Can You Finally Open a Dollar General Franchise Store? (Cost Analysis)

There’s always something about the word “dollar” on a store sign that manages to turn heads and reels-in value oriented customers. Coupled with the mindset that everything in this store is priced at an affordable rate, it’s no wonder that dollar stores are widely known across all parts of the United States.

Dollar General is one of these dollar stores that have made waves all over the country. Though all items they offer aren’t strictly $1 anymore, they still maintain deeply discounted prices so everyone can access groceries, treats, stationary, personal care items, cleaning supplies, and other knick knacks. The company has grown to 20,000 units since opening in 1939 and the discount retailer is ranked 108th in Fortune 500’s 2024 list.

How much does it cost to open a Dollar General store? If Dollar General is your dream business to operate then we’re here to give you a reality check. Unfortunately, they don’t allow franchising at this time. But there is a silver lining. You can take our 7-minute franchise quiz to find an opportunity that fits your interests and budget. 

While you can’t own a Dollar General store, there are other dollar stores you can franchise. Franchise fees can be anywhere between $20,000 to $50,000 and an initial investment of $75,000 to $400,000. You would also probably need a liquid capital of more than $200,000.

We’ll discuss more of this below so read on to know more about the possible franchise fees Dollar General might require should they start accepting franchising, what their annual revenue is, and what other facts and franchise details to expect from operating this well-renowned dollar store.

Financial Requirements and Fees

Dollar General is a privately owned company. Their financial requirements on how to franchise and operate one of their stores are not known since they don’t allow franchising. But here is an estimated number on how much franchising fees based on concepts similar to Dollar General.

If you’re wondering where we got these estimates, these are the fees needed when you open other dollar stores concepts like Just-A-Buck, Mega Dollar Store, and Dollar Discount Store of America. Out of all the three, Mega Dollar store is the most affordable one with an investment fee of $84,900 for a 1,000 sq. ft. store selling $3 items.

Larger Mega Dollar stores of 10,000 sq. feet will require a larger investment between $372,900 and $392,900. The prices change depending on the square footage of your store and the supplies you wish to sell with items up to $10 or less. The area you plan to open the store will also impact startup costs as the monthly lease, permits, taxes, and cost of labor will varies depending on where you live.

But you also might be wondering if there really is no hope at all to do business with Dollar General. There is one way you can sell Dollar General items and earn money from them by joining their supplier diversity program.

Not Sure What Franchise to Start? Take Our 7-Minute Franchise Business Quiz!

Dollar General’s supplier diversity program is for suppliers who wish to supply Dollar General with their products. The program is open to U.S. owned businesses operated by a female, minority, LGBTQIA+ community member, veteran, and/or a person with a disability that has at least 51% ownership of the business. To partner with Dollar General, you may visit the link here.

Average Sales / Revenue per Year

Being on Fortune 500’s list is considered a big deal. And for Dollar General to get there, you know they’ve reached the pinnacle of business performance.

In 2022, Dollar General reached net sales of $37.8 billion. Dollar General reached $9.7 billion in the third quarter of 2023. Sales increased to 2.4% for the same quarter of the previous year. The company hasn’t released their 4th quarter results at the time of this writing.

Dollar General Franchise Facts

Dollar General started in Scottsville, Kentucky in 1939 by J.L. Turner and his son Cal Turner. Before Dollar General, the family-owned business was known as Turner’s Department store before the concept and name were changed.

At first, Dollar General would sell items with a price tag for a dollar only. They were best known for their $1 pink corduroy pants for men and greeting cards that sold for 2 pieces for only $1. Today, items that you can find in Dollar General range from office and household supplies, medicine, toys, electronics, pet care, cleaning aids, personal care, and even food and beverage.

What came with the change in times was also the change in prices. Dollar General still sold $1 items. But a majority of their products are priced under $10. Only 25% of the products at a Dollar General store is now $1 or less.

Dollar General is known to carry big brands including products from Energizer, Coca-Cola, Unilever, Clorox, PepsiCo., Hanes, Nestle, Procter & Gamble, Kellogg’s, Mars, General Mills, and Kimberly-Clark.

Dollar General also owns Dollar General Market, a grocery store that’s considered bigger than a usual Dollar General. The market division sells more produce, meat, and other grocery items than their smaller stores which sell more general merchandise.

The retail company has also started opening DGX, a small store concept that focuses on grab-and-go items such as sandwiches, salads, electronics, home cleaning supplies, and more. The first of this kind opened in Nashville, Tennessee in 2017.

At present, Dollar General has over 170,000 employees and is run by Chief Executive Officer Todd J. Vasos. Company headquarters is in Goodlettsville, Tennessee.

How Much Does Dollar General Make in Profit?

