In five years, Storage Authority co-founder Marc Goodin envisions that the self-storage franchise business he launched this year will have grown to 500 locations nationwide.
“We see it growing exponentially,” Goodin told The SpareFoot Storage Beat. “The most successful business system out there is franchising.”
As a means of comparison, self-storage REIT Sovran Self Storage has about 500 Uncle Bob’s facilities nationwide. Storage Authority now has two locations, both in Connecticut and both owned by Goodin.
Five years from now, there will be five franchises out there for self-storage.
— Storage Authority co-founder Marc Goodin
Goodin said several facilities are under construction by the company’s first batch of franchisees. The locations—in Tampa and Sarasota, FL; Houston, TX; and Putnam and Plainville, CT—are expected to open in the next six to 10 months.
Goodin also expects several operators of existing facilities to become Storage Authority franchisees this year.
Storage Authority got its start after Scott House, a real estate broker with experience in hotel franchising, contacted Goodin to find out whether he thought the self-storage sector could benefit from franchising. Goodin, who started working on self-storage projects as an engineer more than 25 years ago, latched on to the idea and the two formed Storage Authority.
Goodin said attempts at self-storage franchising were made about 10 years ago, but the timing wasn’t right. “There wasn’t as much Internet presence like there is now,” he said, “and there wasn’t as much competition as there is now.”
Bigger is better
Goodin said franchisees of Storage Authority will reap the competitive benefits of being part of a large organization while retaining of ownership and management of their facilities.
“There are four leaders in the self-storage business, and those are the four REITs,” Goodin said.
As massive organizations, the REITs benefit from national branding and discounted vendor pricing. Goodin said that as Storage Authority grows, it will be able to offer similar advantages to independent operators.
Storage Authority says its franchisees also will benefit from development assistance, design support, construction guidance, training programs and sales systems.
The minimum investment for developing a Storage Authority franchise is about $200,000, according to the company’s website. Franchisees pay a one-time franchise fee of $20,000 per facility. After that, a franchisee pays 6 percent of revenue as a royalty fee and a 2.5 percent advertising fee.
“It is a lesser fee than third-party management, and you make more profits than with a third-party management company,” Goodin said.
Goodin doesn’t expect to be the only self-storage franchise company for too long.
“Five years from now, there will be five franchises out there for self-storage. It’s going to be just like the hotel industry,” he said.