Children's Orchard Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$206,700 - $320,500
Franchise Fee
$20,000
Total US Locations
15
Business Summary
Children's Orchard operates retail stores that buy and sell used and new clothing, equipment, accessories, and toys for kids directly to consumers. The stores are operated at approved locations following Children's Orchard's formats, designs, methods, and operating procedures, utilizing their "Children's Orchard" brand.
Corporate History
Children's Orchard, LLC was formed as a Delaware limited liability company on January 27, 2014, under the name NTY Kids, LLC. In February 2015, the company changed its name to Children's Orchard, LLC and purchased certain assets related to the Children's Orchard® franchise system from Children's Orchard, Inc. This included the "Children's Orchard" service mark and existing franchise agreements. Since February 2015, Children's Orchard, LLC has operated and offered franchises for stores that buy and sell used and new clothing, equipment, accessories, and toys for kids. Children's Orchard, Inc., the predecessor, had been franchising since 1993.
Financial Overview
Investment Range
$206,700 - $320,500
Franchise Fee (Low)
$20,000
Franchise Fee (High)
$25,000
Royalty %
4%
Marketing %
5%
Equipment Costs (Low)
$74,200
Equipment Costs (High)
$126,500
Working Capital
$17,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Children's Orchard, LLC's separate financial statements are not provided, but its obligations are absolutely and unconditionally guaranteed by its affiliate, Clothes Mentor, LLC. Clothes Mentor, LLC's audited financial statements show an unqualified audit opinion for the years ended December 31, 2024, and 2023, indicating that its financial statements are presented fairly in all material respects. No going concern qualification or other significant financial health concerns are noted in the auditor's report or financial notes for Clothes Mentor, LLC.
Financing Details
Children's Orchard does not offer any direct or indirect financing options to its franchisees. Additionally, Children's Orchard does not guarantee any franchisee's notes, leases, or other financial obligations.
Performance Metrics
Total US Locations
15
Franchised Units
15
Corporate Units
0
Avg Square Footage
3,500
Franchising Since
2015
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Count
2
Litigation Summary
Children's Orchard has disclosed two concluded arbitration cases. The first case, commenced in May 2020 by CSW Strategic Solutions, LLC, and its owners, alleged breach of contract, violation of the Minnesota Franchise Act and North Carolina Business Opportunity Act, breach of fiduciary duty, fraud, and improper financial performance representations. The claimants sought over $1,000,000, and the case was settled in August 2021 with Children's Orchard paying $400,000. The second case, commenced in August 2019 by Transcendent Business Holdings, LLC, and its owner, involved allegations of breach of contract, violation of the Minnesota Franchise Act, fraudulent non-disclosure, fraud, and negligent misrepresentation related to financial performance representations for an NTY Clothing Exchange® store (an affiliate's brand). The claimants sought over $1,000,000, and this case was settled in January 2020 with Children's Orchard paying $650,000. No other litigation is required to be disclosed for Children's Orchard.
Bankruptcy History
Children's Orchard has no bankruptcy history to report for itself or any of its executives.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Children's Orchard franchisees must provide written notice at least 180 days before the agreement ends. They must be in full compliance with the current franchise agreement, having paid all monetary obligations to Children's Orchard and its affiliates, and met all material operating and quality standards. Franchisees must remodel, modernize, and redecorate their store, and replace fixtures and equipment to match current brand standards, or secure a new approved location and build it out to current specifications. The franchisee and their store manager must satisfactorily complete any new or refresher training programs. A renewal fee of $10,000 is required at least 30 days before the term expires, and a new standard franchise agreement (which may have different terms) must be signed. Finally, the franchisee and each Principal Owner must sign a general release of claims against Children's Orchard and its affiliates.
Training & Support Program
Franchisor Assistance
Children's Orchard provides comprehensive assistance to its franchisees. Before opening, Children's Orchard helps with evaluating and selecting a store location, supplies prototype drawings and specifications for store design, and provides initial training for the franchisee and store manager. Franchisees also receive access to a confidential Operations Manual and the designated Point-of-Sale (POS) System. A field consultant offers 3-4 days of on-site assistance during the store's opening. On an ongoing basis, Children's Orchard provides field consultant visits (approximately 90 days after opening, then periodically for calls and on-site consultations), advisory services on operations, product selection, purchasing, marketing, and administrative procedures. Children's Orchard also periodically updates the Operations Manual and manages the National Marketing and Promotional Fund.
Initial Training Hours
67
Training Location
Plymouth, MN, or a location Children's Orchard designates
Ongoing Support
Children's Orchard provides ongoing support to its franchisees through various channels. Approximately 90 days after opening, a field consultant visits the store, and regular telephone conference calls and on-site field consultations are made available periodically. Advisory services cover all aspects of store operations, including products, purchasing, marketing, sales promotions, and administrative procedures. Franchisees receive periodic updates and revisions to the Operations Manual. Children's Orchard also manages the National Marketing and Promotional Fund (NMF Fund) to advertise and promote stores. Franchisees are required to participate in e-commerce and customer loyalty programs established by Children's Orchard.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Hands-On
Territory Type
Exclusive
Territory Size Requirements
Children's Orchard franchisees receive an exclusive protected area for their store, defined by natural trade areas and population numbers. This territory will be a radius of no less than two miles and no greater than six miles from a specific intersection. In metropolitan areas with over 200,000 people, the protected area will typically have a minimum population of 50,000. In smaller markets, the protected area will usually have a minimum population of approximately 25,000.
Staffing Notes
Children's Orchard franchisees are solely responsible for hiring, compensating, scheduling, and managing all store employees, including implementing a training program for them. The store must always be under the direct supervision of the franchisee (or a Principal Owner or an approved operating manager who has completed Children's Orchard's training program). The person responsible for day-to-day supervision must work full-time and not have other significant management responsibilities. If an operating manager is supervising, the franchisee or a Principal Owner must still be actively involved in store operations and oversight. All employees with managerial duties and corporate officers/directors/partners must sign confidentiality and non-compete agreements.