FDD Talk 2016: The Play It Again Sports Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on the Play It Again Sports franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Play It Again Sports franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Play It Again Sports’ financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average, high, and low gross sales and average gross profit for franchised Play It Again Sports stores that opened in 2014, 2013, 2012, 2011, 2010, and 2009 and prior, respectively, and had been in operation for the 12-month period ended December 26, 2015

• 2015 average, high, and low gross sales and average gross profit for the first, second, third, and fourth quartiles of franchised Play It Again Sports stores that had been in operation for the 12-month period ended December 26, 2015

Section I – Background Information

Play It Again Sports Looks to Get Back Over 300 Mark

After falling unit numbers year by year, Play It Again Sports finally showed a one-year growth rate in 2015 in what could be the start of a turnaround for the franchise.

At the same time, its parent company surpassed $1 billion in systemwide franchised retail sales for 2015 while putting 135 million items back into circulation in local communities. Winmark Corporation ended 2015 with 1,150 operating franchises among its brands, plus 88 more franchises that had been awarded but had not yet opened.

Numbers Fall Before Trend Reverses

While Play It Again Sports placed 327th on Entrepreneur’s Franchise 500 list for 2016, it was its lowest mark in the past decade. During the recession of 2007-08, the brand dropped to No. 319 for the 2008 list but shot up to No. 177 in 2009. Play It Again Sports has since gradually dropped in position each year; its 2015 rank was No. 287.

It has also seen steady losses in units in that time period, from a high of 410 in 2006 to a low of 288 in 2014. 2015 was the first year to reverse the trend, as the franchise finished the year with 296 stores, adding eight units for 2.7 percent growth.

This one-year boost could show positive signs for the brand, which lost 10 units in the past three years for a drop of 3.4 percent. Among the new stores in 2015 is a unit in Waltham, Massachusetts, that opened in October. Owner Dan Pill is a former college baseball player who went on to open two baseball training facilities.

Expertise in Both Buying and Selling

Play It Again Sports is the only sporting goods retailer with a specialization in both buying and selling merchandise. The franchise, which is owned by Winmark Corporation, was founded in 1983. Franchising began in 1988. The brand has nearly 300 stores in North America.

Winmark Corporation, based in Minneapolis, Minnesota, is the largest resale franchisor in the United States, also franchising Plato’s Closet, Once Upon a Child, Style Encore and Music Go Round. It was formerly named Grow Biz.

How It Works

Play It Again Sports buys and sells quality used sports and fitness gear, such as golf clubs and bags, ice skates, inline skates, baseball equipment and apparel, fitness merchandise, and many others.

Items are sold for about 40 to 60 percent of the cost of new items; the seller receives 30 to 50 percent of the resale price, depending on factors such as condition, demand and current stock of similar products. Sellers can even sell equipment they bought used, as long as it meets the Play It Again Sports criteria.

The stores will buy gear if the sports are played in the community and the store has room to store the equipment. Sellers can get cash or checks for their gear, but they can also get 20 to 30 percent more value by putting the money toward products sold in the store; they can choose to purchase these products at the time or later.

The stores buy sports gear all year long, but sellers will get the best price for gear brought in during or just prior to the relevant sports season.

Both New and Used Merchandise

Stores sell both new and used equipment, averaging 60 percent new and 40 percent used. Stocking new products enables the stores to be assured of products when they don’t have enough quality used gear coming in and provides merchandise for customers who are looking for good prices on new equipment.

Furthermore, the customers buying the new gear can later bring it back to the store to sell, ensuring longer life for the equipment and keeping it out of landfills.

Stores Near Big Boxes, Regional Malls

Play It Again Sports locations are between 3,500 and 4,000 square feet, and are generally located in power strip centers anchored by big boxes, or strip centers near larger regional malls.

The primary customers at a Play It Again Sports franchise are adults between the ages of 25 and 49 and parents of children ages 4 to 16. Customers are generally from middle-class to upper-class households.

Section II – Estimated Costs

• Please click here for detailed estimates of Play It Again Sports franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis