Is Target a franchise? (all you need to know)
Target, one of the largest retail chains in the United States, sells a wide variety of merchandise in its stores and online through Target.com.
With more than 1,900 stores nationwide and a well-known brand presence, Target is an ideal opportunity for local business owners looking to operate a franchise. But is Target a franchise business? Here’s what I found out through research!
Is Target a franchise?
Target is not a franchise business. In contrast, Target is operated by Target Corporation and is classified as a general merchandise retailer with more than 1,900 stores in the United States. It was originally known as the Dayton Company, before changing its name to Dayton-Hudson and finally Target Corporation in 2000.
If you want to learn more about the difference between a franchise and a corporation, why some businesses franchise, and why Target doesn’t, keep reading!
Why not target the franchise?
A company like Target may choose not to franchise for a number of reasons. Mainly, though, because they’ve already raised enough money from their existing business and don’t need any further expansion that a franchise can afford them.
Also, they may not want to work with other business partners (franchisees) or take the risk of any liability they assume.
Another reason could be that Target doesn’t want to risk its brand with anyone other than its own direct employees.
Since Target cares so much about its brand presence and store quality, allowing new franchisees to undermine that would be a big risk for the company.
Additionally, because Target stores cost millions of dollars to build and maintain, franchisees’ start-up expenses often far exceed the budget of a Subway or McDonald’s franchise.
how to get involved
While Target doesn’t franchise any of its stores to the public, it does allow anyone to buy its publicly traded stock in the S&P 500 index.
So, if you’re passionate about the Target brand and want to get involved in a different way, investing in a Target company might be the next best thing!
What is the difference between a franchise and a company?
Corporations and franchises have completely different business models. Corporations are owned by shareholders and run by a board of directors, while franchises are partly owned by franchise companies and franchisees, who must pay a fee to use the company’s assets to conduct business.
Beyond that, franchises make money through franchise fees and profits, and create relationship-focused local businesses.
However, it is also solely responsible for the actions of its franchisees, whereas a corporation has limited liability to its shareholders.
Why do companies franchise?
For small businesses, franchising is a great way to expand early and turn a profit without spending too much time, effort, and money.
By contracting a franchisee, a business can leave the job of recruiting to a third-party owner. Franchisees are also making long-term investments, so don’t worry about managers who might jump ship to other roles quickly.
In addition, when franchisees operate branches across the country, businesses can have more room to grow.
It can focus on tackling local marketing and building brand awareness by basing its model on relationships with local customers rather than big brand selection.
What is a franchise?
Franchising is a business model in which individual stores and restaurants are owned and operated locally by local people.
The business will distribute products and services to the franchisor, who will then pay a royalty (and sometimes an initial fee) for the right to do business under the company name.
Franchising is great for large chains as it allows them to build more stores locally through a franchise fee, and individual owners don’t have to worry about marketing since the company handles most of it.
Some examples of franchise companies are McDonald’s, Starbucks, and 7-Eleven.
What is a company?
A corporation is a legal entity separate from its owners. These can be regarded as individuals in law and enjoy the rights and obligations that individuals have.
Additionally, a company is owned by its shareholders (who pay dividends), is run by its board of directors, and is funded by investments and/or profits.
Notable examples of companies include Target, Walmart, and Amazon.
To learn more, you can check out our other posts on whether Walmart, Walgreens, Costco, and Dollar General are franchises.
Conclusion: Is Target a Franchise Company?
Target is not a franchise, but a company owned by Target Corporation, headquartered in Minneapolis, where the first Target outlet opened in 1962. Reasons why it’s not a franchise include Target not needing the additional capital from royalties the expense a franchise would incur, or simply not wanting to work with an outside business partner.
