Plato s Closet
Plato's Closet offers retail stores selling quality used and new brand-name clothing and accessories for teens and young adults. Known for its thrift shopping experience, it operates in the second-hand fashion retail industry.
About Plato s Closet
Winmark Corporation is an American franchisor of five retail businesses that specialize in buying and selling used goods. The company is based in Minneapolis, Minnesota. Winmark was founded in 1988 as Play It Again Sports Franchise Corporation by Ron Olson and Jeffrey Dahlberg after they purchased the Play It Again Sports franchise rights from Martha Morris. They renamed the company to Grow Biz International Inc. in June 1993. Grow Biz went public in August 1993. In 2000, John Morgan replaced Dahlberg as CEO and renamed the company to Winmark in 2001. Morgan rescued Winmark from the verge of bankruptcy by selling financially failing franchise concepts and stores and replacing the management team. The company's strategy was to move from owning stores itself to having franchisees own all the stores.
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Plato s Closet franchise FAQ
How much does it cost to open one — the total initial investment?
The total initial investment necessary to begin operation of a Plato's Closet® store is from $355,700 to $467,900 [p.1]. This range includes $48,200 to $55,900 which must be paid to Winmark [p.1].
What is the initial franchise fee?
The initial franchise fee for a new Plato's Closet® franchisee is $25,000. For a second or subsequent Store, or for an existing franchisee of one of Winmark's other franchised concepts, the Initial Franchise Fee is $15,000 [p.18, p.12].
What are the ongoing royalty and advertising fees?
The ongoing royalty rate is not specified in detail within these excerpts. However, it is mentioned that there are advertising contributions required, with a minimum of 6% of Gross Sales for the store [p.15, p.101]. Additionally, there is an annual Marketing Fee of $1,500, which can be increased by no more than $1,000 during the term of the agreement [p.98, p.101].
How long is the initial franchise agreement, and can I renew it?
The initial term of the franchise agreement is ten years as indicated by the reacquisition of rights for eleven stores in June 2022, each with an initial term of ten years [p.85]. However, this isn't specified in the excerpts whether you can renew the franchise or under what conditions renewal might occur.
Can I sell or transfer my franchise, and what does that require?
According to the FDD, you can transfer your franchise ownership, but it requires good cause as determined by the franchisor [p.158]. The transferee-franchisee must be approved by the franchisor and meet certain standards including managerial, financial, and business qualifications [p.114].
On what grounds can the franchisor terminate the agreement?
The franchisor may terminate the agreement on any grounds available by law [p.165]. Additionally, the franchisor can terminate the franchise agreement if the franchisee fails to comply with any lawful provision of the franchise agreement and does not cure such failure after being given written notice and a reasonable opportunity to do so [p.158].
What financial requirements — net worth and liquid capital — do I need to qualify?
This isn't specified in the excerpts.
Do I get an exclusive or protected territory?
Yes, you receive an 'Exclusive Territory' surrounding the location of your Store when granted a Plato's Closet® franchise. This territory is typically a 3 to 5 mile radius around your Store, and Winmark will not establish another franchised or company-owned Plato's Closet® store within this area during the term of your agreement [p.34].
What training and ongoing support does the franchisor provide?
The franchisor provides a two-part training program that includes both on-site and online components. The first session, Resale University ™ 101 Training, covers general business issues such as real estate matters, business plan development, and inventory management, lasting about four days. The second session, Resale University ™ 201 Training, focuses on sales and marketing, merchandising, and store management, typically spanning at least five days. Additionally, the franchisor offers ongoing support through inspections, advisory services, and periodic updates to the business system [p.104].
How many franchised outlets are there, and how many have closed or been terminated?
The FDD does not specify the number of franchised outlets that have closed or been terminated. This information is not provided in the given excerpts.
Does the franchisor share any financial performance or earnings information?
The franchisor, Winmark Corporation, does not make any financial performance representations other than the specific 'Plato's Closet ® Statement of Average Annual Sales and Gross Profit' provided in Item 19. This representation includes gross profit figures but excludes operating expenses. Additionally, Winmark does not authorize its employees or representatives to make such representations either orally or in writing [p.46]. However, if you are purchasing an existing outlet, the franchisor may provide actual records of that outlet's performance [p.46].
What am I restricted to selling, and where must I buy supplies?
You are restricted to offering and selling only those goods and services that Winmark has approved, with additional requirements to offer all goods and services designated as mandatory by Winmark. You may have to buy or lease items from the franchisor or a limited group of suppliers designated by them, which might be more expensive than other options [p.3, p.38].