Risk Score
Pending analysis
Investment Range
$536,520 - $1,965,005
Franchise Fee
$10,000
Total US Locations
735
Business Summary
Pet Supplies Plus operates retail stores that offer a wide variety of pet food, pet supplies, live pets (excluding dogs or cats), and pet grooming and bathing services. Each store follows a proprietary business system that includes uniform standards for products and services, access to supplier networks, specific interior and exterior design, sales techniques, merchandising, marketing, advertising, and inventory management systems.
Corporate History
PSP Franchising, LLC was formed in Delaware on July 12, 2010, and began offering franchises for Pet Supplies Plus stores in September 2010. Its predecessor, Pet Supplies "Plus"/USA, Inc. (PSPUSA), was incorporated in Michigan in October 1991 and started franchising in 1991. PSP Franchising, LLC's parent company, PSP Stores, LLC, has operated affiliate-owned stores similar to the franchises since 2010. In March 2021, Franchise Group Newco PSP, LLC, a subsidiary of Franchise Group, Inc., acquired a controlling ownership interest of the Pet Supplies Plus brand. In August 2023, Franchise Group, Inc. became a privately held company.
Financial Overview
Investment Range
$536,520 - $1,965,005
Franchise Fee (Low)
$10,000
Franchise Fee (High)
$49,900
Royalty %
3%
Marketing %
3.5%
Equipment Costs (Low)
$215,350
Equipment Costs (High)
$1,205,805
Working Capital
$170,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
PSP Franchising, LLC and its parent, Franchise Group, Inc., along with several affiliates, filed for Chapter 11 bankruptcy on November 3, 2024. The company is operating as a debtor-in-possession under bankruptcy court supervision. A restructuring support agreement is in place, including $250 million in debtor-in-possession financing to ensure liquidity for ongoing operations and to meet commitments. The financial statements for PSP Franchising, LLC include a going concern qualification from their independent auditor, indicating that substantial doubt exists about the company's ability to continue operations due to the uncertainties of the bankruptcy proceedings. The financial statements do not reflect the potential consequences of these proceedings, such as the realizable value of assets or the settlement amounts of pre-petition liabilities.
Financing Details
PSP Franchising, LLC does not offer direct or indirect financing to franchisees and will not guarantee any notes, leases, or other obligations.
Performance Metrics
Total US Locations
735
Franchised Units
502
Corporate Units
233
Avg Square Footage
6,500
Franchising Since
1991
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
Yes
Litigation Count
3
Litigation Summary
PSP Franchising, LLC's affiliate, Buddy's Franchising and Licensing LLC, has three litigation cases. Two of these are ongoing arbitrations: MMS Group, LLC v. Buddy's Franchising and Licensing LLC, filed in November 2022, and Buddy's Franchising and Licensing LLC v. Joseph Gazzo III, filed in May 2023. Both allege breach of franchise agreements, breach of good faith and fair dealing, unfair trade practices, and unfair competition, with Buddy's filing counterclaims for breach of contract, Lanham Act violations, and Defend Trade Secrets Act violations. Both cases are currently in settlement negotiations. The third case, In the Matter of Buddy's Newco, LLC (FTC Matter No: 191 0074), involved an FTC civil investigation into Buddy's Newco, LLC, a parent company, for alleged antitrust violations. This matter was settled in May 2020 without an admission of guilt, resulting in an order that prohibits certain agreements, mandates antitrust compliance programs, and restricts competitor board memberships.
Bankruptcy History
PSP Franchising, LLC's parent company, Franchise Group, Inc. (FRG), and several of its affiliates, including PSP Franchising, LLC itself, filed voluntary petitions for Chapter 11 bankruptcy on November 3, 2024, in the U.S. Bankruptcy Court for the District of Delaware (Case No. 24 12490). The company continues to operate its business and manage its assets as a debtor-in-possession. A restructuring support agreement is in place with holders of approximately 80% of its first lien debt, providing $250 million in debtor-in-possession financing to maintain operations and fulfill commitments to employees, customers, vendors, and franchise partners. The financial statements highlight that substantial doubt exists about the company's ability to continue as a going concern due to the uncertainties associated with these Chapter 11 proceedings.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew, PSP Franchising, LLC franchisees can renew for two successive 5-year terms if they provide written notice between 3 and 9 months before the term ends, prove they can operate at the approved location for the renewal term (or secure an acceptable substitute), complete all required maintenance and remodeling to meet current system standards 90 days before expiration, have no breaches of any agreements with PSP or its affiliates/suppliers, pay all monetary obligations, sign PSP's then-current Franchise Agreement (with the same protected territory size), pay a $2,500 renewal fee, meet current training requirements, and sign a general release. An additional 5-year renewal term beyond the first two will not be unreasonably withheld if these conditions are met.
Training & Support Program
Franchisor Assistance
PSP Franchising, LLC provides assistance with site selection and lease review, offering a list of required inventory and approved suppliers. Franchisees receive an electronic copy of the 3,018-page Operations Manual. Initial tuition-free training is provided for two trainees, one of whom must be a principal, at a designated corporate store location for no less than 80 hours (up to 160 hours for those new to retail or the pet industry). PSP also manages a $30,000 grand opening advertising campaign for the first store. After opening, PSP offers assistance with pricing, Operations Manual updates, ongoing development of operational standards and procedures (covering sales, personnel, marketing, store appearance, accounting, equipment, and operating hours), and inventory selection. Additionally, PSP provides access to and maintains the required point-of-sale (POS) computer system, including software and related technology services.
Initial Training Hours
160
Training Location
Our designated, certified corporate training store location, Livonia, MI
Ongoing Support
After opening, PSP Franchising, LLC provides ongoing consultation and advice via telephone, electronic, or web-based communication. It periodically updates the Operations Manual and develops standards for store operations, including sales techniques, personnel supervision, advertising, store appearance, and financial reporting. PSP also provides ongoing access to its point-of-sale (POS) computer system and related technology services. An annual conference may be held (up to 3 days/year, with registration fee) which franchisees may be required to attend. PSP also performs site evaluations and inspections of the store, records, and operations to ensure quality standards. PSP may also provide additional on-site assistance if requested, at current rates.
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
supervisory
Territory Type
exclusive
Territory Size Requirements
PSP Franchising, LLC territories are generally defined as a radius around an approved location. The size varies based on population, with territories in more populous areas consisting of approximately 60,000 people, and less populous areas approximating 30,000 people. The final size of the territory is defined at the company's sole and absolute discretion, and no minimum territory is guaranteed.
Staffing Notes
PSP Franchising, LLC requires stores to be staffed with a sufficient number of qualified personnel, offering prompt, courteous, and efficient service. All employees must conform to PSP's dress code and appearance standards. The franchisee, or a designated Key Manager, must devote full-time attention to store management. At all times, at least one individual who has successfully completed PSP's initial training program must be on staff. Key Managers must also complete initial training and dedicate their full-time efforts to the store, without engaging in other business activities unless PSP provides prior written consent. Franchisees are solely responsible for all employment decisions and compliance with labor laws.