In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Pet Supplies Plus franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Pet Supplies Plus franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Pet Supplies Plus franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Pet Supplies Plus outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Pet Supplies Plus’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average weekly gross sales, annual gross sales, gross margin percentage, labor costs, rent, royalty and NAF (National Advertising Fund) fee, and EBITDA for the 144 franchised Pet Supplies Plus stores that were open and began operating during the entire Measurement Period (January 1, 2018 to December 31, 2018); were not transferred during the Measurement Period; and responded to Pet Supplies Plus’s survey by providing complete data that was also consistent with those figures otherwise available to PSP (the “Reporting Franchised Stores”)
- 2018 average weekly gross sales and annual gross sales for the 202 franchised Pet Supplies Plus stores that were operated by the same franchisee(s) for the entire Measurement Period (the “Franchised Stores”)
Section I – Background Information
20 Things You Need to Know About the Pet Supplies Plus Franchise
Acquired by Sentinel Capital Partners
1. In mid-December 2018, Sentinel Capital Partners announced that it had acquired Pet Supplies Plus (PSP), the third-largest pet specialty chain in the U.S. and the largest “independent” pet specialty operator. Terms of the transaction were not disclosed.
2. Marc Buan, a Sentinel principal, said, “PSP is the #1 pet franchise system in the U.S. with an expanding footprint and a large white-space opportunity. The pet industry is very attractive due to its stability, growth, and passionate consumer base. PSP has a strong position in the pet retail segment and a very loyal customer base. Led by a highly committed and talented management team, PSP has delivered consistent performance and steady growth. We are excited to partner with PSP during the next phase of its growth.”
3. Chris Rowland, CEO of Pet Supplies Plus, added, “PSP combines the convenience, expertise, and high-touch experience of a local neighborhood pet store with the curated selection and value of a national player. We look forward to partnering with Sentinel, a firm with deep franchising expertise, to help us drive revenue growth and geographic expansion.”
Signs 22 New Franchise Agreements, Resulting in 46 New Stores
4. In late June 2019, Pet Supplies Plus announced that it had welcomed 46 new franchise store deals in the first half of 2019. Twenty-two new agreements represent the 46 locations and Pet Supplies Plus has attracted franchisees from varying backgrounds: former corporate executives, military veterans, entrepreneurs, and even an independent pet store owner who is converting to become a Pet Supplies Plus owner. To further validate the strength of the brand, four franchise brokers, who are most familiar with quality franchise opportunities, have signed on to open their own Pet Supplies Plus stores.
5. The newly-signed stores will be developed across Texas, Florida, California, Michigan, Kentucky, and New Hampshire. Additionally, six existing franchisees signed franchise agreements further investing in the trusted brand. These six current franchise agreements account for 22 of the new store deals, with one franchise group committed to adding 15 more locations.
6. Pet Supplies Plus is attracting franchisees from all walks of life because they see that the convenience model and neighbor-centric company culture is validated through the brand’s strength across its 460 locations. With a passion for pets and a fun environment, people want to own and operate a Pet Supplies Plus because it’s a career that doesn’t feel like work.
7. Franchisees join Pet Supplies Plus to gain best-in-class corporate support, benefit from the impressive average unit volume (AUV), and be a part of the pet industry that reportedly has year-over-year growth even during periods of economic decline, according to The American Pet Products Association.
8. Chris Rowland, CEO of Pet Supplies Plus, said, “We consistently add 30 stores a year, in part because franchise candidates know our tagline, ‘Minus the hassle,’ also refers to our franchise opportunity. We ‘minus the hassle’ out of business ownership and handle the back-office duties like merchandising, marketing, supply chain, promotions, pricing and managing social media allowing our franchisees to focus on what they love to do – engaging with neighbors (a term Pet Supplies Plus uses for customers) and building strong store teams.”
9. Steve Murphy currently owns Pet N’ More in Palm Harbor, Florida, and is the second independent business owner to convert his successful pet store into a Pet Supplies Plus. Knowing the ins and outs of the pet retail world, including its challenges with competitive pricing and the pressures of e-commerce, he and his wife Raffaela realized how the extensive support provided by the established franchise would take their business to the next level.
10. The Murphys follow Bill and Sharon Hannon, who converted their 10-year-old independent pet store into a Pet Supplies Plus in Pen Argyl, Pennsylvania in 2017, and increased year-over-year sales by 23 percent.
11. As a franchise broker and one of Pet Supplies Plus’s newest franchisees, Michelle Lambert knows a thing or two when it comes to franchise opportunities; on a daily basis she researches countless franchise concepts and recognizes strong franchise opportunities. Michelle is especially excited to be a part of the Pet Supplies Plus pack because it allows her to be an even greater advocate for causes in which she is actively involved, like Leader Dogs for the Blind.
