Craters & Freighters Franchise Sales, Costs & Profits (2023)
If you’re looking for a low-cost / high profits franchise to start, shipping franchises are a great pick. Among all of them (there are a few really), Craters & Freighters is a great option.
Indeed, Craters & Freighters is not only affordable ($226,700 investment cost on average), but also very profitable ($1,134,000 in sales as per the FDD and 9% as per our estimates).
Want to know more? in this article we are looking at Craters & Freighters and its latest Franchise Disclosure Document to find out how much it (really) costs, and how profitable the business really is.
Key stats
| Franchise fee | $35,000 |
| Royalty fee | 5.0% |
| Marketing fee | 2.0% |
| Investment (mid-point) | $226,700 |
| Average sales | $1,134,000 |
| Sales to investment ratio | 5.0x |
| Payback period | 3 years |
| Minimum net worth | $150,000 |
| Minimum liquid capital | $100,000 |
Craters & Freighters Franchise Business Plan
All the stats: startup costs, profits, breakeven, etc.
5-year financial projections built with the FDD
Excellent 4.8/5 based on 70 reviews
About Craters & Freighters
Craters & Freighters is an American company specializing in freight handling and specialty packaging services.
Diane Gibson founded the shipping company in 1990 to serve residential and commercial clients across multiple sectors, including aerospace, biotechnology, medical equipment, heavy machinery and telecommunications.
Based in Golden, Colorado, the brand opened its franchising doors in 1991, responding to the increasing logistic demand of global clients.
Today, Craters & Freighters has become an industry leader in packaging, crating and shipping, operating in 64 locations across the US.
Craters & Freighters franchise pros and cons
The Pros:
- A wide client base: Craters & Freighters serves a wide range of clientele, increasing the revenue potential.
- Insurance policy: The company’s group cargo insurance policy protects franchise owners and their clients.
- eBusiness management software: Franchisees leverage the company’s proprietary business software to run the day-to-day operations, including creating pricing reports, managing customer relations and other aspects of logistics.
- In-house engineering team: The company offers in-house engineering services to get well-designed crates to package and ship any product.
- Marketing and advertising support: Franchisees get customized marketing assistance from a dedicated corporate department, paying attention to the business location and the owner’s marketing capabilities. Additional marketing support includes eMarketing, opening assistance, sales support and large trade areas.
- Training: Franchisees don’t need a crate building, transportation or packaging background to operate a Craters & Freighters franchise. The franchisor’s dependable staff will guide you through a comprehensive training program covering packaging, crating, shipping and administration.
- Exclusive territory protection: Franchisees don’t compete against other Craters & Freighters franchises thanks to the exclusive territory rights.
The Cons:
- No absentee ownership: Franchise owners must be involved in the day-to-day operations.
- Not a part-time business: A Craters & Freighters franchise requires a full-time commitment.
- Not a home-based opportunity: Franchises must operate from the designated physical locations.
- Minimum employee requirement: Business owners need 3-4 employees to run a new franchise.
Craters & Freighters franchise costs
You would have to invest $227,000 to open a Craters & Freighters franchise business on average.
The investment covers all the start-up costs you may need, including the initial franchise fee of $35,000. In addition to this fee, the investment also covers:
- Formulation costs: leasehold improvements, lease security deposit, vehicle lease/purchase, deposit, etc.
- Equipment: warehouse tools and equipment, office furniture, fixtures, and equipment
- Operating costs: travel expenses, monthly rent, organizational expenses, insurance, miscellaneous expenses, additional funds for 3 months, etc.
Startup costs
Here’s the full breakdown of costs:
| Type of Expenditure | Amount |
|---|---|
| Initial franchise fee | $35,000 |
| Formulation costs | $39,000 – $81,000 |
| Equipment | $45,000 – $68,000 |
| Initial Marketing fee | $750 – $2,000 |
| Operating costs | $57,100 – $90,500 |
| Total | $176,850 – $276,500 |
Craters & Freighters franchise fees
The initial franchise fee for a Craters & Freighters franchise is $35,000
In addition to the initial franchise fee, you must pay to the franchisor a royalty fee of 5.0% of revenues, as well as a variable marketing fee of 2.0% of revenues.
Craters & Freighters franchise revenue
On average, Craters & Freighters franchises generate $1,134,000 in revenue per year.
That’s the 2020 annual sales per store as of 2020. This is a decrease compared to 2019 (-9.5%, $1,254,000).
Yet, it’s worth noting that Craters & Freighters doesn’t provide detailed information about its franchise’s financial performance in its Franchise Disclosure Document, especially revenue. Instead, we obtained this number by dividing the total revenue of all franchised stores ($73 million) by the number of franchised units (64 as of 2020).
Craters & Freighters franchise profits
We estimate that a Craters & Freighters franchise makes $96,000 in profits per year (9% EBITDA margin).
Note that these are our own estimates. Indeed, Craters & Freighters does not provide any detailed information about the profitability of its franchises. Instead, we had to use the average revenue per franchise ($1,134,000) to which we applied cost percentages as per a McKinsey report, especially for COGS (the cost of carrier) and other operating costs.
| Profit and loss | Amount | % revenue | Source |
|---|---|---|---|
| Revenue | $1,134,132 | 100% | as per FDD |
| COGS | $(833,587) | 74% | assumption (McKinsey) |
| Gross Profit | $300,545 | 27% | |
| Royalties | $(56,707) | 5% | as per FDD |
| Other operating costs | $(147,437) | 13% | assumption (McKinsey) |
| EBITDA | $96,401 | 9% |
Is Craters & Freighters a good franchise investment?
When we compare the initial investment of $227,000 to the future profits of the business, we obtain a 3-4 years payback for Craters & Freighters. In other words, you would repay the initial investment within 3 to 4 years only if you were to invest in a Craters & Freighters franchise as a franchisee.
No need to tell you, from that perspective, this is a great investment. Indeed, a 3-4 years payback is not only a great investment but it’s also in line with similar shipping franchises.
Note that to obtain this payback we used a 5-7% net profit margin (in line with our 9% EBITDA margin as calculated above).
Craters & Freighters Franchise Business Plan
All the stats: startup costs, profits, breakeven, etc.
5-year financial projections built with the FDD
Excellent 4.8/5 based on 70 reviews
Disclaimer
Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.
All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.
