Ace Hardware was first opened in 1924 to sell merchandise in bulk to stores. With over 5,000 stores currently in operation worldwide, Ace Hardware is the largest cooperative hardware business.
If you’re a fan of the brand, you may be wondering if Ace Hardware is a franchise and what that entails. After doing some digging, here’s what I’ve learned about how Ace Hardware operates its business!
Is Ace Hardware A Franchise In 2022?
Ace Hardware is a retailer-owned cooperative where independent operators run the majority of store locations as of 2022. As well as operating Ace Hardware stores, independent owners also serve as shareholders in the business. Ace Hardware became a cooperative in 1973, and there are currently 5,000 stores in 60 countries.
For more information about Ace Hardware, including when it became a cooperative, how much it costs to own and operate an Ace Hardware store, and if owning it is profitable, keep reading!
When Did Ace Hardware Become A Cooperative?
After opening in 1924, Ace Hardware became a cooperative between 1973 and 1974 after the retirement of founder and longtime president Richard Hesse, which allowed the brand to expand and grow.
After Ace Hardware became a cooperative, the headquarters were relocated to Oak Brook, Illinois.
As a cooperative, Ace Hardware can purchase larger volumes of products at lower prices, which are then distributed to Ace Hardware stores through several distribution centers.
How Does The Ace Hardware Cooperative Work?
The Ace Hardware cooperative allows independent business owners to open their own stores while supporting the larger business.
For example, when an independent owner wishes to invest in an Ace Hardware store, they purchase $5,000 in shares for the company.
Then, this allows the owner to display the Ace Hardware logo and branding to attract customers.
Also, the Ace Hardware store owner can select from over 80,000 products within the cooperative warehouses to stock within stores.
Moreover, the Ace Hardware cooperative allows the owner to receive dividends on purchases rather than equity.
Finally, each Ace Hardware store contributes towards the larger cooperative for facilities such as advertising and marketing.
How Many Ace Hardware Stores Are There?
According to the Ace Hardware website, there are currently over 5,000 stores in operation across 60 countries.
With that, independent operators own the majority of these Ace Hardware stores as part of their cooperative.
Therefore, the cooperative business of Ace Hardware allows for a personal experience when shopping, which is why the brand states, “a visit to Ace is like a visit to your neighbor.”
How Much Does It Cost To Own An Ace Hardware?
As Ace Hardware is a cooperative, business owners who wish to invest can set up their stores and use the branding to encourage customers to visit.
To set up your own Ace Hardware store, it’s estimated to cost anywhere between $270,000 and $1,600,000, depending on the store’s location, size, and other factors.
Additionally, the franchise fee for an Ace Hardware store is $5.000, which grants the owner shares within the business and the rights to the Ace Hardware branding, distribution centers, and more.
To purchase an Ace Hardware store, owners must have a minimum net worth of around $400,000 and a cash requirement of $250,000.
Therefore, if an individual store doesn’t meet the expectations, goals, and targets of the Ace Hardware brand, it will face repercussions, including being shut down.
How Much Do Ace Hardware Franchise Owners Make?
It has been reported that Ace Hardware franchise owners make an average of $83,500 per year.
However, some Ace Hardware stores can make as much as $95,000 per year, which makes the business profitable to purchase.
Is Ace Hardware A Good Store To Own?
Ace Hardware can be an excellent business to own as the profits offered by operating a franchise can be over $80,000 per year.
Also, Ace Hardware doesn’t charge its independent owners royalty fees, and a portion of company profits are returned to franchised stores each year.
Moreover, Ace Hardware offers training and support for owners.
On top of that, store owners can tailor an Ace Hardware store to suit the needs of the local customers in the area, which offers a higher chance of success.
In 2019, Entrepreneur named Ace Hardware as the 13th best franchise to recognize its financial growth and brand power performance, indicating the favorability of its business structure.
There are currently 5,000 Ace Hardware stores in operation worldwide, with the majority being operated by independent owners.
That said, Ace Hardware is not a franchise but rather a cooperative group, and it has been since 1973.
Instead, stores are owned by individuals who operate under the Ace Hardware brand after purchasing franchising fees for around $5,000.
Further, a franchise business operation allows Ace Hardware to offer a personalized shopping experience for customers.