Risk Score
Pending analysis
Investment Range
$319,000 - $388,000
Franchise Fee
$60,000
Min Cash Required
$70,000
Total US Locations
20
Business Summary
Scout & Molly's operates brick-and-mortar retail stores specializing in women's clothing, jewelry, handbags, and accessories. The franchisor provides services to its franchisees including assistance with training, operations, advertising, purchasing, and promotional techniques for these boutiques.
Corporate History
The Scout & Molly's brand was originally formed as SCOUT & MOLLY'S LLC on January 23, 2002, in North Carolina, and later converted to a corporation in 2005. From 2008 to 2013, the predecessor companies offered licenses for operating retail locations under the Scout & Molly's trademarks, which are treated as franchises for disclosure purposes. FRANLOGIC SCOUT DEVELOPMENT, LLC was formed on March 4, 2014, to acquire substantially all the assets of these predecessors and began selling franchises under this disclosure document on May 16, 2014.
Financial Overview
Investment Range
$319,000 - $388,000
Franchise Fee (Low)
$60,000
Franchise Fee (High)
$60,000
Minimum Cash Required
$70,000
Royalty %
7%
Marketing %
1%
Equipment Costs (Low)
$98,000
Equipment Costs (High)
$135,000
Working Capital
$70,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Scout & Molly's financial statements show that the company has a negative members' equity (a deficit), indicating that its total liabilities currently exceed its total assets. This financial condition raises questions about Scout & Molly's ability to provide adequate services and support to its franchisees. Additionally, while the company reported net income in 2024, the net income has been declining over the last three fiscal years.
Financing Details
Scout & Molly's does not offer any direct or indirect financing to its franchisees. Franchisees are responsible for securing their own funding, and the franchisor does not guarantee any notes, leases, or other obligations.
Performance Metrics
Total US Locations
20
Franchised Units
20
Corporate Units
0
Avg Square Footage
1,100
Franchising Since
2008
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
3
Litigation Summary
Scout & Molly's has been involved in three notable litigation cases. In 2016, a multi-unit franchisee, Scott Holdings, Inc., sued Scout & Molly's, alleging violations of the California Franchise Investment Law and seeking damages due to allegedly misleading advertising. This case was settled in June 2018 with Scout & Molly's agreeing to pay $240,000 plus interest. In 2018, PeopleShare, LLC, a staffing company, brought a claim against FranLogic Scout Development, LLC and FranLogic Corporation for breach of an oral contract, seeking $50,000 in unpaid wages for temporary employees. FranLogic disputed the claims due to the absence of a written contract. In June 2022, an arbitrator ordered FranLogic to pay $48,112.90, and a settlement agreement for installment payments was reached in July 2022. Also in 2018, Lisa Kornstein Kaufman, a former owner of the Scout & Molly's franchise system, sued Ed Samane and several affiliated entities, including FranLogic Scout Development, LLC. She alleged various claims including breach of fiduciary duty, breach of contract, and fraud, seeking at least $800,000 in damages. In June 2022, the parties settled the claims, which involved a payment of $312,500 to Kornstein, the release of a $200,000 debt owed by FranLogic Corporation to Kornstein, and Samane acquiring Kornstein's outstanding equity shares in FranLogic Scout Development, LLC as part of the settlement.
Bankruptcy History
Scout & Molly's has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, Scout & Molly's franchisees must provide written notice of their intent to renew between 6 and 9 months before their initial term expires. They must be in good standing, free of defaults, and have not received more than two default notices in any 12-month period. All financial obligations to Scout & Molly's and its affiliates must be current. Franchisees are required to sign Scout & Molly's then-current Franchise Agreement, which may have materially different terms, and must execute a general release of all claims against the franchisor. They must also secure the right to occupy their current premises or an approved alternative location for the new term and complete any required renovations or re-equipping to meet current brand standards. Scout & Molly's may choose not to grant a renewal if they provide 180 days' notice, have no more than one franchise operating in the territory, and their refusal is not intended to convert the location into a company-owned store.
Training & Support Program
Franchisor Assistance
Before opening, Scout & Molly's assists with site selection approval, provides recommended floor plans, and design specifications. They also provide lists of required equipment, supplies, approved suppliers, and forms. Franchisees and their designated Store Managers receive an initial 48-hour training program, which can take place at the corporate office in King of Prussia, Pennsylvania, at the franchised business, or another designated location, covering sales, marketing/merchandising, franchisee responsibilities, and software functionality. For ongoing support, Scout & Molly's offers advice and consultation services, and makes advertising materials available. They administer a Brand Development Fund, funded by 1% of monthly gross sales, which is used for marketing development, retail growth consultants, promotional marketing, public relations, advertising, and maintaining the corporate website. Scout & Molly's may also offer additional training courses and require franchisees to attend designated conferences and annual meetings. Franchisees are required to use approved point-of-sale software and provide the franchisor with independent access to their accounting system for monitoring.
Initial Training Hours
48
Training Location
King of Prussia, Pennsylvania, at your Franchised Business, or at a location we designate
Ongoing Support
After opening, Scout & Molly's franchisees receive advice and consultation services. The franchisor provides advertising materials and manages a Brand Development Fund (1% of monthly gross sales) to support marketing development, retail growth consultants, promotional activities, public relations, and maintaining the corporate website. Scout & Molly's may offer additional training courses and require attendance at designated conferences and annual meetings. Franchisees must use specific point-of-sale software and allow the franchisor independent access to their accounting system for data monitoring.
Franchise Requirements
Ideal Candidate Profile
Scout & Molly's seeks individuals who are either full-time, hands-on owner-operators, or at least part-time involved if they hire a full-time Store Manager. Ideal candidates should possess strong business acumen, an acceptable credit rating, good moral character, and a reputation and business qualifications satisfactory to Scout & Molly's. Franchisees are expected to dedicate significant effort to managing their retail women's clothing and accessories store.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
Full-Time
Territory Type
Non-Exclusive
Territory Size Requirements
The standard territory for a Scout & Molly's franchise is defined as either an approximately 3-mile radius around the approved location or, in major metropolitan areas, a geographic area with a population of 50,000 people. While the territory is designated as protected, it is explicitly non-exclusive, meaning the franchisor reserves the right to compete with franchisees through company-owned stores or other channels of distribution.
Staffing Notes
Scout & Molly's requires that the franchised business be managed full-time (at least 40 hours per week) by an individual who has completed their initial training. This can be the owner or a designated Store Manager. If a full-time Store Manager is hired, the owner's required involvement is reduced to part-time (20 hours per week). Franchisees are responsible for training all new and existing employees to the franchisor's standards, and any replacement Store Managers must also complete the initial training program.