In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Plato’s Closet franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Plato’s Closet franchise, based on Item 7 of the company’s 2021 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Plato’s Closet franchise, based on Items 5 and 6 of the company’s 2021 FDD
- Section IV – Number of franchised and company-owned Plato’s Closet outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD
- Section V – Presentation and analysis of Plato’s Closet’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
- 2020 average, median, high, and low gross sales and average and median gross profit for the 465 franchised Plato’s Closet stores in the United States and Canada that had been in operation by the same franchisee or owners for the 12-month period ended December 26, 2020, grouped by year opened (2019, 2018, 2017, 2016, 2015, and 2014 and prior)
- 2020 average, median, high, and low gross sales and average and median gross profit for the first, second, third, and fourth quartiles of the 465 franchised Plato’s Closet stores in the United States and Canada that had been in operation by the same franchisee or owners for the 12-month period ended December 26, 2020
- number and percentage of franchised Plato’s Closet stores in the United States and Canada that had been in operation by the same franchisee or owners for the 12-month period ended December 26, 2020, grouped by range of gross sales ($0 to $250,000; $250,001 to $500,000; $500,001 to $1,000,000; $1,000,001 to $2,000,000; $2,000,001 to $3,000,000; and greater than $3,000,000)
Section I – Background Information
17 Things You Need to Know About the Plato’s Closet Franchise
Franchisee Puts Extra Disinfecting, Safety Measures in Place
1. In mid-May 2020, about two months after most states went into lockdown because of the ongoing COVID-19 pandemic, Plato’s Closet in Coralville, Iowa reopened with extra steps in place to ensure used items are still safe to buy. Renee Lehr, the district manager for the store, said, “It’s been exactly two months. What we’ve done in our store is set up stations and kind of separating the store a little bit so there’s more space for each person to have as much distance, hopefully, the six-foot distance, that they can have in the store.”
2. Safety at stores like Plato’s Closet is key, considering how much of their inventory is secondhand. “Making sure that they’re freshly laundered, that there’s no signs of recent wear or tear on those items,” Lehr said. “We’re wearing gloves when we process these containers, going through and inspecting every item for condition issues.”
3. Lehr said they will still buy used items, but new rules are now in place. “All of our items are quarantined for 48 hours,” Lehr said. “So before we place them out on our floor, before we mix them in with other clothing, we are holding those behind, disinfecting those for 48 hours.”
Announces Territory Expansion in Wisconsin
4. At the end of March 2021, Winmark Corporation announced that the Sheboygan, Wisconsin market is now open and available for new Plato’s Closet, Once Upon A Child, Style Encore, and Play It Again Sports franchise locations. Each of the Winmark brands has set the bar high in terms of industry standards to become the most dependable choice as consumers are continuously looking for high-quality, affordable, used retail resale shopping options.
5. With a focus on being fashion-savvy and shopping smart, Plato’s Closet specializes in clothing and accessories for teens and twenty-somethings. The hip, trendy clothing store buys and sells guys’ and girls’ gently-used, brand-name clothing and accessories, including shoes, belts, purses, and jewelry, among other items. Once Upon A Child, the largest children’s resale franchise in North America, specializes in reselling gently-used kid’s clothes, shoes, toys, furniture, and baby gear.
6. Designed by women, for women, Style Encore is a unique national resale chain that specializes in clothing and accessories. The fresh, trendy store buys and sells gently-used clothing, shoes, handbags, and accessories, among other items. A favorite for families, Play it Again Sports buys and sells quality, used sports and fitness equipment – including football equipment, baseball gloves and bats, hockey gear, golf clubs, soccer, lacrosse equipment, motorized treadmills, ellipticals and bikes, benches and weights, and more.
7. Renae Gaudette, president of franchising for Winmark Brands, said, “While the past year has been challenging for many retail brands, Winmark’s resale retail franchise brands saw growth and with our expansion of franchise opportunities in Sheboygan, Wisconsin, we expect that growth to continue. We continually review potential markets for future expansion of all Winmark brands and are looking forward to adding additional markets to our portfolio.”
Opens New Location in Canada
8. In early November 2020, Plato’s Closet opened a new location in Sherwood Park, Alberta. The new location held a four-day grand opening celebration. Located at #19 201 Kaska Road, workers had been stocking the 3,000 square foot store since mid-September, following two months of renovations. Aimed at a younger demographic, the store purchases gently-used teen and young adult trendy clothing across all name brands and sizes (including plus sizes), both male and female.
