How to Open a Dollar General Franchise in 2023: A complete guide

Table of Contents

Overview of Dollar General franchise

Dollar General is a chain of discount stores that offer a variety of products at low prices. The company was founded in 1939 and has since grown to become one of the largest discount retailers in the United States. Dollar General offers franchise opportunities to entrepreneurs who want to own and operate their own retail stores under the Dollar General brand.

Benefits of owning a Dollar General franchise

Owning a Dollar General franchise comes with several benefits. These include access to an established brand and proven business model, ongoing support and training, and access to products and supplies at competitive prices. Franchisees also benefit from national advertising and marketing campaigns, which help to attract customers and build brand awareness.

Purpose of this guide

The purpose of this guide is to provide a comprehensive overview of owning and operating a Dollar General franchise. It will cover everything from the requirements for owning a franchise, to hiring and managing staff, to managing finances and accounting. By following the advice and best practices outlined in this guide, entrepreneurs can build successful and profitable businesses that serve their communities and meet their personal and professional goals.

Understanding Dollar General Franchise

History of Dollar General franchise

Dollar General was founded in 1939 by J.L. Turner and his son Cal Turner. The company was originally called J.L. Turner and Son, but was later renamed to Dollar General Corporation in 1968. The company went public in 1968 and has since grown to become one of the largest discount retailers in the United States.

Dollar General is a major discount retailer that operates thousands of stores across the United States. In 2020, the company announced its plans to transition from a publicly traded company to a privately held company. As part of this transition, Dollar General evaluated each of its locations to determine which stores were underperforming and should be closed.

To assess each location, Dollar General used a model known as “EZ Stores.” This model was designed to evaluate the profitability and potential of each store based on factors such as location, store size, and customer traffic. Stores that did not meet the criteria set forth by the EZ Stores model were marked for closure.

According to Dollar General’s CEO, Todd Vasos, the company’s decision to assess each location was driven by a desire to optimize the company’s store network and ensure that it was focusing its resources on its most profitable locations. By closing underperforming stores, Dollar General could redirect its investment to areas with greater growth potential.

Overall, the decision to assess each location using the EZ Stores model was a strategic move by Dollar General to improve its bottom line and position the company for long-term success. By evaluating each location individually, Dollar General could ensure that it was making informed decisions about which stores to close and which to invest in, ultimately helping the company to better serve its customers and achieve its business goals.

After assessing each of its locations using the EZ Stores model, Dollar General proceeded with its plans to close underperforming stores. In its 2020 annual report, the company noted that it had closed 122 stores during the year, with the majority of closures occurring in the second half of the year.

Despite the store closures, Dollar General continued to experience growth in its overall business. In fact, the company reported record sales and earnings for the fiscal year 2020, with net sales increasing by 21.6% and earnings per share increasing by 63.3% compared to the previous year.

Dollar General also continued to expand its store network during this time. In 2020, the company opened a total of 1,000 new stores and remodeled or relocated 1,670 stores.

Overall, the decision to assess each location using the EZ Stores model and close underperforming stores appears to have been a successful strategy for Dollar General. The company was able to optimize its store network and focus on its most profitable locations, while also continuing to grow its business and expand its footprint across the country.

Requirements for owning a Dollar General franchise

To own a Dollar General franchise, entrepreneurs must meet certain requirements. These include financial requirements, business experience, and location and territory.

Financial requirements

Franchisees must have a minimum net worth of $1,000,000 and liquid assets of at least $250,000. These funds will be used to cover the costs of opening and operating the dollar general store, as well as ongoing fees and royalties.

Business experience

Franchisees must have experience in retail management or a related field. They should have a solid understanding of business operations, including inventory management, financial management, and customer service.

Location and territory

Dollar General franchises are awarded based on a territory system. Franchisees must identify a suitable location for their store within the designated territory. The location should be easily accessible and visible, with a high traffic flow.

Fees and royalties

Dollar General franchisees are required to pay an initial franchise fee of $25,000. They also pay ongoing royalties based on a percentage of their gross sales. The exact amount of royalties varies depending on the store’s performance and location.

