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How Much Does A Plato’s Closet Franchise Cost?
If you’re an entrepreneur who leans towards the philosophy of conscious fashion, you’re probably toying with the idea of opening your own Plato’s Closet. Not only will it provide affordable options for shoppers, but it also helps keep usable clothes out of the landfill. Not to mention, it also allows sellers to thrive by making cash out of things they no longer need.
In this article, we’ll tackle Plato’s Closet franchise cost and the duties you’ll need to comply with once you decide to commit. We’ll also look at other fees that aren’t part of the initial cost, but you need to prepare for once you get the ball rolling.
Franchise Description
Before we delve into Plato’s Closet franchise cost, let’s learn a few pieces of key info about the business. The venture started in 1998, and they opened it for franchising a year after. Winmark Corporation is the franchisor, and the head office is located in Minneapolis, Minnesota.
Today, the retail-resale brand targets teens and twenty-somethings looking for high-quality and affordable clothing. They use an “ultra-high-value” approach, which enables them to create a kinetic retail atmosphere—the brand banks on the promise of letting clients ride the latest fashion trends without breaking the bank. As a result, they’ve developed a community of supporters who shop for clothes and sell garments that no longer meet their style or size.
Training Overview
Aside from the money you need to cover Plato’s Closet franchise cost, it’s also crucial to invest time and effort in the business. The journey to opening a store starts with a two-part training course in Winmark’s headquarters.
The first part of the program covers the management and operation of a retail business. This includes matters related to real estate, business plan, buying used products, and the preferred vendor program. This course will last for five days.
After the initial phase and when the financing and lease are complete, there will be a concept training. This five-day course covers matters related to sales and marketing, computer operation, and store management. Franchise owners need to complete both phases according to the head office’s standards.
Obligations and Restrictions
Aside from shouldering Plato’s Closet franchise cost, there are also duties to comply with. For one, franchise owners must personally manage the store. Otherwise, they must get the franchisor’s written consent to delegate someone else to do it for them. Store managers must attend the second phase of the training mentioned above before operating the store.
Franchise owners may not sell or offer products and services that aren’t approved by the head office. They’re also compelled to offer the goods as required by the head office for all franchisees.
Franchise owners will have an “exclusive territory” surrounding tier approved location. It’s typically a three to a five-mile radius around the store. However, the franchisor will provide a mapping that takes population density and consumer traffic into account. The exclusive territory in urban areas will have a minimum population of up to 100,000 persons. Locations outside urban hubs, on the other hand, will have a minimum population of 50,000 persons.
The period of the initial franchise agreement is ten years. They can renew the franchise for another ten years as long as they meet the renewal requirements set in the Franchise Agreement.
Your Investment
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $25,000 | $25,000 |
| Fixtures and Supplies | $35,000 | $50,000 |
| Signs | $8,000 | $11,000 |
| Security Cameras | $1,000 | $5,000 |
| Point-of-Sale (POS) System | $20,700 | $26,600 |
| Leasehold Improvements | $12,000 | $20,000 |
| Build-Out | $18,000 | $50,000 |
| Deposits and Business Licenses | $1,000 | $17,000 |
| Opening Inventory | $65,000 | $80,000 |
| Miscellaneous Pre-Opening Expenses | $25,000 | $55,000 |
| Rent – first 3 months | $10,000 | $17,000 |
| Additional Funds – first 3 months | $30,000 | $33,000 |
| ESTIMATED TOTAL | $250,700 | $389,600 |
Other Costs
| Type of Fee | Amount |
|---|---|
| Continuing Fee | 5% of gross sales. |
| Marketing Fee | $1,000 per year. |
| Cooperative Advertising | Maximum amount is 5% of gross sales. |
| Local Marketing Expenses | Minimum amount, when combined with cooperative advertising expenses, is 5% of gross sales. |
| Advertising Fee | If Winmark imposes this fee, franchisees will pay up to 2% of gross sales. |
| Transfer Fee | $10,000 |
| Audit Expenses | Cost and expenses related to audit. |
| Renewal Fee | $5,000 |
| DRS Maintenance Fee | The fee for the term of this Franchise Agreement is $1,000. Upon renewal, the then-current rate for the fee will be applied. |
| Technology Fee | Currently $0. |
| Remodeling Expenses | Will vary under the circumstances. |
| Insurance | Will vary under certain circumstances. |
| Interest Expenses | Lesser of 18% per year or maximum rate permitted by law. |
| Lease Payment | Will vary under certain circumstances. |
| Costs and Attorney’s Fees | Will vary under certain circumstances. |
Did You Know?
Here are a few things you might want to know about Plato’s Closet:
- There is a huge potential in the venture, as proven by recognition from industry leaders. In 2014 and 2015, Plato’s Closet was recognized as a top-ranking franchise investment by Forbes Magazine in the $150,001 to $500,000 category. Entrepreneur Magazine Franchise 500 also included the brand as #1 in Category 2011–2019.
- The brand boasts of top quartile average gross sales of $1,621,916. With such earnings, it’s not surprising that a lot of entrepreneurs want to join the brand. In fact, Plato’s Closet already has over 480 locations in North America, and more stores are opening every week.
- It may be common knowledge that young people spend a lot on clothes. Did you know that the teens and 20s market spend around $50 billion a year on clothing and accessories? And that doesn’t include the additional $170 billion spent by their parents on them!
- Affordability is one of the strengths of Plato’s Closet. The products that they sell are up to 70 percent cheaper compared to regular pricing. That said, the younger clients looking to save become loyal customers of the boutique.
If you’re passionate about fashion and you want a sustainable business around it, Plato’s Closet is surely a good option to explore. Not only will you make good money out of it, but you’ll also be helping communities by exchanging their gently used items for cash.
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