Risk Score
Pending analysis
Investment Range
$532,000 - $2,215,000
Franchise Fee
$40,000
Total US Locations
31
Business Summary
MGM Wine & Spirits operates off-sale retail liquor stores that sell alcoholic beverages and other regulated products like tobacco and lottery tickets to customers aged 21 and older. The business focuses on providing a system for operating and promoting these retail stores under the MGM Wine & Spirits brand, offering a variety of products including liquor, wine, and beer.
Corporate History
MGM Wine & Spirits (M.G.M. Liquor Stores, Inc.) started when its current principals began operating retail liquor stores in 1970 through various entities. They developed systems for off-sale retail liquor stores, leading to the formation of M.G.M. Liquor Warehouse International, Inc. in 1977, specifically for offering franchises. This company operated the MGM franchise system until 1995. In early 1995, M.G.M. Wine & Spirits, Inc. acquired several company-owned stores and subsequently incorporated M.G.M. Liquor Stores, Inc. on September 29, 1995. M.G.M. Liquor Stores, Inc. then took over all franchise business in October 1995, with M.G.M. Wine & Spirits, Inc. becoming its parent company. The company officially began offering MGM Wine & Spirits franchises in October 1995. As of December 31, 2024, MGM Wine & Spirits has 27 franchised stores and 4 affiliate-owned stores, all located in Minnesota. MGM Wine & Spirits and its predecessor have exclusively offered franchises for off-sale retail liquor stores.
Financial Overview
Investment Range
$532,000 - $2,215,000
Franchise Fee (Low)
$40,000
Franchise Fee (High)
$50,000
Royalty %
2.2%
Marketing %
1.2%
Equipment Costs (Low)
$192,000
Equipment Costs (High)
$913,000
Working Capital
$75,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
MGM Wine & Spirits' financial statements received an unqualified opinion from its independent auditors, meaning they present fairly in all material respects. However, the auditors highlighted a significant risk due to concentrations. MGM Wine & Spirits has substantial receivables from its parent company and other affiliated entities, amounting to approximately $1,425,000 as of December 31, 2024. These receivables are greater than MGM Wine & Spirits' total stockholder's equity of $175,000 at that time. This concentration of receivables poses a significant risk if the related party entities were to become insolvent. As an S corporation, MGM Wine & Spirits does not include a provision for income taxes in its financial statements.
Financing Details
MGM Wine & Spirits does not offer any direct or indirect financing to its franchisees. This means that franchisees will need to secure their own funding for the initial investment and ongoing operations, as MGM Wine & Spirits will not guarantee any loans, leases, or other financial obligations they may incur.
Performance Metrics
Total US Locations
31
Franchised Units
27
Corporate Units
4
Avg Square Footage
7,500
Franchising Since
1977
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
MGM Wine & Spirits has disclosed two litigation cases. In September 2023, MGM Wine & Spirits initiated an arbitration action against a franchisee, VZ Inc., and its principals, to collect marketing contributions, service fees, late fees, and interest. After a hearing, the arbitrator ruled in favor of MGM Wine & Spirits, awarding them $360,907 and ordering the franchisee to comply with reporting and payment obligations. In February 2024, three affiliates of MGM Wine & Spirits initiated an action against a former franchisee, Stone Lake II, LLC, and its principals, for unpaid rent and note obligations from the original purchase of their store. The former franchisee initially denied the claims but later agreed to pay the rent and remaining principal owed to MGM Wine & Spirits affiliates.
Bankruptcy History
MGM Wine & Spirits has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Term
20 years
Renewal Conditions
To renew an MGM Wine & Spirits franchise, franchisees must provide at least 210 days' written notice before their current franchise agreement expires. They must also sign a new franchise agreement, which may have terms and conditions significantly different from their original agreement. A renewal fee of $5,000 is required, and franchisees must make all necessary capital expenditures to renovate and modernize their MGM Wine & Spirits store to meet the then-current brand standards.
Training & Support Program
Franchisor Assistance
MGM Wine & Spirits provides franchisees with a range of assistance both before and during the operation of their stores. Before opening, MGM Wine & Spirits will designate the store's location and territory, and will consult on site selection, even helping with lease negotiations. Franchisees receive an initial training program at no additional cost and are loaned confidential operations manuals. They also get a list of approved suppliers and MGM Wine & Spirits leases and installs the required exterior sign for the store. During operation, MGM Wine & Spirits helps develop and conduct an opening advertising campaign (at the franchisee's expense), assists with reviewing and printing monthly business reports during the first year, provides suggested product specials, and offers additional information on market conditions, sales, and marketing strategies.
Initial Training Hours
69
Training Location
Franchisor training facility in St. Paul, MN, and company-owned stores in the Minneapolis-St. Paul area.
Ongoing Support
MGM Wine & Spirits provides ongoing support to its franchisees after their stores open. This includes developing and conducting advertising campaigns and promotional programs for store openings, though these are at the franchisee's expense. During the first year of operation, MGM Wine & Spirits assists franchisees, upon request, with reviewing, downloading, and printing monthly business reports. The franchisor also provides suggested periodic product specials and shares additional information on market conditions, sales motivation, and various advertising and marketing topics as deemed appropriate. Additionally, MGM Wine & Spirits makes copies of its advertising and marketing materials available to franchisees upon request. Franchisees are also required to attend state-licensed beverage association training programs annually, though MGM Wine & Spirits does not provide this specific training itself.
Franchise Requirements
Ideal Candidate Profile
MGM Wine & Spirits seeks franchisees who are committed to the operation of their store. Ideal candidates are expected to participate personally on a full-time basis. If an exception is approved, the franchisee must demonstrate the ability to appoint a competent, qualified manager to operate the store and continuously supervise that manager's activities.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
full-time
Territory Type
exclusive
Territory Size Requirements
MGM Wine & Spirits designates a territory of one mile around the franchisee's approved store site. This distance is measured by the shortest route an automobile would travel from the parking space nearest to the front door of the MGM Wine & Spirits store on roads open at the time the store initially opens for business.
Staffing Notes
MGM Wine & Spirits requires franchisees to be solely responsible for recruiting, hiring, and training all their employees. All personnel are considered employees of the franchisee, not MGM Wine & Spirits. Franchisees are generally expected to participate personally and full-time in the store's operation. However, MGM Wine & Spirits may approve an appointed, competent, and qualified manager to operate the store, provided the franchisee continues to supervise the manager's activities. If a franchisee fails to meet quality or service standards, MGM Wine & Spirits reserves the right to assign personnel to provide additional training to the franchisee or their employees, with costs reimbursed by the franchisee.