Risk Score
Pending analysis
Investment Range
$327,200 - $449,000
Franchise Fee
$15,000
Total US Locations
470
Business Summary
Plato's Closet operates retail stores that sell quality used and new brand name clothing and accessories for teens and young adults. The business model focuses on consumer value by offering used merchandise at significant savings and by purchasing used products directly from customers. Stores also stock new accessories to complement their used goods selection. Plato's Closet aims to serve parents of teenagers, teenagers, and young adults looking for affordable brand name clothing and accessories.
Corporate History
Winmark Corporation, the franchisor for Plato's Closet, was originally incorporated in Minnesota on July 20, 1988, under the name Play It Again Sports Franchise Corporation. Its corporate name changed to Grow Biz International, Inc. in July 1993, and then to Winmark Corporation in November 2001. Winmark Corporation began offering Plato's Closet franchises in March 1999. In addition to Plato's Closet, Winmark Corporation also operates four other franchise systems: Play It Again Sports, Music Go Round, Once Upon A Child, and Style Encore. The company previously offered other franchise concepts like Disc Go Round, It's About Games, Computer Renaissance, ReTool, and Wirth Business Credit, but these are no longer offered.
Financial Overview
Investment Range
$327,200 - $449,000
Franchise Fee (Low)
$15,000
Franchise Fee (High)
$25,000
Royalty %
5%
Marketing %
2%
Equipment Costs (Low)
$139,700
Equipment Costs (High)
$191,500
Working Capital
$45,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
A special risk to consider for Plato's Closet is that Winmark Corporation's financial condition, as shown in its financial statements, raises questions about its ability to provide services and support to franchisees. Despite this highlighted risk, the company's financial statements for the fiscal year ended December 28, 2024, received an unqualified opinion from its independent auditors, Grant Thornton LLP.
Financing Details
Plato's Closet does not offer any direct or indirect financing to its franchisees. Winmark Corporation also does not guarantee any notes, leases, or other financial obligations for franchisees.
Performance Metrics
Total US Locations
470
Franchised Units
470
Corporate Units
0
Avg Square Footage
4,000
Franchising Since
1999
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Plato's Closet has no litigation history to report. Item 3 of the Franchise Disclosure Document explicitly states that no litigation is required to be disclosed for Winmark Corporation.
Bankruptcy History
Plato's Closet has no bankruptcy history. Item 4 of the Franchise Disclosure Document indicates that no bankruptcy information is required to be disclosed for Winmark Corporation or its key personnel.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their Plato's Closet franchise, franchisees must provide written notice to Winmark Corporation at least 180 days before the agreement ends. They must have complied with all material provisions of their current agreement, including paying all monetary obligations, adhering to operating and quality standards, and meeting all current brand standards. Franchisees are also required to make reasonable capital expenditures at their own expense to remodel, modernize, and redecorate the store premises, and to replace and modernize fixtures, supplies, and equipment to match current new store standards. A renewal fee of $10,000 is due 30 days before the existing agreement expires. Franchisees must also be able to secure an extension of their current lease or find a new, approved location within their development area. At Winmark Corporation's discretion, franchisees may be required to sign the then-current franchise agreement, which could include different royalty rates, advertising contributions, and an altered exclusive territory, and may not contain any further rights of renewal.
Training & Support Program
Franchisor Assistance
Before a Plato's Closet store opens, Winmark Corporation provides assistance with site evaluation and leasing, along with specifications for the store's layout and design. They furnish a list of standard fixtures, equipment, supplies, and initial inventory. Franchisees attend a mandatory two-part training program in Minneapolis, MN, which covers general business, real estate, financing, store development, buying used products, marketing, computer operations, and management. Winmark Corporation also provides pre-opening and grand opening assistance and helps develop a business plan. During ongoing operations, Winmark Corporation offers support through field consultants who conduct periodic store evaluations and provide written reports. Franchisees can request advisory services for store operations and receive updates on the business system and operations manuals. Winmark Corporation also develops advertising and marketing materials, and manages the marketing fund. They provide the point-of-sale system and proprietary software, including ongoing maintenance and updates.
Initial Training Hours
60
Training Location
Minneapolis, MN and online
Ongoing Support
Plato's Closet offers ongoing support to its franchisees through several channels. Winmark Corporation provides field consultants who conduct periodic evaluations of the stores and issue written reports to help with operations. Franchisees can request advisory services related to store operations. Winmark Corporation also regularly updates the business system and furnishes updated materials for the confidential Operations Manuals, which are also accessible on the brand extranet site. Additionally, Winmark Corporation develops advertising and marketing materials for franchisees and requires participation in the Plato's Closet national (electronic) gift card program and approved email and loyalty programs. The franchisor also provides ongoing maintenance, repairs, and updates to the proprietary point-of-sale (DRS) software.
Franchise Requirements
Ideal Candidate Profile
Plato's Closet seeks individual franchisees who are willing to be on-site owner/operators and personally manage their store, with the operation of the franchised business as their primary job responsibility. If the franchisee is a corporate entity or partnership, one individual must hold at least a 50% equity and voting interest and be obligated to personally manage and operate the business. If a franchisee operates multiple stores, they may delegate management duties for additional stores to qualified managers, who must attend the concept training program. All principal owners (10% or greater interest) and their spouses must sign a personal guarantee for financial obligations and agree to confidentiality and non-compete provisions.
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
Plato's Closet grants franchisees an Exclusive Territory that typically ranges from a 3 to 5 mile radius around the store. For stores located in urban areas (metropolitan areas with over 250,000 people), the Exclusive Territory generally has a minimum population of 75,000 to 100,000 persons. For stores in all other areas, the Exclusive Territory generally has a minimum population of 50,000 persons. The boundaries are determined by computer-modeled mapping, considering population density, average household income, and consumer traffic patterns.
Staffing Notes
Plato's Closet franchisees are required to have a designated management person on duty at all times when the store is open for business. Franchisees must employ and maintain a sufficient number of adequately trained and competent employees to provide efficient service to customers. If a franchisee operates multiple stores, they can delegate management duties for additional stores to one or more managers. These delegated managers are required to attend the second session of the new store training program. Employees are not considered employees of Winmark Corporation, and the franchisee is solely responsible for all employment-related matters, including hiring, firing, training, setting hours, and supervision.