9. Franchisee Shawn Neumeier said, “People here really love clothes and they really like higher-end clothes as well, even though that’s not everything that we sell. Sherwood Park is an amazing community that loves fashion and I think it will be very successful here. I’ve heard so many positive things from people who said this is what Sherwood Park needs.”
10. The store purchases clothing from residents, who are paid in cash on the spot (unlike other methods where sellers have to wait to be paid until their items are sold). “It gives people some money back from the clothes that they’ve already bought and you’ll also be able to play a part in saving the planet. It’s not always about fast fashion. It’s about giving those clothes an extra life,” said Neumeier.
11. Neumeier added, “For some people selling clothes, this is a way for them to get some extra money. Other people do it because they want to help the environment. And then there are people who want to sell the clothes and use that money to purchase some new clothes, and that’s the scenario that we hope for. You’ll sell your clothes and then go shopping around and you’ll find some great deals and buy more clothes.”
12. The first 20 customers on the day of the grand opening were given a $10 coupon and a 15 percent off voucher at Plato’s Closet’s sister store, Once Upon A Child. The remainder of the weekend saw customers get a chance to win a gift card to The Hair District Sherwood Park on Friday, a chance to win a $50 Plato’s Closet gift card on Saturday, and a chance to win a gift card to a local nail salon on Sunday. In addition, customers received $10 vouchers to use towards a future purchase between Nov. 9-30.
13. And that’s not all. “I’ve really focused on supporting local, so instead of me purchasing a Michael Kors bag for a giveaway, I’ve been giving shout-outs to local companies and businesses by inviting them to submit flyers or vouchers to our Facebook and Instagram so we can also generate business for them, and that’s led to even more gift baskets. I’m really proud that our opening will be helping other businesses in the area as well,” Neumeier added.
14. The Park location is the third Plato’s Closet in the Edmonton area. Neumeier noted she’s been embraced by the resale community as she’s received mentorship and support from the owner of the other Plato’s Closet stores as well as the owner of Once Upon A Child.
Company History
15. Plato’s Closet was founded by Dennis and Lynn Blum in the 1990s in Perrysburg, Ohio. The Blums also started Once Upon A Child. Similar in concept to Once Upon A Child, Plato’s Closet purchases and sells used, brand-name children’s and teenagers’ clothes, shoes, and accessories.
16. Over the next few years, the Blums opened additional Plato’s Closet stores and in 1998, the Winmark Corporation acquired the company – it had owned Once Upon A Child since 1992. Under Winmark’s ownership, Plato’s Closet launched national franchising. Today, Plato’s Closet has locations all across North America and it is one of Winmark’s most successful brands.
Entrepreneur’s Franchise 500
17. Plato’s Closet ranked No. 335 on Entrepreneur’s 2021 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Plato’s Closet franchise costs, based on Item 7 of the company’s 2021 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Plato’s Closet’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
Franchised
2018
- Outlets at the Start of the Year: 476
- Outlets at the End of the Year: 480
- Net Change: +4
2019
- Outlets at the Start of the Year: 480
- Outlets at the End of the Year: 483
- Net Change: +3
2020
- Outlets at the Start of the Year: 483
- Outlets at the End of the Year: 485
- Net Change: +2
Company-Owned
2018
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
2019
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
2020
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis
- This Item 19 contains financial performance representations based on information from franchised Plato’s Closet Stores entitled “2020 Plato’s Closet Unaudited Statement of Average Annual Sales and Gross Profit.”
- The gross profit figures in this Item 19 do reflect the cost of sales but do not reflect the operating expenses that must be deducted from the gross profit figures to obtain your net income or profit.
- The following statement of average annual sales and gross profit includes average gross sales and gross profit during the 12-month period ended December 26, 2020 as reported by 465 of the 468 franchised Plato’s Closet Stores located in the United States and Canada that commenced operations during the years 1998 through 2019.
- This statement includes information from only those Plato’s Closet Stores located in the United States and Canada that had been in operation by the same franchisee or owners for the 12-month period ended December 26, 2020, with the understanding that some of these Stores had temporary closures as a result of COVID-19, as further described below.