Support and training provided by Dollar General

Dollar General provides extensive support and training to its franchisees. This includes initial training at the company’s headquarters, ongoing training and support, and access to a network of experienced franchisees. Franchisees also benefit from national advertising and marketing campaigns, which help to attract customers and build brand awareness.

Established brand and reputation

One of the biggest benefits of owning a Dollar General franchise is the established brand and reputation. The company has been in business for over 80 years and has built a reputation for offering quality products at low prices. This makes it easier for franchisees to attract and retain customers.

Proven business model

Dollar General has a proven business model that has been successful for decades. This model includes everything from store layout and merchandising to inventory management and customer service. Franchisees can benefit from this proven model by implementing it in their own stores.

Access to products and supplies

Dollar General franchisees have access to a wide range of products and supplies at competitive prices. This allows them to offer a variety of products to their customers at low prices, while still maintaining a healthy profit margin.

Marketing and advertising support

Dollar General provides extensive marketing and advertising support to its franchisees. This includes national advertising campaigns, local marketing support, and promotional materials. This helps to build brand awareness and attract customers to the franchisee’s store.

Ongoing support and resources

Dollar General provides ongoing support and resources to its franchisees. This includes access to training and development programs, as well as support from experienced franchisees and the corporate office. Franchisees can also benefit from the company’s purchasing power, which allows them to get better deals on products and supplies.

How to open a dollar store franchise?’

Opening a Dollar Store franchise is a great way to start your own business and take advantage of the brand recognition and proven business model of a well-established company. Here are the steps to open a Dollar Store franchise:

  1. Research and familiarize yourself with the Dollar Store franchise model, requirements, and fees.
  2. Determine if you meet the financial and experience requirements to become a Dollar Store franchisee.
  3. Submit a franchise application and wait for approval from Dollar Store.
  4. Secure financing for your franchise startup costs, including the franchise fee, inventory, and store equipment.
  5. Find a suitable location for your Dollar Store franchise, taking into consideration factors such as foot traffic, visibility, and accessibility.
  6. Sign a lease for your store location and prepare it for opening, including any necessary renovations or upgrades.
  7. Order inventory and supplies for your store and set up your Point-of-Sale (POS) system and other equipment.
  8. Hire and train staff for your store, including managers, cashiers, and stockers.
  9. Launch your Dollar Store franchise and begin marketing and promoting your store to attract customers.

By following these steps and utilizing the training and support provided by Dollar Store, you can successfully open and operate your own Dollar Store franchise.

Starting a Dollar General Franchise

Researching the market and competition

Before starting a Dollar General franchise, it is important to research the local market and competition. This will help to identify the potential demand for the store’s products and services, as well as the competition in the area. Market research may include analyzing demographic data, researching local buying habits, and surveying potential customers.

Securing financing

Franchisees must have the necessary funds to cover the costs of opening and operating the store. This includes the initial franchise fee, as well as the costs of inventory, equipment, and other supplies. Franchisees can secure financing through a variety of sources, such as loans from banks or other financial institutions, private investors, or personal savings.

Finding a suitable location

The location of a Dollar General franchise is critical to its success. Franchisees should look for locations with high traffic flow and easy accessibility. They should also consider the demographics of the area, such as the age and income levels of the local population. Additionally, franchisees should ensure that the location meets all zoning and other regulatory requirements.

Applying for a franchise

Once a potential franchisee has completed the necessary research and secured financing, they can apply for a Dollar General franchise. The application process includes completing an online application and submitting it to the company. The application will be reviewed by the corporate office, and the potential franchisee will be contacted to schedule an interview. If approved, the franchisee will be required to sign a franchise agreement and pay the initial franchise fee.

Examples of successful Dollar General franchise locations include those in rural areas or small towns, where there may be limited retail options. Franchisees can also benefit from locating their stores near other retailers, such as grocery stores or pharmacies, to attract more customers. Additionally, franchisees may choose to offer additional services, such as a pharmacy or a fuel station, to further differentiate their store from the competition.

