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FDD Talk 2019: Once Upon A Child Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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Once Upon a Child Franchise Photo by GrowingKidsMinistryOnce Upon a Child Franchise Photo by GrowingKidsMinistry

In this FDD Talk post, you’ll learn the following:

  • Section I – Background information on the Once Upon A Child franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Once Upon A Child franchise, based on Item 7 of the company’s 2019 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Once Upon A Child franchise, based on Items 5 and 6 of the company’s 2019 FDD
  • Section IV – Number of franchised and company-owned Once Upon A Child outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
  • Section V – Presentation and analysis of Once Upon A Child’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
  • 2018 average, high, and low gross sales and average gross profit of 341 of the 342 franchised Once Upon A Child stores in the United States and Canada that had been in operation by the same franchisee or owners for the 12-month period ended December 29, 2018, grouped by year opened (2017, 2016, 2015, 2014, 2013, and 2012 and prior)
  • 2018 average gross sales for the first, second, third, and fourth quartiles of 341 of the 342 franchised Once Upon A Child stores in the United States and Canada that had been in operation by the same franchisee or owners for the 12-month period ended December 29, 2018
  • number and percentage of franchised Once Upon A Child Stores in the United States and Canada that had been in operation by the same franchisee or owners for the 12-month period ended December 29, 2018, grouped by range of gross sales ($0 to $250,000; $250,001 to $500,000; $500,001 to $1,000,000; $1,000,001 to $2,000,000; $2,000,001 to $3,000,000; and greater than $3,000,000)

Section I – Background Information

14 Things You Need to Know About the Once Upon A Child Franchise

Leads Winmark’s Brands in Most Recycled Items Purchased

1.  In early March 2019, Once Upon A Child and the other brands under its parent company, Winmark, announced that they had collectively purchased over 150+ million gently-used items in 2018. Once Upon A Child took the lead by recycling over 84 million gently-used children’s items, while Plato’s Closet purchased 54 million teen and young adult secondhand clothing and accessories.

2.  Each brand has set the bar high in terms of industry standards to become the most dependable resale choice as consumers are looking for high-quality, affordable, gently-used shopping selection. It comes as no surprise that for the fifth consecutive year, Entrepreneur Magazine has named Once Upon A Child the top children’s retail franchise and Plato’s Closet the top apparel and accessories franchise in the nation.

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3.  Steve Murphy, president of franchising for Winmark, said, “The strength of our business model holds true, and our franchisees in each brand are dedicated to leveraging the franchise model, executing flawlessly, delivering consistency and being a reliable resource to the communities they serve.”

4.  According to Winmark, many of its franchisees left corporate America and their long-time careers because they were seeking a franchise opportunity that allowed them to make more of a difference in their communities. Every Winmark brand recycles thousands of items into local communities by reselling quality, used merchandise.

5.  In fact, the majority of owners were loyal customers before joining the franchise. They understood the local recycling void the brand fills and wanted to be a part of providing more neighborhoods with affordable, quality resale shopping options.

6.  Renae Gaudette, vice president of franchising for Winmark, added, “The consumers and franchisees both have a heart for sustainability and see that resale is doing its part to make a local impact with every purchase and sale of high-quality items that still have life to give. Each of our concepts is the leader in its respective niche because owners are prioritizing the community impact and want to see their stores be used for good.”

Current Franchisees Return to Cape Coral, Florida

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7.  In 2006, Gary and Debbie Firke moved from Ohio to Cape Coral, Florida to open the first Once Upon A Child store in the area. However, the Firkes had to move the store in 2009 to Fort Meyers in order to meet growing demand. At the end of January 2019, the Firkes opened a new Once Upon A Child in Cape Coral, stating it was the right time to bring the brand back to the area.

8.  According to district manager Carli Firke, who is the daughter of Gary and Debbie, “A lot of young families are moving into town. Our corporation decided it was an open territory, so we jumped back in again and returned to Cape Coral. It was close to home and easy enough.”

9.  With the newly-opened Cape Coral location, the Firke family now owns and operates four Once Upon A Child stores in Southwest Florida. Firke added that since the family has already opened a few stores in the region, getting the Cape Coral store up and running was fairly easy. Since the store’s success depends on a steady flow of inventory, Firke says, “We buy all the time because we always need everything. That is how we stay afloat.”

10.  Firke also noted that Once Upon A Child is successful because it pays cash on the spot for the used items and is not a consignment store. The payout for used items comes out to about 30 percent of what Once Upon A Child can get for the items. The condition of the item is important and will factor into the resale price.

11.  Items also must meet all government safety standards. Because of laws and standards, there aren’t any car seats sold in a Once Upon A Child store. Also, any cribs not sold after 2011 are on the blacklist. Toys that have been recalled are also forbidden.

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Company History

12.  Once Upon A Child was founded in 1985 by Lynn and Dennis Blum in Perrysburg, Ohio. The Blums got the idea to start a resale store that focused on children’s attire and toys after noticing that people often purchased used baby clothes from Goodwill. Before opening the first Once Upon A Child store, Lynn Blum had been selling her three sons’ and friends’ and neighbors’ clothing in a garage sale from her house every week.

13.  In 1989, Dennis Blum quit his job to work with Lynn full time and they grew Once Upon A Child over the next few years. After a few additional stores were opened, the Winmark Corporation acquired Once Upon A Child from the Blums in 1992. After the acquisition, franchising started immediately and by 2011, there were 240 Once Upon A Child stores in the U.S. and 24 in Canada.

Entrepreneur’s Franchise 500

14.  Once Upon A Child ranked No. 129 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of Once Upon A Child franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Once Upon A Child’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

  • Outlets at the Start of the Year:  326
  • Outlets at the End of the Year:  348
  • Net Change:  +22

2017

  • Outlets at the Start of the Year:  348
  • Outlets at the End of the Year:  360
  • Net Change:  +12

2018

  • Outlets at the Start of the Year:  360
  • Outlets at the End of the Year:  379
  • Net Change:  +19

Company-Owned

2016

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

2017

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

2018

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

  • The following is a financial performance representation entitled “Unaudited Statement of Average Annual Sales and Gross Profit.” The gross profit figures do reflect the cost of sales but do not reflect the operating expenses that must be deducted from the gross profit figures to obtain your net income or profit.
  • The following statement of average annual gross sales and gross profit includes average gross sales and gross profit during the 12-month period ended December 29, 2018 (Winmark’s fiscal year) as reported by 341 of the 342 franchised Once Upon A Child Stores located in the United States and Canada that commenced operations in each of the years 1988 through 2017.
  • This statement includes information from only those Once Upon A Child Stores in the United States and Canada that had been in operation by the same franchisee or owners for the 12-month period ended December 29, 2018. No other Once Upon A Child Stores are included in this statement due to insufficient history of operations (not in operation for the 12-month period ended December 29, 2018 or transferred during this period).
  • The financial statements Winmark receives from franchisees for these Stores are unaudited, and Winmark does not audit or independently verify, or express an opinion regarding, these statements.
  • There were 342 franchised Once Upon A Child Stores that had been in operation by the same franchisee or owners for the 12-month period ended December 29, 2018. Only 341 of the 342 Stores are reflected in the average, however, because one Store was temporarily closed for several months.
  • This financial performance representation does not include information for the 37 Once Upon A Child Stores that opened or transferred in 2018. No Stores closed in 2018 after being opened less than 12 months.

Part 1 – Statement of Average Gross Sales and Gross Profit of 341 Franchised Once Upon A Child Stores for the Fiscal Year Ended December 29, 2018

Year Opened – 2017

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