There are tons of eBay drop off stores popping up such as Orbit Drop, QuikDrop, and AuctionDrop’s relationship with The UPS Store . Many of them are franchises. None of the franchises have a household brand name, so the value of the franchise is in the training. Orbit Drop, for example, receives a fee of 35% of the selling price up to $501, then the percentage reduces free lessens as the sale price increases.
Is the franchise brand, training and support worth the $15,000 franchise few and 6% royalty? Probably not for someone with mild business savvy who has experience selling on eBay. $5,000 franchise fee + 3% royalty would be my limit, which is enough to pay for a good consultant to help you set up and maintain your business systems. Most high volume eBay sellers are already familiar with eBay and the eye-popping 3rd party eBay selling tools. If you are going to open your own store (besides regitering a state and federal trademark for you store’s name), go visit and learn from similar franchises in your area. Spend that $15,000 on your store and marketing.
I think the idea is good, and I was wondering when someone would start these. But, I question at this early stage in the industry whether the ongoing franchise fees of 5-6% will kill the margins need to be worthwhile. Look at other consignment and used reseller franchises such as Winmark’s Play It Again Sports to use eBay as another sales channel.
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April 7, 2005 UPDATE: Imagine this Sold is opening up their fist Canadina franchise. The franchise is fee is on the high side from what we’ve seen with others – $20,000 and for additional stores, $10,000 each. The royalty is 6% of net profit (all shipping & handling profits are excluded from net profits for royalty purposes). There is also a mandatory 4% “art work” fee which they claim is used to maintain signage designs (you still have to pay for all advertising media buys). The typical investment to open a store is between $120,000 and $180,000. That’s a lot of eBay sales ($6000,000 in sales would be needed to cover the high-end investment if you retain 30% of total sales as a selling fee).
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