Hiring and Managing Staff

Tips for recruiting and hiring staff

One of the key aspects of managing a successful Dollar General franchise is hiring and managing a team of motivated and engaged employees. Franchisees should look for individuals who are enthusiastic about customer service and have experience in retail sales. They can also use online job boards and social media to advertise job openings and attract qualified candidates.

Training and development

Once staff have been hired, it is important to provide them with adequate training and development opportunities. This may include training on the company’s policies and procedures, as well as training on customer service and sales techniques. Franchisees can also provide ongoing training to help employees stay up-to-date on new products and technologies.

Performance management and motivation

Performance management and motivation are critical to maintaining a successful team. Franchisees should set clear performance goals and provide regular feedback to employees. They can also use incentives and recognition programs to motivate employees and reward them for their hard work.

Managing staff turnover

Managing staff turnover is an ongoing challenge for franchisees. To minimize turnover, franchisees can offer competitive salaries and benefits packages, as well as opportunities for career growth and advancement. They can also create a positive work environment by providing a supportive and respectful workplace culture.

Examples of successful Dollar General franchises with engaged and motivated staff include those that provide ongoing training and development opportunities, recognize and reward top performers, and provide a supportive and respectful workplace culture. Franchisees who invest in their staff and prioritize employee satisfaction are more likely to retain top talent and maintain a successful business.

Building Customer Loyalty

Understanding customer needs and preferences

To build customer loyalty, it is important for Dollar General franchisees to understand the needs and preferences of their target customer base. This can be done through market research, analyzing sales data, and gathering feedback from customers. By understanding what their customers want and need, franchisees can tailor their products and services to meet those needs.

For example, if a Dollar General franchise is located in an area with a large senior population, the franchisee may want to focus on stocking more health and wellness products, as well as offering discounts on certain items that are in high demand among seniors. This can help build customer loyalty by showing that the franchise is attentive to the unique needs of its customers.

Providing excellent customer service

Providing excellent customer service is essential for building customer loyalty. Franchisees should train their staff to be friendly, knowledgeable, and attentive to customers’ needs. They should also ensure that their staff has the tools and resources they need to provide a positive customer experience, such as easy-to-navigate store layouts, well-stocked shelves, and fast and efficient checkout processes.

For example, a Dollar General franchisee may provide ongoing training for their staff to help them improve their customer service skills. They may also invest in technology that makes the checkout process faster and more convenient for customers, such as self-checkout kiosks or mobile payment options.

Creating a welcoming store environment

Creating a welcoming store environment can help build customer loyalty by making customers feel comfortable and valued. This can include things like clean and organized store displays, attractive signage and graphics, and comfortable seating areas where customers can take a break and relax. Franchisees can also play background music or provide other amenities to create a pleasant shopping experience for their customers.

For example, a Dollar General franchisee may invest in new lighting and fixtures to make the store look more modern and inviting. They may also create attractive displays of popular products to draw customers in and make it easier for them to find what they are looking for.

Building relationships with customers

Building relationships with customers can be a powerful way to build customer loyalty. Franchisees can encourage their staff to greet customers by name and engage in friendly conversation. They can also create loyalty programs or offer discounts to repeat customers to show their appreciation. Building a relationship with customers can help foster a sense of loyalty and trust, which can translate into repeat business and positive word-of-mouth advertising.

For example, a Dollar General franchisee may create a loyalty program that offers customers exclusive discounts and promotions. They may also send out personalized emails or newsletters to keep customers informed about new products and upcoming sales.

Successful examples of building customer loyalty in a Dollar General franchise include those that focus on providing excellent customer service, creating a welcoming store environment and building relationships with customers. Franchisees who prioritize the needs and preferences of their target customer base, provide a positive shopping experience and foster a sense of loyalty and trust with their customers are more likely to succeed in the highly competitive retail market.

Technology in Managing a Dollar General Store

Technology plays a significant role in managing a Dollar General franchise efficiently. By adopting the right technology tools, franchise owners can streamline their operations, improve customer experience, and boost sales. Here are some technology tools that Dollar General franchise owners can leverage to run their stores effectively:

Point-of-sale systems: 

A point-of-sale (POS) system is an essential technology tool for managing sales transactions and inventory. A good POS system allows franchise owners to track sales, monitor inventory levels, and generate reports. This information helps franchise owners make informed decisions about stock management, pricing, and promotions. Dollar General provides its franchisees with a POS system that is tailored to the needs of their business.

