Review of Ther Racetrac Franchise Opp and Startup Costs

When many investors think of a franchise opportunity, they generally lean toward high service industries like food, fashion, or retail. What tends to get ignored is the other high service industry in the United States, which is the convenience store. Paired with a gas station, the convenience store is one of the most effective ways to build revenues through competitive fuel prices and high margin snacks and other goods. RaceTrac is one of the most exciting organizations where you can make this happen today as they franchise under the “RaceWay” name.

What does this investment opportunity look like?

What Is the Initial Required Investment?

The only thing that you’ll need on hand is about $50k worth of capital to get going with a franchise location. You may need to provide a security deposit for your chosen location and you’ll want to invest in some inventory for your new store. Add in operating capital and equipment and you can have your own fuel station up and running with a convenience store attached for as little as $125k.

That’s right – there aren’t any franchise fees involved in this business arrangement. You’ll get to give your community competitive fuel prices and you won’t even have to worry about the fuel supply chain. That will all be taken care of for you in this RaceTrac franchise opportunity. You’ll also have the networking support of nearly 300 stores in the Southeastern United States to help with brand recognition.

You’ll also receive a lot of extra flexibility in this franchise model when it comes to being your own boss. You have a lot of leeway in your entrepreneurial decisions, including as to whom you choose as your vendors. There is simply a certain limit on certain items within inventory that cannot be sold and these are part of the gasoline service agreement that you sign in becoming a contractor of RaceTrac. You’re required to obtain all of your fuel from the organization and that is how the ongoing franchise fees are handled.

The one primary restriction that RaceWay does have in place is that they do not usually allow multiple units to be owned by a franchisee. There are always exceptions to this rule and it often depends on the location of the stores and your ability or history of creating and maintaining a successful community presence.

Because of the business model, however, it is important to note that this is not actually a franchising opportunity. You will be an independent contractor, running your own business, with the license to utilize the RaceWay name, branding, and food programs if you elect to have them included.

What Kind of Support Do You Receive?

Because this is an independent contracting opportunity, RaceTrac cannot actually instruct you on how to run your business. If they did so, they would be required to classify you as an employee of their organization instead of an independent contractor. What you can do, however, is go through the gasoline services agreement to determine the viability of the agreement to your bottom line. For food options, you can also contract out with vendors and receive options that RaceWay has found to be successful in the past.

There will be a District Manager with RaceTrac that will work with you in order to understand how all the on-site equipment works, the policies and procedures that are part of the agreement, and make sure you understand the daily reporting requirements. The agreement also requires you to keep your new location open from 6am to 11pm every day, but there is a strong encouragement to have a 24/7 presence in the community.

Is This a Good Investment Opportunity?

There are a lot of pros and cons with an investment opportunity like this one that is provided by RaceTrac. Let’s look at those a little more in-depth:

The Pros:

• You get to be your own boss. Outside of the contractual agreement, you really don’t have anyone telling you how to run your business. You get the chance to build your brand, drive traffic to your store, and build up multiple streams of revenue.
• You get to use an established brand. With nearly 300 locations in 12 states, people are familiar with the RaceWay and RaceTrac brands. People trust them, use them more often, and feel like the gasoline they purchase from them is a competitively priced product.
• You have the chance to provide variety. The food program and the inventory you run are completely up to you. If you just want to run a small store, that can be done. If you want to run a large store with a tremendous selection, that can be done as well.

The Cons:

• You have no say in certain inventory. RaceWay prohibits you from selling certain items that could be the exact items that your community wants.
• You are at their mercy for fuel prices. One of the biggest reasons why people come to a convenience store initially is a low fuel price. If your prices are higher than the competition, then you won’t get as much traffic into the store to purchase your inventory or eat your fresh food products.
• You are pretty much locked into 1 location. RaceWay doesn’t like to hand out multiple locations, so you’re in a make it or break it type of situation. For a well-researched location with a history of success, that may not be a problem. For others, it could be a huge gamble to take.

Is this the right investment opportunity to make? It could be if you’re in the US Southeast and you’re looking to get involved in a business that doesn’t require franchising agreements. If you want to be your own boss and simply be bound by the agreements that you create with business associates, then you’ll get the freedom you want for a relatively small investment. Take a look at the full opportunity today and see if it could be what you’ve been looking to find.

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