Everybody is aware of the furniture-producing giant IKEA, right? Yes, they are super famous, even in the Indian market as well. But why so much love for this furniture brand? Well, it is just because they make lovely and practical home furniture that is easy to get without breaking the bank, that’s the best bit about it all. The idea of making the furniture yourself which is the key to the company’s products has been a great success as it saves some cash while using the IKEA style which is highly trendy and contemporary.

The company is well-known for its DIY (Do-It-Yourself) furniture which makes people stand out with their creations. In India, IKEA has increased its footprint with its large retail stores and a wide range of products from home furniture to office furniture and even to little businesses, did you know that already? Well, if your entrepreneurial mind is telling you something, well then, you should definitely get to know about their franchise opportunity. Today, we will be taking a good look at a few things like what IKEA franchise cost in India, what is their main Revenue and Profit Sharing Structure, and what the ROI looks like. So, here we go.

What is the Cost of Starting an IKEA Franchise in India?

If one thinks about starting an IKEA franchise in India, they should know that it is a high investment, at least that we can say for sure. So, if you are here just to know the cost and where every rupee you spend will be used, then just check out the investment breakdown given below.

• Infrastructure Investment: To start an IKEA store, the investment of Rs. 1 crore to Rs. 3 crores is the requirement. What exactly do you get with that? Well, just to give you an idea, this covers a wide range of activities such as space renovation and the staging of products, and it is necessary for the store to comply with IKEA’s design standards.
• E-Commerce Setup: As you may already know, like, nowadays it is necessary to have a competitive strong online presence, thus a new e-commerce website will need to be created and also be maintained.
• Marketing and Advertising: As you can already see everything is going online, but still, marketing is one thing that is important both offline as well as online. Sure, that’ll also cost money, you know, to let people know about your store.
• Hiring Employees: IKEA customers should be provided with the service expected from trained staff so proper training must be given to the recruits one will hire, you know?

While IKEA has not given an official franchise fee, setting up the infrastructure and infrastructure costs are considerable. Nevertheless, it must be mentioned that the brand power and popularity of IKEA suggest great returns on this investment, so just keep that in mind if you have any rising doubts.

Revenue and Profit-Sharing Structure

We must say that the, perhaps surprising, fact is that most of the revenue earned through IKEA franchise sales goes directly to you. Yes, we know that is kinda hard to believe at first, but that’s how it is with the IKEA franchise opportunity. The franchisees stay under a predominantly 92-8 splitting system where 92% is the portion remaining with the franchisee while the rest, 8%, goes to IKEA as a royalty fee.

The licensing structure of the IKEA franchise allows a retail outlet owner to keep a major share of the profit, thus providing him an upper hand over other retail formats. After that, what is left is the managing of on-going expenses like, inventory, salary payment, and advertisement of the establishment, and that’s all.

Timeframe for Return on Investment (ROI)

Well, we know that the question “How long will it take to get my money aka the initial investment back?” is one of the first that prospective franchisees pose. The answer is based on several factors, namely location, market demand, and operational efficiency. With this one, on average, it takes close to 1.5 to 2.5 years for investors to earn back their investments and for profitable operations to start.

Just so you know though, in addition, the actual store setup can take a period of 3 to 4 months on average. This involves tasks like the store’s design, the stocking of the inventory, and the training of workers, and as you can tell, that takes time.