Inventory management: 

Effective inventory management is crucial for a successful Dollar General franchise. Franchise owners need to ensure that their stores are well-stocked with the right products to meet customer demand. An inventory management system can help franchise owners track inventory levels, monitor sales trends, and forecast demand. By using an inventory management system, franchise owners can ensure that their stores have the right products at the right time.

Marketing and advertising tools: 

Technology tools such as social media, email marketing, and digital signage can help Dollar General franchise owners reach their target customers and promote their products. Social media platforms such as Facebook and Instagram are effective channels for engaging with customers and promoting products. Email marketing is another powerful tool that franchise owners can use to send promotions, discounts, and other marketing messages directly to their customers’ inboxes. Digital signage, such as electronic billboards and kiosks, can be used to display promotional messages and product information in-store.

Security and surveillance: 

Security is a top priority for Dollar General franchise owners. By using surveillance systems, franchise owners can monitor their stores for theft and other security risks. Security cameras can be installed inside and outside the store to monitor customer activity and detect any suspicious behavior. In addition, access control systems can be used to limit access to sensitive areas such as stockrooms and cash registers.

Maintaining Cleanliness and Safety Standards

Maintaining cleanliness and safety standards is crucial for the success of a Dollar General franchise. A clean and organized store can enhance the shopping experience for customers and help build trust and loyalty. Moreover, ensuring that the store complies with all relevant regulations and standards is essential for avoiding any legal or financial liabilities.

Store layout and organization: 

The store layout and organization play a significant role in maintaining cleanliness and safety standards. The store should be well-organized and free of clutter, with products placed neatly on shelves. There should be clear pathways for customers to navigate the store without any obstacles, and the checkout area should be free of congestion. The store should also have clearly marked emergency exits and signage to guide customers in case of an emergency.

Cleaning and maintenance schedules: 

Regular cleaning and maintenance are essential to keep the store clean and well-maintained. The store should have a cleaning schedule that outlines the frequency of cleaning tasks, such as mopping floors, wiping down surfaces, and cleaning restrooms. The schedule should also include a list of cleaning supplies and equipment needed for each task. Maintenance tasks, such as checking and replacing light bulbs, repairing damaged fixtures, and ensuring that equipment is in good working condition, should also be scheduled.

Safety protocols and procedures: 

Dollar General franchise owners must establish safety protocols and procedures to ensure the safety of customers and employees. This includes procedures for handling accidents, such as slips and falls, and emergency situations such as fires or natural disasters. It is also important to ensure that employees are trained in first aid and CPR and have access to a first aid kit.

Compliance with regulations and standards: 

Finally, franchise owners must ensure that their store complies with all relevant regulations and standards, such as food safety regulations and fire safety codes. They should also stay up-to-date on any changes to regulations and standards that may impact their store’s operations. Failure to comply with regulations and standards can result in fines, legal action, and damage to the store’s reputation.

For example, Dollar General has faced legal action in the past for violating environmental regulations, which resulted in the company paying millions of dollars in fines. Therefore, maintaining cleanliness and safety standards is not only essential for customer satisfaction but also for avoiding any legal or financial liabilities.

Optimizing Merchandising and Store Layout

Dollar General franchise owners can improve their store’s performance and profitability by optimizing the merchandising and store layout. The following are some tips and strategies for effective merchandising:

Understanding product categories and customer needs:

To optimize merchandising, franchise owners need to understand their customers’ needs and preferences. By understanding the most popular product categories and brands, franchise owners can stock their stores with the right merchandise that customers are looking for. They can also use sales data to identify trends and patterns in customer behavior, which can help them make informed decisions about merchandising.

Stocking and replenishing inventory:

Maintaining adequate inventory levels is essential for a successful Dollar General franchise. Franchise owners need to ensure that they have enough stock of popular products and that they can replenish their inventory quickly. They can use inventory management software to track their inventory levels, monitor sales data, and forecast demand.

