The Vitamin Shoppe Embarks on Franchising
The Vitamin Shoppe is launching franchises in the U.S., seeking to expand its domestic footprint and capitalize on retail real estate values around the country.
The Secaucus, N.J.- based specialty retailer of vitamins, mineral and supplement products, said it’s the first time in its 44-year history that it is partnering with business owners to operate franchise stores.
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“Now is an especially opportune time to partner with highly motivated entrepreneurs to expand our store fleet,” Sharon Leite, chief executive officer of The Vitamin Shoppe, said in a statement Wednesday. “This new growth strategy is a capital-efficient way to grow our retail footprint in a favorable real estate market, while empowering our franchise partners to create dynamic, locally owned businesses. With the events of the past year, consumers have become more invested in their health and well-being, as reflected in The Vitamin Shoppe’s performance.”
There’s also been a spate of store closings due to COVID-19, bankruptcies and other kinds of restructuring leaving malls and landlords eager to find new retail tenants and willing to negotiate more favorable lease terms.
While franchising can be an efficient way to grow the footprint of a retailer, there are challenges. Companies must provide proper support, training and guidance to the franchisees so company standards and brand image are maintained.
Overseas, The Vitamin Shoppe has four country license agreements in place in Vietnam, Paraguay, Panama and Guatemala. The three licensees each have exclusive rights to own and operate stores and distribute products from The Vitamin Shoppe in their respective countries. There are two stores in Vietnam, three in Paraguay, eight in Panama and 10 in Guatemala. Additional country licenses are expected to be announced in the coming months.
In a country license agreement, the licensee runs all aspects of the retail business for the entire country, including local merchandising strategy, legal registrations for their country, local marketing content (in their local language), online versus retail distribution strategies, any of their own local partnerships and establishing local ambassadors to brand. They basically run the entire business, with our products, branding, IP, and general support.
U.S. franchise partners will have more of a one-stop, turnkey model, where they own and operate the real estate and store, but The Vitamin Shoppe helps provide the products, supply chain, marketing, legal, operations, support, etc. This model is suited to independent operators and entrepreneurs, whereas the international partners are bigger, established companies, according to the company.
The Vitamin Shoppes’ franchise model provides commission to those franchisees that with their stores and service to customers drive sales to the vitaminshoppe.com website and the VShoppe app.
The move to franchising follows other recent innovations by the company, including remodeling stores to make them easier to shop and easier to learn about products, upgrading the loyalty program, and partnerships with among others, WW (formerly Weight Watchers) and Martha Stewart CBD.
The Vitamin Shoppe said the franchise application process would take six to eight weeks. The company hopes the first franchises open before the end of this year. The company’s franchised stores can open in any state in the U.S. with the exception of Washington and Oregon where Vitamin Shoppe operates stores under the Super Supplements banner.
The Vitamin Shoppe, which has more than 715 company-owned shops, is a subsidiary of the publicly owned Franchise Group Inc., whose businesses include Pet Supplies Plus, American Freight, Buddy’s Home Furnishings and Liberty Tax Service. On a combined basis, Franchise Group operates more than 4,600 locations, predominantly in the U.S. and Canada, that are either company-run or -operated under franchising agreements.
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