Opening your own vape shop franchise can feel like stepping into the unknown — especially if you’ve never owned a business. But with vape shops growing in popularity, now is the time to dive in.
Before opening your vape shop, start with research — especially around rules and regulations. Vape and tobacco franchises operate in a regulated industry, and staying compliant will help you succeed.
In this blog, we’ll share the steps it takes to open a vape shop franchise, including research, regulatory considerations, business operations, and more. You’ll even learn how the right technology can make managing several locations much easier.
Why Open a Vape Shop Franchise?
The electronic cigarette and vape shop market is booming. It was valued at $8 billion in 2023 and has grown at a rate of almost 4% per year for the past five years — and that trend doesn’t appear to be slowing down. The market is hot, which makes now the perfect time to open a vape shop franchise.
When it comes to opening a stand-alone vape shop rather than a franchise, the benefits are the same: you get to be your own boss and make a living doing what you love.
However, there are even more benefits to opening a franchise. There’s a ready-made business model, you receive marketing assistance, you already have brand recognition, and the franchise helps you handle legalities and excessive taxation.
And while vape shops generate annual revenues of around $300,000, it’s important to remember two things: first, you won’t make that money right away, and second, you have to factor in startup costs.
Here are a few quick stats:
- Average startup cost: $30,000 to $70,000
- Time to set up: 3 to 6 months
- Estimated monthly cost for inventory: $6,000 to $11,000
- Estimated monthly sales: $9,000 to $30,000 (first 2 years)
Note that these estimates vary based on building size and location. It’s also a good idea to have a few months’ worth of working capital, in case your vape shop franchise doesn’t take off right away.
In the next section, we’ll share eight tips to aid with the opening of your vape shop franchise.
1. Research the Vaping Market
Start by researching the vape store market in your area. This research will help you understand how many vape stores already exist and whether it’s already saturated.
Once you decide on a location, do some research to find your target audience. Consider demographics, psychographics, and buying habits. Find out where your ideal customers live, work, and shop. Once you have that area nailed down, you’re ready to start assessing the competition.
While you’re looking at existing vape stores in the area, make note of the products they sell, their pricing, whether they sell online, and their marketing efforts. This will help you later, and we’ll explain more below.
2. Write a Business Plan
A solid business plan outlines the goals of your business, how you’ll reach those goals, and the time frame for achieving them. Now that you have a handle on your competition and demographics in your chosen location, it’s time to crunch the numbers for your startup costs.
Think about rent, inventory, equipment, and marketing. Use this information to build a detailed budget for your first year. Set realistic financial goals, and consider what a good vape shop profit margin is. Then outilne how you plan to start making a profit. Creating a budget will help you stay on track and set more goals for the future.
You’ll also need to answer these questions:
- What are your short-term goals?
- What are your long-term goals?
- What is your five-year plan?
- How will you set yourself apart from the competition?
Related Read: ANSWERED: How Much Does it Cost to Open a Tobacco Shop?
3. Choosing the Right Franchise
Investing in the right franchise can make or break the success of your vape shop. The most important thing to do is research and you’ll find a match that works with your lifestyle and business goals.
First things first: Keep in mind that franchise startup fees will cost anywhere between $10,000 and $20,000, in addition to other startup fees.
Factors to consider when selecting a vape shop franchise:
- Brand recognition: What are their marketing efforts like? Have you seen them advertised before? Poll your friends and family about whether they’ve ever heard of that brand.
- Brand reputation: Read reviews of the franchise on Yelp, Google, and social media. Does the franchise respond to negative reviews?
- Brand integrity: Do the franchise's beliefs and values align with yours? Do they live up to their own beliefs and values?
- Product quality: While you’re reading franchise reviews, also look for what people are saying about the products, and do your own research on individual product reviews.
- Training and support: How much support does this franchise give new owners? If you’ve never opened a business, it’s important to know they’ll be there to guide you.
- Exclusive territory rights: Some franchises offer exclusive rights to operate within a defined territory.
- Franchise agreement: Go over the agreement with a lawyer to make sure you aren’t stepping into a contract that doesn’t align with your goals or that will be impossible to leave should your life change.
Once you find the perfect franchise partner, get excited! You’re one step closer to opening your own vape shop.