12. Rowland added, “The franchise broker community has shown interest and made personal investments in our brand, and that speaks volumes to the credibility of the Pet Supplies Plus franchise offer, corporate support provided and systems we’ve set in place to ensure success in the pet retail industry.”
Celebrated National Pet ID Week with Discounted Microchipping
13. At the beginning of April 2019, Pet Supplies Plus announced that the brand planned to celebrate National Pet ID Week (April 14-20) by offering discounted microchipping services and name identification tags. During the promotion, pet owners were able to receive the microchipping service for $7, a fraction of the typical cost, in addition to 50% off ID tags for their pets with a purchase of a pet collar.
14. During this time, participating Pet Supplies Plus stores nationwide partnered with VIP Petcare to offer microchipping vouchers to customers with any in-store purchase of $30 or more. Customers received their voucher for discounted microchipping April 14-20, while supplies lasted, at their nearest Pet Supplies Plus store. Each voucher was for the special discounted rate and was valid through June 3, 2019.
15. Normally, microchipping services at Pet Supplies Plus retail for $19, an already reduced rate compared to traditional microchipping services that range anywhere from $25-$75.
16. Chris Rowland, CEO of Pet Supplies Plus, said, “Our neighbors and their pets are like family whether they’re in our stores or around our communities, so we feel strongly about investing in their well-being. It’s truly unfortunate when we hear of a situation where a pet is lost so we’re working to increase the chances of pets reuniting with their families in such an event. It’s absolutely necessary that our neighbors have affordable access to microchipping and pet ID tag services, and hope that our partnership with VIP Petcare boosts microchipping rates nationwide.”
17. Pet Supplies Plus was founded in 1988 by Harry Shallop and Jack Berry in Redford, Michigan. Shallop and Berry designed the shop using the grocery store model. According to Pet Supplies Plus, it was the first pet store to feature wide aisles and neat, well-stocked display shelves. This new retail pet shop concept was an immediate success.
18. The first franchised Pet Supplies Plus store opened in 1989. Within five years, Shallop and Berry had opened 30 stores primarily in the eastern United States and by 1995, there were 100 locations around the country. Over the next few decades, Pet Supplies Plus continued to grow and by the early 2000s, the chain had grown to 200 stores.
19. In 2010, Pet Supplies Plus was acquired by Irving Place Capital, a private equity group. Pet Supplies Plus’s success continued under Irving Place Capital’s leadership and the company celebrated the opening of its 400th store in May 2017. A year later, Pet Supplies Plus was acquired by Sentinel Capital Partners.
Entrepreneur’s Franchise 500
20. Pet Supplies Plus ranked No. 46 on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Pet Supplies Plus franchise costs, based on Item 7 of the company’s 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Pet Supplies Plus’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 154
- Outlets at the End of the Year: 187
- Net Change: +33
- Outlets at the Start of the Year: 187
- Outlets at the End of the Year: 212
- Net Change: +25
- Outlets at the Start of the Year: 212
- Outlets at the End of the Year: 234
- Net Change: +22
- Outlets at the Start of the Year: 186
- Outlets at the End of the Year: 198
- Net Change: +12
- Outlets at the Start of the Year: 198
- Outlets at the End of the Year: 211
- Net Change: +13
- Outlets at the Start of the Year: 211
- Outlets at the End of the Year: 218
- Net Change: +7
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- This Item sets forth historical gross sales information for franchised outlets for the measurement period of January 1, 2018 to December 31, 2018 (the “Measurement Period”), which was provided to Pet Supplies Plus by its franchised Stores.
- During the Measurement Period, there were 234 franchised outlets and 218 affiliate-owned outlets, which is a total of 452 outlets.
- Pet Supplies Plus has not audited or independently verified the data submitted by the Stores and no assurance can be offered that the data does not contain inaccuracies that an audit might disclose.
Part 1 – Average Gross Sales, Gross Margins, EBITDA, Royalty, NAF Fee, Rent, and Labor Expenses for Reporting Franchised Stores (January 1, 2018 to December 31, 2018)
- Part 1 sets forth average weekly and annual gross sales data, gross margins, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), rent expenses, royalties and national advertising expenses, and labor expenses for Pet Supplies Plus’s 144 franchised Stores that were:
- (a) open and began operating during the entire Measurement Period;
- (b) were not transferred during the Measurement Period; and
- (c) responded to Pet Supplies Plus’s survey by providing complete data that was also consistent with those figures otherwise available to PSP (the “Reporting Franchised Stores”).
- 28 stores were excluded because they were not operating during the entire Measurement Period, 4 stores were excluded because of ownership transfers, and 56 franchisees failed to adequately respond to Pet Supplies Plus’s survey.
- Of those 56 franchisees with deficient responses, 53 failed to respond altogether, and 3 provided figures that were inconsistent with information otherwise available to PSP.
- The Reporting Franchised Stores’ performance data is segmented into groups by vintage. The Stores were organized into three groups: 1 Year, 2-3 Years, and 4+ Years based on the number of years the Store has been open.