think of investing them in a new IKEA store, but nothing less than that.
If you have this type of budget, however, the investment can be totally worth it.
It won’t be that hard to start having hundreds of clients coming to your store every day: IKEA is just too well known and too appreciated.
Just make sure to pick a location that is not close to any other IKEA store.
Requirements
IKEA has precise requirements for their franchise partners:
- Experience in the sector
- Local market knowledge
- Financial strength
Furthermore, they have precise requirements regarding the dimensions of the store. They’ll communicate them to you after you first submit your candidacy to become a franchise partner.
Training & Support
IKEA provides support to their franchise partners: the support is related to marketing, sales management, security measures, and product knowledge.
Obligations & Restrictions
Because IKEA isn’t technically a franchise, but it acts like one, all the details of their franchise contract aren’t publicly known.
Probably, they’ll discuss each deal separately. Your obligations and restrictions will be therefore indicated in your contract.
Make sure you read it carefully, and you have your lawyers reading them.
Terms Of Agreements & renewal
The contract you sign with IKEA, the one that allows you to become their collaborator and open an IKEA store, can have or does not have an expiration date.
In every case, however, the agreements are that you need to pay a 3% franchise fee on all your sales.
Financial Assistance
IKEA does not provide financial assistance. On the contrary, one of their requirements is that you have the financial strength to make the investment and be responsible for that.
Comparison Franchise: IKEA VS Ashley Furniture Industries
| Company | IKEA | Health Mart |
|---|---|---|
| Founded | 1943 | 1945 |
| Number of Outlets | 445 | 700 |
| Franchise Fee | 3% | None |
| Franchise | YES | NO |
Conclusion
Investing in a new IKEA store is not for everyone because the initial investment is very high.
However, those who can afford it will create a solid business capable of generating huge profits. Keep in mind that you’ll need to pay a 3% franchise fee forever on all your sales.
IKEA Franchise: FAQ
Is IKEA a franchise or chain?
Even though IKEA isn’t technically a franchise, it acts like one. It is possible for external investors to open a store after they’ve signed a deal with the main company.
Who is the owner of IKEA?
Jesper Brodin and Jon Abrahamsson Ring are the current CEOs and chairmen of the company.
How many IKEA stores are there?
IKEA counts 445 stores opened all around the world.
Is the IKEA franchise a good investment?
The IKEA franchise is a big investment, but if you can afford it, it can be a great deal because IKEA is known for making great profits as it is the favorite furniture provider for many customers all around the world.
IS the IKEA franchise worth it?
The big investment that IKEA requires is worth it because of the popularity and reputation of the brand.
Reference: IKEA – Wikipedia
Amit Gupta is the founder of DrFranchises – a digital marketing agency that helps brands rank better on Google Maps through local SEO strategies. Amit has over 11 years of experience in digital marketing, SEO, email marketing, and social media marketing. He’s also the owner of multiple franchises and has helped countless brands achieve success online. When he’s not working, Amit can be found playing with his dog.