FDD Talk 2016: The Style Encore 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 Style Encore franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Style Encore franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Style Encore’s 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 Style Encore Stores that opened in 2014 and 2013, separately stated, and had been in operation for the 12-month period ended December 26, 2015

• 2015 average gross sales for the first, second, third, and fourth quartiles of franchised Style Encore Stores that had been in operation for the 12-month period ended December 26, 2015

Section I – Background Information

Style Encore Picked As Top New Franchise

After just three years in business, Style Encore is gaining locations and gaining attention as well. The chain, which doubled its units in the past year, earned the top spot in Entrepreneur’s Top New Franchises list for 2016. Rankings are based on criteria that include system size, growth rate, and financial strength and stability.

Chain is Newest Winmark Corp. Franchise

Based in Minneapolis, Minnesota, Style Encore is the newest member of the Winmark Corporation franchise family. Winmark, which also franchises Plato’s Closet, Once Upon A Child, Play It Again Sports and Music Go Round, surpassed $1 billion in systemwide franchise retail sales in 2015. The company has a total of 1,150 locations among its franchises, all of which are resale retail brands.

Style Encore was founded in 2013 and started franchising that same year. Style Encore added 17 locations in 2015 to finish the year with 32. With 45 current locations and another 23 in the works, Style Encore is rapidly expanding.

Wide Range of Sizes, Styles

Style Encore resells women’s casual and business clothing in a wide range of sizes, covering size 0 to 4X, that are designed for women in their late 20s to late 50s. Women can find shoes up to size 12. These items will sell for up to 70 percent off their original prices.

Stores generally look for apparel, shoes, jewelry and purses that have been in retail stores in the past couple of years, are currently fashionable, and are in very good condition. A seller who accepts a store’s offer on her items will be paid on the spot. Sellers often use their earnings to purchase merchandise, and buyers may end up returning to stores to resell their purchases later, so the two roles can be entwined.

Personal Styling Sessions Pair Shoppers With Styles

Style Encore offers more than just merchandise. A customer can set up a free personal styling session and fill out a style questionnaire with sizes, body type and color preferences. When she arrives at the store, she will be shown to a dressing room with a variety of outfits and fashion accessories waiting for her to try on.

Training Helps Franchisees Keep Up With Fashion Trends

Franchisees are trained in how to follow fashion trends and what inventory would be most appropriate for their stores. Field operations managers function as liaisons between franchisees and the home office and have extensive professional experience with major retailers such as Old Navy, JCPenney and Target Corporation.

Style Encore stores average 3,000 to 4,000 square feet and tend to be located in power strip centers or in suburban centers near shopping malls. Core customers are middle-class to upper-middle-class women.

Section II – Estimated Costs

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

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