- There are no material financial and operational characteristics of the U.S. Stores that differ materially from the Canadian Stores included in this financial performance representation.
- No other Plato’s Closet Stores are included in this statement due to insufficient history of operations (not in operation for the 12-month period ended December 26, 2020 or transferred during this period).
- The financial statements Winmark receives from franchisees for these Stores are unaudited, and Winmark does not audit or independently verify, or express an opinion regarding, these statements.
- There were 468 franchised Plato’s Closet Stores which had been in operation by the same franchisee or owners at least 12 months as of December 26, 2020. Only 465 of the 468 Stores are reflected in the average, however, because one Store was temporarily closed due to a hurricane and two Stores were temporarily closed for an extended period of time as a result of relocations.
- This financial performance representation does not include information for the 17 Plato’s Closet Stores that opened or transferred in 2020. No Stores closed in 2020 after being opened less than 12 months.
- Due to governmental regulations and other restrictions related to COVID-19 in many jurisdictions during 2020, many Plato’s Closet Stores were forced to temporarily close for extended periods of time during the year. The temporary closures and COVID-19 regulations and restrictions negatively impacted the Stores’ sales, as reflected below.
- During the temporary in-store closures, some Stores continued to operate by offering curbside and/or online sales.
- Despite these temporary closures, as of the date of the 2021 Disclosure Document, Plato’s Closet does not anticipate that COVID-19 has or will significantly change its business model or the way its Business System operates.
- For purposes of clarification, the 465 Stores includes all Stores that were temporarily closed as a result of COVID-19.
Part 1 – Statement of Average Gross Sales and Gross Profit of 465 Franchised Plato’s Closet Stores for the Fiscal Year Ended December 26, 2020
Year Opened – 2019
- Number of Stores Reported: 25
- Number and Percentage of Stores Attaining or Exceeding Average Gross Sales: 6/24%
- Number and Percentage of Stores Attaining or Exceeding Average Gross Profit: 6/24%
- 2020 Average Gross Sales: $728,169
- 2020 Median Gross Sales: $677,115
- 2020 Average Gross Profit: $454,549
- 2020 Median Gross Profit: $429,088
- Average Gross Profit Percentage: 62.42%
- Sales Range: $289,622 to $1,476,265
Year Opened – 2018
- Number of Stores Reported: 28
- Number and Percentage of Stores Attaining or Exceeding Average Gross Sales: 11/39%
- Number and Percentage of Stores Attaining or Exceeding Average Gross Profit: 11/39%
- 2020 Average Gross Sales: $877,274
- 2020 Median Gross Sales: $812,368
- 2020 Average Gross Profit: $548,331
- 2020 Median Gross Profit: $492,348
- Average Gross Profit Percentage: 62.50%
- Sales Range: $349,219 to $1,653,024
Year Opened – 2017
- Number of Stores Reported: 31
- Number and Percentage of Stores Attaining or Exceeding Average Gross Sales: 6/19%
- Number and Percentage of Stores Attaining or Exceeding Average Gross Profit: 7/23%
- 2020 Average Gross Sales: $781,851
- 2020 Median Gross Sales: $761,300
- 2020 Average Gross Profit: $482,308
- 2020 Median Gross Profit: $451,816
- Average Gross Profit Percentage: 61.69%
- Sales Range: $326,339 to $1,483,100
Year Opened – 2016
- Number of Stores Reported: 26
- Number and Percentage of Stores Attaining or Exceeding Average Gross Sales: 8/31%
- Number and Percentage of Stores Attaining or Exceeding Average Gross Profit: 9/35%
- 2020 Average Gross Sales: $891,349
- 2020 Median Gross Sales: $824,225
- 2020 Average Gross Profit: $553,022
- 2020 Median Gross Profit: $497,959
- Average Gross Profit Percentage: 62.04%
- Sales Range: $260,237 to $1,790,551
Year Opened – 2015
- Number of Stores Reported: 31
- Number and Percentage of Stores Attaining or Exceeding Average Gross Sales: 11/35%