Visual merchandising and product displays:

Effective visual merchandising can attract customers and encourage them to buy more products. Dollar General franchise owners can create eye-catching displays and product arrangements to highlight their most popular items or promote new products. They can also use signage and banners to draw attention to their promotions and discounts.

Pricing and promotions:

Pricing is a critical factor in merchandising, and Dollar General franchise owners must set their prices competitively. They can also offer promotions and discounts to attract more customers and increase sales. Promotions can include BOGO (buy one, get one) offers, discounts on bulk purchases, and seasonal sales.

By implementing these strategies, Dollar General franchise owners can optimize their store’s merchandising and layout, attract more customers, and increase sales.

Managing Finances and Accounting

As a Dollar General franchise owner, it is important to have a solid understanding of your financial situation and to develop a budget and forecast to help guide your decision-making. This will help you to plan for expenses and investments in the future. You should consider factors such as sales, expenses, and seasonality when developing your budget and forecast.

Bookkeeping and record-keeping

Keeping accurate and up-to-date records is crucial for managing the finances of your Dollar General franchise. This includes tracking sales, expenses, payroll, and inventory. You may choose to use accounting software to help with bookkeeping, or you can hire a professional bookkeeper to manage these tasks for you.

Tax planning and preparation

Tax planning and preparation is another important aspect of managing the finances of your Dollar General franchise. You will need to stay up-to-date on tax laws and regulations, and you may want to consult with a professional tax accountant to help you manage your tax liability and ensure compliance.

Managing expenses and cash flow

Managing expenses and cash flow is critical for the success of any business, including a Dollar General franchise. You should regularly review your expenses to identify areas where you can cut costs and improve profitability. Additionally, you should monitor your cash flow to ensure that you have enough cash on hand to cover expenses and invest in the growth of your business.

Understanding federal, state, and local regulations

Owning a Dollar General franchise comes with a range of legal and regulatory requirements. Franchise owners need to ensure that they comply with federal, state, and local regulations relating to employment, taxation, health and safety, and other areas. These regulations can vary depending on the location of the store, so franchise owners must be aware of the specific requirements in their area.

Compliance with employment laws and regulations

Franchise owners must ensure that they comply with all employment laws and regulations, such as minimum wage and overtime requirements, anti-discrimination laws, and workplace health and safety regulations. Failure to comply with these regulations can result in legal action, fines, and damage to the reputation of the franchise.

Protecting intellectual property

Dollar General franchise owners must ensure that they protect the intellectual property of the company, including its trademarks and copyrights. Franchise owners must follow the guidelines provided by Dollar General regarding the use of their brand and intellectual property.

Maintaining licenses and permits

Franchise owners must obtain and maintain all necessary licenses and permits required by federal, state, and local governments. These may include business licenses, sales tax permits, and health and safety permits.

It is important for franchise owners to stay up-to-date with any changes in regulations that may affect their business. They can do this by consulting with legal and financial experts and by attending industry conferences and training sessions.

Economic Trends and Consumer Behavior

Like all businesses, Dollar General is affected by economic trends and fluctuations. Understanding these trends can help franchise owners make informed decisions about their operations and strategies. For example, during an economic downturn, consumers tend to be more value-conscious and may turn to discount retailers like Dollar General for their shopping needs. In contrast, during a period of economic growth, consumers may be more willing to spend money on higher-priced items and luxury goods.

Adapting to changing consumer behaviour:

Consumer behaviour is constantly changing, and it is important for Dollar General franchise owners to adapt to these changes to remain competitive. For example, as more consumers turn to online shopping, Dollar General may need to develop a stronger e-commerce presence to meet the needs of these customers. Additionally, as consumers become more interested in health and wellness, Dollar General may need to stock more organic and natural products to cater to this trend.

Identifying emerging opportunities and challenges:

By staying up-to-date on emerging trends and developments, Dollar General franchise owners can identify new opportunities and potential challenges that may affect their business. For example, as the population ages, there may be an increased demand for products and services that cater to seniors. Alternatively, changes in regulations or supply chain disruptions may pose challenges to the franchise.

