Feasibility Study: Purchasing a Franchise

Sarah E. Wantiez
January 21, 2010
Trinity Christian College
 Mission Statement

Plato’s Closet is all about being fashion

savvy and shopping smart. We’re a
nationwide unique recycling retail store
specializing in clothes for teens and
twenty-something - we buy and sell the
last looks in gently used clothing and
accessories from the hottest brand name
designers for girls and guys.
(1998, Winmark Corporations)
 Winmark’s Requirements

• Purchase Price: $25,000

• $52,980 to 98,655 Cash or liquid assets.

• $123,620 to $230,195 to be used as

collateral

• Investigate rental location

– 2,500 to 3,600 square feet
 Franchise Benefits
• Developing a 3 year Business Plan.
• Retail Selection, Demographic Study and
Market Analysis
• 75 hours of classroom instruction and in-
store training.
• On-site support Pre-opening and
Opening
– Employee Training
– Merchandising
– Store Operations
– Service Procedures
Cont.

• Specially Designed Computer System

– Also 24 hour access to computer assistance
• Professionally produced advertising and
marketing resources
– Television
– Radio Commercials
– Direct Mail
– Print Ads
 Winmark Supplies

• Building permit and business license

• Carpentry
• Equipment- register, racks ect.
• Electrical, Plumbing
• Grand Opening Advertising and
Promotion
• Heating, Venting, and Air Conditioning
• Initial inventory
• Interior Finished: Paint and Signage
 Market Trends

• Q3 Winmark reported an 11.6% increase

• Q3 Plato’s Closet
– 23 Opened
– 3 Did not Re-new and Closed
– 4 Re-new Leases

• Current Franchise Ranking of 97

– Up 2 points from 2008
 Customer Demographics
• Middle to upper-middle-income households with
Junior/senior high school and college girls and
boys.
• Core Customer Group
– Females age 12 to 24
• Secondary Customer Group
– 25-45 year old females (moms included)
• Tertiary Customer Group
– Males age 12-24
• Product selection
– Girls' juniors size 0 - 15/16
– Guys' waist size 28 - 40
 Location and Market Size

• Oak Lawn IL, 60453

– Population: 53,407
– Average Age: 43
– Average Income: 53,752
– 2 Middle Schools
• 7 others within a 3.5 mile radius
– 2 High Schools
• 5 others within a 3.5 mile radius
– 2 Colleges within a 3.5 mile radius
Surrounding Communities

• Burbank
• Chicago Ridge
• Bridgeview
• Worth
• Palos Heights
• Palos Hills
• Palos Park
 Competitive Environment

• Discovery

– Family Owned and Operated for over 20

years
– Sells latest trends
– Low Prices
– Power Strip-mall Locations throughout
Chicagoland
– No Name Brands
– Medium to Poor Quality Clothes
 Competitive Environment

• Forever 21 and Forever XXI

– Mall Locations throughout the United States,

Canada, and Japan.
– Sell New Clothes
– Own Brand
• Also a Plus-Size Brand
– Moderate Prices
 Competitive Environment

• Charlotte Russe

– Approaching 500 stores in mall locations

world wide and a $900 million in sales.
– Corporate Backing
– Sells New Clothes
• Variety of Clothing lines along with their own
brand.
– Higher Prices
– Moderate Quality Clothes
 Location and Rent

TSF× PPSF÷ 12 Months=Monthly Rent

Mall Range: $18 to $13 per square foot

3000 × $15 ÷ 12 months= $3,750

 Interviews Quotes
• Michael Salvati
– “I am the hardest boss I ever had to work for.”
• Michael Lally
– “I felt like I did not get a good-night sleep for the
first five years.”
• Dawn Lally
– “Devotion and patience are key to opening up a
franchise and raising a family.”
• Robert Kuenster
– “Over the next twelve months we are just
looking to maintain.”
Incorporation or LLC

• Incorporation
– Annual meetings and keeping detailed
corporate records (minutes)
– Personal liability protection
– Tax savings
– Increased opportunities for raising capital
• LLC
– Offers all the same personal liability
protection minus the corporate Minutes.
 PRO’S & CON’S

PRO’S CON’S
 Multi-Million Dollar
Company backs the  Requires about $200,000
franchise in start-up capital.
 Winmark will assist you
in preparing business  Requires a lot of time &
plans to help insure a Devotions to the
successful franchise franchise
 First step in becoming
an entrepreneur
At this point a franchise is not for me.