- Number and Percentage of Stores Attaining or Exceeding Average Gross Profit: 11/35%
- 2020 Average Gross Sales: $851,068
- 2020 Median Gross Sales: $744,088
- 2020 Average Gross Profit: $538,781
- 2020 Median Gross Profit: $475,955
- Average Gross Profit Percentage: 63.31%
- Sales Range: $341,017 to $2,147,817
Year Opened – 2014 and Prior
- Number of Stores Reported: 324
- Number and Percentage of Stores Attaining or Exceeding Average Gross Sales: 148/46%
- Number and Percentage of Stores Attaining or Exceeding Average Gross Profit: 148/46%
- 2020 Average Gross Sales: $972,679
- 2020 Median Gross Sales: $898,613
- 2020 Average Gross Profit: $609,734
- 2020 Median Gross Profit: $560,281
- Average Gross Profit Percentage: 62.69%
- Sales Range: $282,649 to $2,694,181
Total
- Number of Stores Reported: 465
- Number and Percentage of Stores Attaining or Exceeding Average Gross Sales: 190/41%
- Number and Percentage of Stores Attaining or Exceeding Average Gross Profit: 192/41%
- 2020 Average Gross Sales: $928,412
- 2020 Median Gross Sales: $862,134
- 2020 Average Gross Profit: $581,297
- 2020 Median Gross Profit: $539,586
- Average Gross Profit Percentage: 62.61%
- “Gross Sales” means all revenues the franchisee receives from the sale of goods and services, whether by cash or by check, credit card or trade, in connection with the Store, less sales tax and customer refunds and returns.
- Average Gross Profit equals Gross Sales less Cost of Goods Sold. Average Gross Profit does not reflect any expenses related to the operation of a Plato’s Closet Store other than Cost of Goods Sold.
Part 2 – Statement of Sales Ranges by Quartile for 465 of the 468 Franchised Plato’s Closet Stores Open on December 26, 2020 That Had Been in Operation for at Least 12 Months by the Same Franchisee or Owners for the 12-Month Period Ended December 26, 2020
- Quartile refers to that portion of the total number of Stores open that represents 25%. For example, the first quartile identifies those Stores that were in the top 25% of all Stores in Gross Sales.
- These results relate to specific Plato’s Closet Stores located in the United States and Canada. Your individual results will likely differ from these results.
1st Quartile
- Number of Stores: 116
- 2020 Gross Sales Range by Quartile: $1,134,078 to $2,694,181
- 2020 Quartile Average Gross Sales: $1,423,349
- 2020 Quartile Median Gross Sales: $1,345,896
- Number and Percentage of Stores Attaining or Exceeding Quartile Average Gross Sales: 46/40%
- 2020 Quartile Average Gross Profit: $889,904
- 2020 Quartile Median Gross Profit: $836,856
- Number and Percentage of Stores Attaining or Exceeding Quartile Average Gross Profit: 43/37%
- Quartile Average Gross Profit Percentage: 62.52%
2nd Quartile
- Number of Stores: 116
- 2020 Gross Sales Range by Quartile: $862,163 to $1,123,995
- 2020 Quartile Average Gross Sales: $975,071
- 2020 Quartile Median Gross Sales: $980,870
- Number and Percentage of Stores Attaining or Exceeding Quartile Average Gross Sales: 61/53%
- 2020 Quartile Average Gross Profit: $610,705
- 2020 Quartile Median Gross Profit: $607,329
- Number and Percentage of Stores Attaining or Exceeding Quartile Average Gross Profit: 56/48%
- Quartile Average Gross Profit Percentage: 62.63%
3rd Quartile
- Number of Stores: 116
- 2020 Gross Sales Range by Quartile: $684,421 to $862,134
- 2020 Quartile Average Gross Sales: $771,574
- 2020 Quartile Median Gross Sales: $767,269
- Number and Percentage of Stores Attaining or Exceeding Quartile Average Gross Sales: 55/47%
- 2020 Quartile Average Gross Profit: $484,034
- 2020 Quartile Median Gross Profit: $480,780
- Number and Percentage of Stores Attaining or Exceeding Quartile Average Gross Profit: 55/47%
- Quartile Average Gross Profit Percentage: 62.73%
4th Quartile
- Number of Stores: 117
- 2020 Gross Sales Range by Quartile: $260,237 to $683,688
- 2020 Quartile Average Gross Sales: $546,941
- 2020 Quartile Median Gross Sales: $570,333
- Number and Percentage of Stores Attaining or Exceeding Quartile Average Gross Sales: 69/59%