Dollar General’s gross profit for the year 2023 was recorded to be $11.82 billion. There has been an increase in their profit by 9.31% from 2022. This is considered quite impressive. Many retailers have struggled to adapt to consumer demand that’s shifting from malls to online retail. But Dollar General has thrived and performed even better in today’s environment.

But Dollar General seems to have survived the year with increased earnings. And with the company continuing to expand to this day, we can expect their future sales might just match or beat their present numbers.

Advantages of a Dollar General Franchise

Now let’s say you are able to franchise a Dollar General. Let’s say you are granted to operate one of their branches near you. Does being a Dollar General franchise operator have any advantages?

Here we have a few for you to take note of:

Affordable Items

From the name itself, Dollar General is known to sell affordable items. Though not everything in the store will be a dollar, you can get white bread that’s cheaper compared to Walmart. Dollar General’s white bread is around $2.80 while at Walmart it’s about $3.42. Looking for toothpaste? Dollar General sells Crest Cavity Protection toothpaste at $1.00 for 2.9 oz $3.85 while at Walmart you get it at $2.12 for 5.7 oz. Of course, these prices are subject to change at any moment.

Related Reading: How Much Does It Cost to Open a Trader Joe’s?

With this kind of bargain, value shoppers turn to Dollar General store rather than shop at a usual grocery store for their needs.

No-Frills Shopping Experience

Having a Dollar General store means offering a no-frills shopping experience for everyone. You don’t need to worry about any fancy display or any promotional ad to put out. And from a business perspective, swapping out merchandising and making seasonal promotion banners to describe all sale all takes up marketing budget.

The fact that the store just sells items less than $10 has people coming in to take a look at what you’re selling. And more often than not, customers come in looking for one specific item but come out with additional supplies in their hands. If you can bring people into the store for one thing, there’s a good chance they’ll buy more.

Big Company

Though Dollar General is a simple store, the company has grown into a huge corporation. As mentioned previously, the company foot print is now at 20,000 stores and continues to grow. The corporation is continuously thinking of more ways to expand from Dollar General Market to DGX to Popshelf. So as an investor, you know you’re in good hands because if you own a Dollar General. The company is constantly innovating and reinventing itself.

Viewed as an essential business

Over the past two years, some businesses have been forced to temporarily shutdown due to health concerns. But dollar store businesses have been able to stay open as they were viewed as an “essential business” that sell necessities like food, soap, and other indispensable items.

Before opening any type of retailer store, you’ve got to honestly evaluate the risk of the concept. By opening a dollar store that sells food items, you can feel more comfortable knowing local government or health authorities are unlikely to temporarily shut down the business.

Challenges of a Dollar General Franchise

Running a business is not always rainbows and butterflies. Though we’ve mentioned all the advantages in the event you could run a Dollar General franchise, there are still challenges with any business. Below are some of the things you should be aware of before opening any type of dollar store concept.

Minimal Staffing

There have been reports of Dollar General stores being understaffed. This is apparently part of the company’s business model and is one of the reasons why they are able to expand quickly and operate profitably. However, having a minimal staff in one store can lead to overworked and disgruntled workers.

Messy Stores

You might have noticed how Dollar General stores can sometimes be messy. It’s like the items haven’t been arranged really well or the display is in a disarray. Well, that’s the cause of minimal staffing as mentioned above. But they’ve really become known for it. It’s like a part of the customer expectation at this point.

The obvious solution to messy stores is to hire more workers so your staff doesn’t have to run between cashiering and fixing the shelves. But more staff means more expenses that cut out profitability. Until then, your staff will have to multitask to get things done which means you’re back to your messy store problem.

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Expired Products

Dollar stores are notoriously known for selling expired products or items that are close to their expiration date. Hence, the affordable prices. But whether or not this is intentional, operating a dollar store means you’ll be getting lots of complaints about this. Dollar General has addressed this issue so you can only hope the stocks you get will have longer expiry dates.

Is the Dollar General Franchise Right For You?

With all the data provided above, the Dollar General store is a profitable business that could be a promising franchise opportunity if it ever becomes a real option. If you’re passionate about running a retail store, this type of retail business for you. However, there is no definite date as to when Dollar General will be open for franchising so you might want to look for other dollar stores concepts that you could operate now. Fortunately, you’ve got a few options.

What is an alternative Dollar General franchise?

Other stores you might want to look into are the following:

• Just-A-Buck – This dollar store requires an investment of $100,000 to $300,000 and a franchising fee of $50,000.
• Mega Dollar Store – For a 1,000 sq. ft. store selling $1 items, you’ll need an investment fee of $84,900
• Dollar Discount Store of America – Investment starts at $99,000 to $195,000 with a franchise fee of $18,000 and a royalty fee of 3%.

Any of the options above will allow you to open a similar dollar store retail location.