Home Depot is one of the largest home improvement retailers in the United States. As of March 2021, the number of store locations reached over an astounding 2100 stores nationwide. Let’s know ‘Is Home Depot a Franchise?’
For a business or company to become a franchise, its products, brand, etcetera, will be licensed for a franchise fee to the public. An entrepreneur will pay this fee to purchase the franchise. Now, you may be wondering whether Home Depot is also a franchise? Well, keep on reading to find out more.
Home Depot is not a franchise. Even though the company has numerous stores both national and internationally, they are not individually owned. Home Depot is a publicly-traded company. All Home Depot stores are run by a group of Shareholders, a Board of Directors as well as the current CEO-Craig Menear.
There are many benefits to profit from after licensing a business/company as a franchise. These advantages are ongoing and beneficial to the owner, as well as the public.
Not only will the Brand or company have a higher growth rate but also, the owner will not have to lay out his capital for this growth of the business.
As for the public, an entrepreneur will be able to purchase a guaranteed successful business, only for a franchise fee.
With advantages such as these, one may wonder why such a big brand like Home Depot is not a franchise? Let us delve deeper to find out more about the multibillion-dollar company.
All There Is to Know About Home Depot and Why, It Isn’t a Franchise.
Home Depot was co-founded in the year 1978 by Bernard Marcus, Arthur Blank, Ron Brill, and Pat Farrah. The company’s headquarters is based in Cobb County, Georgia in Alaska.
They aimed to build the largest home improvement retailer store that would surpass all their competitors by far. Given the size of the stores and the number of products offered to their customers, Home Depot has surpassed its founder’s expectations.
The stores are very large and exceed over 100,000ft2. The items inside the store are organized in a warehouse-style setting.
There is a surplus number of supplies as these stores cater to a large group of customers. The online website of the store, homedepot.com, attracts over a 100million users annually.
Currently, Home Depot has over 90 distribution centers to serve the 2000 plus stores in the U.S. alone.
Home Depot has purchased a few companies under its wing, and these companies can provide a wider range of items and services to Home Depot’s customers.
These 7 interline brands are listed below:
- Wilmar Industries (MRO)
- Barnett (MRO, Contractor Supplies)
- SupplyWorks (janitorial, packaging, MRO)
- US Lock (keys, security devices)
- Hardware Express (hardware supplies)
- Maintenance USA (MRO)
- Leran Gas Products (propane accessories)
For a company to be let out as a franchise, the stores, brand, or products will be given to an entrepreneur at a set franchise fee. After the entrepreneur purchases the franchise then he/she will become a franchisee.
The franchisee will then receive support and goods from the franchise. There will also be a franchise contract with guidelines stipulated for the franchisee to adhere to.
When looking at the vast amount of items sold at Home Depot, as well the size of the infrastructure that makes a Home Depot store, it would be unreasonable to make the store a franchise as the fee would be too much compared to other franchises out there.
There are a few disadvantages to listing the company as a franchise as well. If Home depot would become a franchise, it would no longer be run by the CEO.
The Individual store owners would control their stores and implement their ideas, however still abiding by the franchise guidelines on the contract.
Home Depot would also no longer be in control of all the profits received. The profits gained by the franchisee’s stores will stay with the franchisee.
Who owns Home Depot?
Home Depot stores are not individually owned. All stores are under the same parent company and are run by a board of directors, a group of shareholders, and the current CEO – Craig Menear.
Home Depot is currently a publicly-traded company. The current shareholders and the percentage stakes they have in the company are listed below.
- The Vanguard Group, Inc. has an 8.49% stake,
- S SgA Funds management, Inc. has a 4.54% stake,
- BlackRock Fund Advisors has a 4.41% stake,
- Capital Research and Management Co… has a 3.91% stake,
- Fidelity Management and Research Co… has a 1.69% stake,
- Wellington Management Co. LLP has a 1.56% stake.
One could go on to call these shareholders, the owners of Home Depot.
Conclusion
Home Depot is not a franchise. The large home improvement retailer is a publicly-traded company. There are no individual store owners, and the company is not privately owned.
Home Depot is run by a Board of directors, a Group of Shareholders, and the CEO. These are the people who govern all Home Depot stores, including their online store.
The reason why Home Depot cannot be a franchise is because of the size of the store as well as the number of items sold in each store.
The capital required from an entrepreneur to get the infrastructure of the store built, including the items for sale, would be immense when added to the franchise fee.
It would not be feasible for Home Depot to become a franchise any time soon as there would be a lot of negatives for the company, and entrepreneurs, to consider.