Staying informed and proactive:

To successfully navigate economic trends and changing consumer behaviour, it is essential for Dollar General franchise owners to stay informed and proactive. This can involve regularly monitoring industry news and trends, attending conferences and workshops, and networking with other franchise owners to share knowledge and best practices. Additionally, franchise owners may need to be willing to adapt their strategies and operations as needed to stay competitive and meet the needs of their customers.

Final thoughts

In this guide, we have covered various aspects of owning and operating a Dollar General franchise. We started by understanding the history of the franchise and the requirements for owning one. We then explored the benefits of owning a Dollar General franchise, such as an established brand and reputation, a proven business model, access to products and supplies, and ongoing support and resources. We also discussed various strategies for building customer loyalty, managing staff, utilizing technology, maintaining cleanliness and safety standards, optimizing merchandising and store layout, managing finances and accounting, navigating legal and regulatory requirements, and staying informed about economic trends and consumer behaviour.

Owning a Dollar General franchise can be a lucrative opportunity for entrepreneurs who are willing to put in the effort to manage the store effectively. It is essential to understand the requirements and challenges of owning a franchise, as well as the support and resources that are available. By implementing the best practices and strategies outlined in this guide, franchise owners can increase their chances of success.

If you are interested in owning a Dollar General franchise, we encourage you to research the opportunity further and reach out to Dollar General for more information. Remember that owning a franchise is a significant investment, and it is crucial to do your due diligence and make an informed decision.

FAQs on Dollar General franchise:

How much does it cost to open a Dollar General franchise?

The cost to open a Dollar General franchise varies based on several factors such as location, store size, and inventory. However, the estimated initial investment ranges from $250,000 to $700,000. This includes franchise fees, inventory, supplies, and equipment.

What are the requirements to own a Dollar General franchise?

To own a Dollar General franchise, you need to meet certain requirements such as having a minimum net worth of $1.5 million and liquid assets of $750,000. You should also have prior experience in retail or general business management. Additionally, you should be willing to devote yourself full-time to operating the franchise.

Does Dollar General offer to finance for franchisees?

Dollar General does not offer direct financing for franchisees. However, they may provide a list of recommended lenders and financial institutions that offer financing options to qualified franchisees.

What kind of training and support does Dollar General offer to franchisees?

Dollar General provides comprehensive training and support to franchisees, including a 4-week training program that covers all aspects of running a store. Additionally, franchisees receive ongoing support, including access to a dedicated franchise support team, marketing materials, and advertising support.

How much can I make as a Dollar General franchisee?

The income potential for a Dollar General franchisee varies based on factors such as location, store size, and sales volume. According to the company, the average annual revenue for a Dollar General store is approximately $1.7 million. However, individual results may vary.

How long does it take to open a Dollar General franchise?

The process of opening a Dollar General franchise typically takes around 6 to 12 months from the initial application to the store opening. This includes site selection, financing, training, and store build-out.

Can I own multiple Dollar General franchises?

Yes, franchisees are allowed to own multiple Dollar General franchises. However, the company has specific criteria for approving multi-unit ownership, including financial stability and prior success as a franchisee.

How much does it cost to open a Dollar General franchise?

The total cost to open a Dollar General franchise ranges from $250,000 to $1.5 million, depending on various factors such as location, size of the store, and inventory. This includes the initial franchise fee, which ranges from $20,000 to $30,000, as well as the cost of building and equipping the store, inventory, and working capital.

How long does it take to open a Dollar General franchise?

The length of time it takes to open a Dollar General franchise can vary depending on factors such as location, permits, and construction. On average, the process can take between 6 and 12 months from the time of signing the franchise agreement to the opening of the store.

Do I need retail experience to own a Dollar General franchise?

While retail experience is not necessarily required, it is preferred for potential franchisees. Dollar General seeks franchisees with a track record of success in retail or business management. However, they do provide extensive training and support to help franchisees succeed.

Can I own multiple Dollar General franchises?

Yes, it is possible to own multiple Dollar General franchises. However, it is important to note that each franchise requires its own initial investment and ongoing fees. Additionally, potential franchisees must demonstrate their ability to effectively manage multiple locations.