Related Read: How To Open a Cigar Lounge: A 4-Step Checklist
4. Understand Local Regulations
A franchise will help you navigate licensing, permits, and other legalities, but it’s a good idea to have a basic understanding as you get started.
Check your local area for specific laws and regulations to make sure your franchise isn’t in a prohibited jurisdiction.
Read up on the Food and Drug Administration’s (FDA) tobacco retailer and manufacturer regulations to ensure you meet compliance. Noncompliance with any regulations will result first in a warning letter, followed by fines starting around $300 and rising depending on the severity and length of noncompliance.
Paying fines can be crippling to your franchise, but it does more than monetary damage — expect reputational damage, possible operational disruptions, and harsher penalties if your store fails inspections again.
Related Read: How to Obtain a Tobacco Retail License: 5 Steps
5. Conduct Financial Planning
In addition to franchise fees, you must account for many other expenses when opening a vape shop franchise. Here’s a breakdown:
- Furnishings: $5,000-$15,000 (depending on store size)
- Business registration: $500
- Permits and licenses: $500
- Business insurance: $650
- Initial store space rental (12 months): $42,000 (rates vary)
- Phone, internet, and utilities: $300-$700
- Point of sale system: The cost of your point of sale system will depend on multiple factors. Estimate your cost here.
Later, you’ll add employee wages, which can cost anywhere from $2,500 to $3,500 per month.
Related Read: Smoke Shop Product List: 23 Products Every Smoke Shop Needs
6. Determine How To Handle Inventory Management
Your initial inventory purchase is a big investment and sets the tone for your store’s launch. If you’ve chosen a reputable franchise partner, you won’t have to worry too much about product quality, but you do need to make sure inventory isn’t damaged when it arrives.
Think of stocking your vape shop as curating a collection of products specifically chosen for your target audience. To make the most of your inventory and keep costs in check, focus on building solid relationships with reliable vendors. They can help you get the best products at the best prices, which will give your vape shop a great start.
Also keep your storage space in mind. If all you have is a backroom, don’t order more products than you can sell.
To get an accurate view of your inventory, invest in a POS system that will help you keep track of everything from inventory to purchase orders, sales, forecasting, and reordering.
Cigars POS will help with high-risk payment processing, age verification, inventory management, customer loyalty, sales, and more. Use our unique build and price tool to find the package you need with no costly extras.
Related Read: The Tobacco Point of Sale System Buyers' Guide
7. Hire and Train Staff
The average pay for a vape shop employee is between $9 and $13 per hour, but rates will vary by location. Train your staff to offer excellent customer service, because friendly, knowledgeable, and approachable team members will help build a loyal customer base.
Also train your staff on clear policies for handling questions, returns, and warranties and how to use your POS system.
Creating a positive work culture means your employees will enjoy coming to work, especially when you offer commission or other sales incentives.
Last, don’t forget to solicit feedback. You may think everything is working fine, but listen to your staff to see where you can improve. When they feel heard, they also feel valued.
8. Open Your Vape Shop Franchise
Opening day is here! Your vape shop franchise will help with marketing promotions, but make sure you help spread the word too! Post fliers around town, send a press release to local news organizations, and schedule posts to your social media channels.
Just be aware of marketing restrictions imposed by the FDA. You’re not allowed to buy or post ads for your products on Google, social media, or television.
As a general rule, your marketing should:
- Be accessible to people of legal smoking age only
- Display health warnings
- Use imagery that does not appeal to underage people
- Complies with tax laws
To celebrate your big day, plan for food, drinks, sales, and door prizes. Chat with customers when they arrive, and encourage them to sign up for your customer loyalty program for other great perks.
Related Read: The Ultimate Guide to Effective Tobacco Marketing
Launch Your Vape Shop Franchise with Cigars POS
You’re on your way to opening a vape shop franchise! With a solid business plan, market research, and a good franchise partner, you’ll build a solid foundation for success and growth.
The right technology can make managing one or multiple vape shop franchises easier. With Cigars POS, you can add and edit inventory items, search for inventory items, and mix and match promotions. Plus, you can manage spending, sales, and employees all in one place.
Schedule a demo today to learn how Cigars POS can improve your profits and streamline transactions.
