5 Reasons to Invest in a Pet Franchise in 2024

Issue #79

July 2nd, 2024

Quick Hits:

💰 This might be the best time to buy this stock

🎇 With the 4th of July just a couple of days away, this new (really) short film from Petco is a reminder that not everyone loves fireworks

🖊️ This new bill would regulate pet insurance statewide

🐈 Psss, cat people, is this your definition of heaven?

In case you haven’t heard, the pet industry is booming. Pets parents are more intentional than ever with their spending. Finding the best foods, daycare, toys, supplements, vet care, beds, and anything else that will enhance their pets' lives. Dogs no longer live outside in the doghouse (unless that doghouse is a lavish dog villa) but sleep in our beds, and are the target of our full love & attention. Some are even full-blown social media superstars.

With this boom in demand comes a new group of entrepreneurs innovating the space. New products, services, expos, and businesses are opening daily to serve this burgeoning industry.

Many entrepreneurs and pet enthusiasts want to get into the space but are not sure how. In fact, We regularly receive emails asking our opinion on how to do just that. Some think a startup is the only way to go. However, there are plenty of established (and some that are newer) franchises that offer great opportunities for those who want to enter the space with a bit more security.

Here are a few of the sectors that you could be a franchisee in:

• Pet food and supply franchises

• Mobile pet grooming franchises

• Pet retail franchises

• Pet grooming franchises

• Pet boarding and daycare franchises

• Specialty pet services franchises

• Pet waste management franchises

• Veterinary franchises

• Pet training franchises

Revenue in pet care services more than quadrupled from 2004 to 2021, reaching $10.7 billion in 2021. According to the latest Economic Census data from 2017, pet boarding services take the cake, accounting for the largest share of total pet care revenue.

So why enter the space as a franchisee? Well, why not?? Here are 5 quick reasons why:

1. Pets are family - 85% of dog owners and 76% of cat owners view their pets as family. As many as 39% of dog owners have cut out expenses in their own lives when money was tight, to afford their pet’s expenses. That’s love, my friends.

2. Growth - The pet industry is experiencing unprecedented growth, contributing $260.5 billion directly and indirectly to the U.S. economy as of 2021. This trend is reflected in the rapid expansion and significant sales growth observed in various pet food franchises, which have added new territories and reported notable increases in same-store sales in early 2024. The U.S. pet industry is expected to grow 7% annually and hit $325B in five years.

3. What’s a recession? Pet-related businesses have proven to be recession-resistant. During economic downturns, such as the 2008 financial crisis and the COVID-19 pandemic, the pet industry experienced steady growth.

4. Consistency and reliability - Most basic dog needs remain constant throughout the year, ensuring that your business can generate steady revenue in both summer and winter (this ain’t a ski shop).

5. The proof is in the pudding - Proven business model, brand recognition, training support, marketing assistance, financing options, networking, operational systems and know-how, and more… The thing that makes franchises so alluring in other industries is applicable in the pet space, with a few distinctions - lower competition compared to other franchise industries; passion-driven; and relatively newer - with plenty of innovations on the horizon.

Opportunities to Consider

Here are 15 companies worth looking into 🔎 

1. PetButler 

   Investment Range: $36,961 to $44,671

   Initial Franchise Fee: $12,500

2. DogDrop 

   Initial Investment: $305,000 - $568,000

   Franchise Fee: 12K + onboarding fees

3. Hounds Town USA

   Total Startup Costs: $338,000 – $770,000

   Initial Franchise Fee: $49,000

4. Earthwise

   Total Startup Costs: $214,500 to $1,138,000

   Initial Franchise Fee: $39,500

5. Camp Bow Wow

   Total Startup Costs: $928,000 – $1,658,500

   Initial Franchise Fee: $30,000 – $50,000

6. Dogtopia

   Total Startup Costs: $688,312 – $1,806,803

   Initial Franchise Fee: $49,500

7. Scenthound

   Total Startup Costs: $201,375 – $369,825

   Initial Franchise Fee: $49,900

8. Easyvet

   Total Startup Costs: $150,000

   Initial Franchise Fee: $35,000

9. Dog Training Elite (for a 3-territory franchise)

   Investment Range: $159,050 - $186,750

   Initial Franchise Fee: $110,000

10. Wag N Wash

    Total Startup Costs: $296,670 – $960,200

    Initial Franchise Fee: $49,900

11. Woof Gang Bakery & Grooming

    Initial investment: $155,300-$280,400

    Initial Franchise Fee: $49,900

12. Pet Supplies Plus

    Total Startup Costs: $454,870-$1,524,200

    Initial Franchise Fee: $49,900

13. Aussie Pet Mobile

    Initial Investment: $179,980-$198,705

    Initial Franchise Fee: $19,950

14. Zoom Room

    Initial investment: $271,660-$407,410

    Initial Franchise Fee: $49,500

15. DoodyCalls

    Startup Costs: $64,025 to $83,450
    Franchise Fee: $50,000

PAWS right there!!! Don’t forget to subscribe 👇👇

Inorganic growth

Over the last couple of months, we covered various items around growth strategy. We know investors care deeply about this (it underwrites their investment in you / your business). So, let's turn our attention to the last topic here - inorganic growth. What is inorganic growth? Put bluntly, it is buying other companies and assets so you can create a bigger business faster. Now, because this activity tends to require more $$, this is a growth strategy that you usually start to employ as your business gets bigger (think scale-up vs. start-up). 

Couple of considerations for you to keep in mind as you explore the "deal-making" route:

• Negotiations & structuring - Agreeing to buy another business could be a complex exercise. How do you actually value a business? Do you pay everything upfront or some now and some later? What do you do if there is a broker in the middle? Are you the only buyer?... you get the point. There are a lot of different questions that come up and ultimately you need to find a deal that works for you and the sellers.

  The point here is that all of these questions (and others) are best tackled with a group, not alone. So, put ego to the side, bring some smart people on board, and try to achieve the best outcome for the business. It's much easier to solve problems with smart people around you.

• Timing - Deals are ultimately about people, so expect the unexpected. Sometimes these things can take 6 weeks and sometimes they can take 18 months. This could be the seller's one chance to maximize his/her return, so you can't blame them for exploring all different avenues (especially if they spent the last 15 years bootstrapping to get to this point). It's not uncommon for sellers to change their minds right before they sign on the dotted line or for another bidder to "magically" show up from nowhere offering 10% more than your offer. Prepare for things to take longer than expected.

• Post-deal considerations - You got the deal done! Congrats!! 9 months of work around the clock have come to an end, so that's it... right?... wrong! Interestingly enough, getting the deal done is only the first step in the journey. Make sure someone in the business "owns" the post-transaction activities and can serve as a point of contact for all relevant parties (on either side).

  Your investors are likely to want recurring updates on how the larger business is doing, so don't drop the ball here. Some investors may even want you to prepare a 100-day plan post-transaction. Whatever it is, be on the front foot, for your sake more than anyone else's!

Each deal will present its own unique challenges, make sure you can rely on your Board or a group of advisors for advice and support. As you do more and more of these, the learning and experience will accumulate, and before you know it, you will be a deal machine!!

You reached the end, you deserve a treat 🍖

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Finally, What happened when the dog swallowed a clock?

He got ticks.

See you Thursday!