- 2020 Quartile Average Gross Profit: $342,604
- 2020 Quartile Median Gross Profit: $357,492
- Number and Percentage of Stores Attaining or Exceeding Quartile Average Gross Profit: 72/62%
- Quartile Average Gross Profit Percentage: 62.64%
Part 3 – Number of Stores, Average and Median Gross Sales, Lowest and Highest Gross Sales Amount in Each Range, and Percentage of Total Number of Stores That Fell Within Certain Ranges of Gross Sales for 2020
- Based on information reported by 465 of the 468 Plato’s Closet Stores which had been in operation by the same franchisee or owner for the 12-month period ended December 26, 2020, the following chart sets forth the number of Stores, average and median Gross Sales, the lowest and highest Gross Sales amount in each range, and the percentage of total number of Stores that fell within certain ranges of Gross Sales for 2020:
2020 Range of Gross Sales: $0 to $250,000
- Number of Stores Falling Within Range: 0
- Average Gross Sales for Stores Within Range: 0
- Number and Percent of Stores Attaining or Exceeding Average Gross Sales for Stores Within Range: 0/0%
- Gross Sales for Lowest Store Within Range: 0
- Gross Sales for Highest Store Within Range: 0
- Median Gross Sales for Stores Within Range: 0
- Percent of Total Number of Stores (465) Within Range: 0%
2020 Range of Gross Sales: $250,001 to $500,000
- Number of Stores Falling Within Range: 31
- Average Gross Sales for Stores Within Range: $402,458
- Number and Percent of Stores Attaining or Exceeding Average Gross Sales for Stores Within Range: 17/55%
- Gross Sales for Lowest Store Within Range: $260,237
- Gross Sales for Highest Store Within Range: $496,591
- Median Gross Sales for Stores Within Range: $417,491
- Percent of Total Number of Stores (465) Within Range: 6.67%
2020 Range of Gross Sales: $500,001 to $1,000,000
- Number of Stores Falling Within Range: 270
- Average Gross Sales for Stores Within Range: $754,675
- Number and Percent of Stores Attaining or Exceeding Average Gross Sales for Stores Within Range: 137/51%
- Gross Sales for Lowest Store Within Range: $500,109
- Gross Sales for Highest Store Within Range: $997,992
- Median Gross Sales for Stores Within Range: $757,191
- Percent of Total Number of Stores (465) Within Range: 58.06%
2020 Range of Gross Sales: $1,000,001 to $2,000,000
- Number of Stores Falling Within Range: 159
- Average Gross Sales for Stores Within Range: $1,283,520
- Number and Percent of Stores Attaining or Exceeding Average Gross Sales for Stores Within Range: 63/40%
- Gross Sales for Lowest Store Within Range: $1,001,628
- Gross Sales for Highest Store Within Range: $1,932,409
- Median Gross Sales for Stores Within Range: $1,233,181
- Percent of Total Number of Stores (465) Within Range: 34.19%
2020 Range of Gross Sales: $2,000,001 to $3,000,000
- Number of Stores Falling Within Range: 5
- Average Gross Sales for Stores Within Range: $2,278,635
- Number and Percent of Stores Attaining or Exceeding Average Gross Sales for Stores Within Range: 2/40%
- Gross Sales for Lowest Store Within Range: $2,014,489
- Gross Sales for Highest Store Within Range: $2,694,181
- Median Gross Sales for Stores Within Range: $2,147,817
- Percent of Total Number of Stores (465) Within Range: 1.08%
2020 Range of Gross Sales: Greater Than $3,000,000
- Number of Stores Falling Within Range: 0
- Average Gross Sales for Stores Within Range: 0
- Number and Percent of Stores Attaining or Exceeding Average Gross Sales for Stores Within Range: 0/0%
- Gross Sales for Lowest Store Within Range: 0
- Gross Sales for Highest Store Within Range: 0
- Median Gross Sales for Stores Within Range: 0
- Percent of Total Number of Stores (465) Within Range: 0%
Key Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️
To Access the Rest of This Article and Other Premium, Income-Enhancing Content, Subscribe Now or Log In.
Gain the Insider Information (and Actual Earnings Data) You Need to Make a Safe and Smart Franchise Investment. Click Here to Learn More.
Leave a Reply