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How to Open a Drive-In Movie Theater

Drive-In Movie

Once thought to be going extinct, drive-in movie theaters are making a significant comeback. The ever-changing landscape of the theater industry has forced business owners to get creative. More and more theatergoers are seeking new and diverse outlets for their movie-watching experiences. And drive-in movie theaters offer customers a nostalgic, colorful atmosphere with the ability to watch a movie with family and friends in the comfort and security of their vehicle.

These magical spaces don't just appear out of nowhere. They're started and operated by people with a passion for the entertainment industry. Still, many new drive-in owners are learning the hard way that, without proper research and maintenance, money can be hard to come by.

There are specific steps every business owner should take to set up their drive-in movie theater business.

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1. Visualize the Big Picture

You are about to embark on a long adventure. The best thing you can do for yourself and your loved ones is to sit down and survey all your options. Perhaps you would like to reach out to a small business attorney or financial advisor to assess your long-term business outlook.

Make sure all your legal and financial ducks are in a row before starting the business. It will allow you to move through the following stages with confidence.

2. Bring Your Business Plan into Focus

A business plan is your project's script. It conceptualizes your business and stages out all the big sequences so you can execute them later. For this step, you'll want to research every facet of the theater industry, from concessions to projectors and everything in between. If you plan on selling concessions, you'll want to take a very close look at the federal regulations governing food sales in the U.S. from the U.S. Food and Drug Administration (FDA).

It helps to immerse yourself in your local municipality's business laws and regulations. Here are some of the more burning questions that you'll want to address during this stage:

  • Where will your drive-in movie theater be located?
  • How much acreage will you need for your drive-in movie theater?
  • What equipment do you need?
  • What will you charge for tickets?
  • Are you the sole proprietor or working alongside other owners?
  • Which legal business entity will you elect when you register with a state?
  • How will you secure financing?
  • Who are your competitors, and is there a market demand for a drive-in movie theater in your area?
  • What industry trends can you take advantage of to set yourself apart from the competition?
  • What are you going to name your drive-in?
  • How will you market your new venture?

Once you've finished researching, it's time to start drafting your business plan. Thankfully, there are plenty of templates available online for you to choose from. Leave no stone unturned as you dream up your perfect drive-in. You'll be glad you did.

3. Secure a Budget

When a motion picture secures its budget, the filmmakers know their project's potential as well as its limitations. Obtaining financing  for your drive-in movie theater is no different. The fact is that drive-in movie theaters need a big budget. Owners need to consider acquiring the following:

  • A significant amount of open property, both for your massive screens and parking for your customers
  • High-end projectors that can cast images on your ample screens
  • Concessions and cooking equipment such as popcorn makers, deep fryers, and soda fountains
  • Staff to run projectors, concessions, and parking
  • An agreement with an FM station to provide crystal-clear audio for your showings

Drive-in theaters can cost upwards of one million dollars. But this is where the diligence you put in during the business plan phase pays off. If you have a great business plan that details your business's potential, your chances of obtaining financing with a bank will increase. Take your business plan into a bank of your choice and speak with a representative about securing funding for your venture.

4. Become Executive Producer of Your Own Legal Entity

All drive-in movie theater companies should register with a state governmental authority (usually a secretary of state).

When you don't register your business with a state, the law recognizes your business as a sole proprietorship if there is a single owner or general partnership if there are multiple owners. These options do not provide enough protection from debts and obligations raised while conducting business. Depending on your finances and overall goals for your business, there are two options you'll want to consider:

  • Limited liability company (LLC): LLCs are a great option for new businesses because they protect your personal assets and provide useful tax options. LLCs can have one owner or multiple owners. These legal entities keep business and personal affairs separate. They also keep your non-business assets safe when the company creates debt or is sued.
  • Corporation: This structure is generally reserved for larger ventures that take on many owners and outside investments. Corporations tend to be more expensive and regulated than LLCs. It's important to note here that businesses can begin as LLCs and change to a corporate structure when the business venture grows.

