If you‘re wondering whether the retail giant Walmart is a franchise, the short answer is no. Walmart operates as a public corporation, not a franchise system.
As an experienced ecommerce seller, I‘ve worked with Walmart as a Marketplace seller and interacted with major franchises. This gives me a unique perspective on Walmart‘s corporate structure.
In this comprehensive guide, we‘ll explore why Walmart isn‘t a franchise, how its corporation structure works, whether it could ever franchise in the future, and ways you can partner with Walmart.
Let‘s dive in!
Why Walmart Isn‘t Structured as a Franchise
Franchises allow independent business owners to operate under the parent company‘s brand name, systems, and processes in exchange for an upfront franchise fee and ongoing royalty payments. Franchisees do not actually own the brand – they pay for the right to use it.
For example, restaurant franchises like McDonald‘s and Subway allow individuals to open franchise locations using the company‘s recipes, menus, marketing, etc. The franchisee owns that specific location, but McDonald‘s corporate still owns and controls the brand.
Walmart does not work this way at all. All Walmart stores are fully owned and operated by the Walmart corporation. No individual or business entity can purchase a Walmart franchise location.
Additionally, Walmart is a publicly traded company on the NYSE. The Walton family owns around half of outstanding shares, and numerous investment companies and everyday investors own the other half.
For perspective, here are some of Walmart‘s major shareholders according to NASDAQ:
|Shareholder||Shares Owned||Percent of Company|
|The Vanguard Group||106,029,201||3.7%|
|State Street Corp||64,398,424||2.3%|
As a public company, Walmart is focused on driving profits and growth for shareholders. Expanding into new markets and territories rapidly is a priority.
If Walmart franchised stores, it would lose some control over growth and consistency. Franchisees are independent operators, whereas corporate-owned stores allow centralized control.
Essentially, Walmart‘s public corporation structure has fueled its explosive expansion and tremendous scale. Franchising could actually threaten that, so Walmart has no incentive to franchise.
How Walmart‘s Corporate Structure Works
Since Walmart owns all its locations outright, it utilizes a hierarchical corporate structure to manage its operations.
At the top is the CEO and Executive team that oversee the corporation as a whole. Below that are several layers of upper management based on function:
Divisional VPs – Oversee major regions, e.g. VP of West Coast Stores
Regional Managers – Manage groups of stores in smaller geographic areas
District Managers – Support and supervise Store Managers within their district
Store Managers – Manage individual Walmart store locations
This hierarchical management structure provides centralized control and oversight across Walmart‘s thousands of store locations. Strategic objectives flow from the CEO down to the stores.
Now imagine if each location was an independent franchise with its own operator. Walmart would lose this control and ability to execute coordinated strategies.
Franchises have contractual relationships with the franchisee, but the parent company cannot force initiatives the way corporate-owned stores can.
Again, this highlights why the public corporation model serves Walmart so well. The hierarchy enables consistent execution of strategy and tight control over operations.
Will Walmart Ever Franchise in the Future?
Given how core Walmart‘s public ownership structure is to its identity and success, I think it‘s very unlikely Walmart would ever shift to a franchise model.
The Walton family and majority shareholders aim to increase stock prices and profits. As shareholders, they earn quarterly dividends based on financial performance.
These shareholders will ensure Walmart continues rapidly expanding into new markets, maintains cost leadership, and makes other strategic moves to satisfy investors.
Franchising would mean relinquishing some of that control and losing certain revenue streams. It would also introduce a lot of variability into their cohesive brand identity.
Therefore, I don‘t foresee Walmart ever transitioning major parts of its core retail operations into a franchise system. Its shareholders would not allow decisions that could damage stock value and performance.
How Retailers Can Partner With Walmart
While you can‘t buy a Walmart franchise, retailers do have a few avenues to partner with Walmart:
Sell on Walmart Marketplace
Launched in 2009, Walmart Marketplace allows third-party sellers to list products on Walmart.com. As one of the largest retail ecommerce sites, it offers sellers incredible reach.
Qualifying as a Marketplace seller has benefits like:
- Access to Walmart‘s massive customer base (over 120 million monthly visitors)
- Utilize Walmart‘s fulfillment services for storage, delivery, and returns
- Eligible for Free 2-day shipping when items are fulfilled by Walmart
- Promoted product placements on category and search pages
However, Walmart also takes a cut of your sales. Seller fees include:
- 15% referral fee on most items
- Up to 20% referral fee for Beauty products
- Additional 3-15% for Walmart fulfillment services if used
The referral fees are much higher than Amazon‘s, which average 11-15% in my experience. But you gain unique exposure and distribution through Walmart.
Based on my experience as a longtime ecommerce seller, I definitely recommend at least considering Walmart Marketplace. Apply if you meet their requirements and test it out yourself. The huge potential upside is worth the high fees.
Become a Walmart Supplier
Major brands can also supply wholesale products to Walmart to be sold in stores. This is very challenging to break into as Walmart has stringent requirements:
- Proven sales history and brand reputation
- Have a unique product offering
- Ability to supply products at massive scale
- Competitive pricing and terms
- Strong quality control and service capabilities
If your brand can meet these demands, you can work with Walmart buyers to develop a vendor partnership. But small sellers will have little chance of getting retail placement directly with Walmart stores.
Invest as a Shareholder
Finally, any individual or institution can purchase Walmart shares on the public market to become partial owners.
Benefits of owning Walmart stock include:
- Quarterly dividend payments based on profits
- Capital appreciation if share price increases
- Voting rights on shareholder resolutions
- Ability to attend annual shareholder meetings
Walmart‘s profitability and continued growth make it a appealing long-term holding for many investors‘ portfolios.
In 2021, Walmart paid out approximately $6.7 billion in dividends alone. The current dividend yield is around 1.50% per year.
Stock ownership is realistically the only way an everyday person can gain partial equity interest in Walmart. And shareholders collectively drive the corporate decisions.
Conclusion: Walmart‘s Structure Favors Control and Growth
In summary, Walmart operates as a public corporation, not a franchise system. Key reasons why:
- The Walton family and other shareholders wish to retain control and maximize growth
- The corporate hierarchy structure enables coordinated strategy setting and execution
- Franchising could slow expansion and introduce brand variability
- Shareholders demand decisions that will improve stock value and performance
While major franchises grant store ownership rights to franchisees, Walmart directly owns and runs all its locations. This empowers corporate to rapidly expand and implement strategic initiatives.
As an experienced seller, I hope this guide has provided valuable perspective into Walmart‘s corporate dynamics. Retailers can still engage with Walmart as Marketplace sellers, suppliers, or shareholders.
But for those wondering "is Walmart a franchise?", the clear answer is no. Its public corporation setup has fueled Walmart‘s position as the world‘s largest retailer.