Any time a business becomes a legal entity, it is subject to both application fees early on and renewal fees after that. It is best to check with your state's regulatory business authority to determine what you require.

Registration is one of the most critical steps of the entire process. If you have questions about how you should register in your state, don't hesitate to contact a small business attorney.

5. Lights, Camera, Taxes

Once you've registered your company, it's time to procure an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). EINs are like Social Security numbers for your business. They identify your business with the IRS so you can pay taxes on it.

EINs are good numbers to have. Not only do you need one to hire employees, but they also allow you to open a bank account so your business can make transactions.

6. Get a (Show) Business Bank Account

Having an EIN allows you to open a business account with a bank of your choosing. This is important because if you and your company are separate legal entities, you do not want to commingle your personal assets with your business funds.

Track all money that goes in and out of the account. Staying on top of your finances will help you determine what your profit margin needs to be so you can keep operating.

7. Scout Locations & Equipment

Here, you must decide where your business will be located. Drive-ins generally require 10-14 acres of flat, open land. The bigger the space, the more cars you will be able to fit on the land. You'll also need space around the property for barriers. Consider either buying your own property or leasing commercial real estate.

Scouting locations for drive-ins can be tricky because you need an area that customers will visit, but you also can't build a drive-in near a high-traffic area with a lot of other businesses. Those businesses likely have lights that will impact the brightness of your screens and distract from the movies. Many drive-ins set up shop just outside of large towns. There, they are close to commerce but still far enough away to take advantage of darker conditions.

Finally, this should also be the step where you secure equipment for your site. Note that projectors aren't cheap. A new top-of-the-line model can cost up to $150,000.

8. Secure Your Distributor Deal

If you want to show the latest movies, you will need to obtain a license from a service known as a film distributor. The best way to accomplish this is by hiring someone with experience in the industry, such as a booking agent, to work with film distributors and bring quality content to your drive-in.

9. Have Yourself a (Federally Compliant) Snack

When you host new blockbuster movies, a share of every ticket sale is allotted to the studios that make those movies. For this reason, the bulk of profits for most theaters is made through concessions.

Know this: If you plan on selling food at your drive-in, you will be subject to a large swath of federal and state regulations. There are all kinds of rules regarding what food you can serve, how the quality of the food is maintained, and the way the food can be sold.

Don't get discouraged. Concessions can be highly lucrative if you serve the right products and stay in compliance with the law. Seek out a small business attorney who can answer questions about staying in compliance in your state.

10. Get Insured

Accidents happen, and business insurance offers the peace of mind you'll want if something unfortunate occurs. With so many people visiting and working on your drive-in theatre, there are two specific kinds of business insurance you will want to obtain:

  • General liability insurance: This insurance protects you when a customer gets injured on-site.
  • Workers' compensation insurance: If you plan on hiring employees, your state will probably require you to get this kind of insurance. Workers' compensation insurance protects your business in the event an employee gets injured on the job.

11. Hire Your Cast

In addition to a booking agent, you'll want a cast of people working on-site playing the following roles:

  • Ticket-takers
  • Projection specialists to manage the projector
  • Representatives to work concession stands
  • Groundskeepers to maintain the property and clean up after showings

12. That's a Wrap!

You and your crew have made all the necessary preparations, and now it's time to unleash your opus upon the world!

Stay on top of your financial records and track all money coming in and out of the business. If you've made it to the last step, the experience you've gained along the way will serve you well as you bring that silver screen magic to your community.

Need Additional Help? Speak With an Attorney

Drive-in movie theaters can be fun, rewarding businesses. But that doesn't mean owning and operating one is easy. Opening a business takes hard work and an eye for detail. With so much information coming at you so quickly, it's not hard to feel overwhelmed. When questions mount and time is of the essence, consider using our trusted, simple-to-use online business formation tool. We'll walk you through the steps of creating your business and help you meet all the legal requirements.

If you need more than a DIY service, let FindLaw's database of experienced legal practitioners put you in touch with the right attorney today.

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