Author: msmith

If you’re considering leaving your corporate job or getting off the retirement couch to start your own business, NTY Franchise Company is something you might want to seriously investigate.

“Why?” you may ask. Basically, the overall risk profile of such a career move/investment — and likelihood of achieving long-term financial success — is much more attractive than attempting to start some one-off business on your own.

Here are a few things to consider:

GREATER FREEDOM AND AUTONOMY

Most people realize that you must work hard these days to survive or get ahead regardless of what type of employment you are in. When you own your own business it’s no different. What is different though, is that when you own your own business — such as through a franchise with a structured business model — you substantially control your own destiny.

As a franchise owner, once your business is up and running — generating free cash flow and staffed appropriately — the model typically provides significant freedom and autonomy to be in control of your own destiny and schedule. And when you control your own destiny and schedule you have much greater discretionary time to spend with family, friends, on exercise, hobbies, etc.

Ultimately, when you have more time to spend with people you enjoy — or doing things you like to do — you are happier and willing to stay dedicated to your new routine (or career/business!) for the long term.

SHORTENED TIMELINE TO PROFITABILITY

You could theoretically achieve freedom, autonomy (and financial independence) by just starting your own successful business from the ground up. But history has shown that without a predetermined structure in place to quickly get off the ground and reach economic stride, attaining independent small-business success is much easier said than done. In fact, new, one-off start-up businesses tend to have a very high failure rate versus franchising.

“When you sign on with an established national franchise company you go into business for yourself; but not by yourself,” says James Wollman, Vice President of Franchising for NTY Franchise Company. “There is structure; which is particularly important for people coming out of corporate America who are accustomed to having structure most of their career. Basically, we utilize structure to shorten the learning curve — to get you bigger, better, faster and stronger than you otherwise would on your own.”

Many grassroots small businesses take years to achieve profitability as they find their way in the unchartered, hyper-competitive world we live in today. And actually, many never achieve profitability or sustain profitability over the long term.

SUPERIOR, PROVEN BUSINESS MODEL

The way franchising helps you achieve profitability sooner than you otherwise might with your own business — and sustain it for the long term — is through leveraging multi-faceted proven business models. This includes: detailed prospective target market analysis; deep knowledge in real estate brokerage/leasing contracts; ideal layouts; point-of-sale systems; national marketing; ongoing support and training; etc. The road is well-paved, with good and bad investment decisions and lessons learned — providing the benefit of hindsight for your success.

These proven franchise business models typically yield much higher returns than comparable one-off concepts or start-up ideas. “Our Clothes Mentor women’s brand is an upscale resale national franchise consistently generates gross margins of 65 percent,” says Mr. Wollman. “Most retailers would be quite envious of this return level — often a multiple of comparable Mom and Pops’.”

Notably, often securing the best real estate or lease locations (and lowest rates of business financing) are difficult if you choose to go it alone, without a nameplate franchise brand behind you. “We’ve had many people not able to get phone calls returned from real estate brokers on desired locations until they called back and said they were now signed on with us,” explains James.

LOWER CASH INVESTMENT WITH HIGHER CASH-ON-CASH RETURN

To start a truly meaningful business on your own, the level of required cash out the door is often substantial. However, when starting a business based on an established franchise concept, you are more likely to get an SBA loan which will only require 25-30 percent cash out the door — with the balance substantially backed by collateral. This is important because with less cash out the door you can keep more of your existing assets (such as retirement accounts, stock portfolios, etc.) in place, earning a return. Then, the cash flow from your franchise directly services the loan — that you might not have gotten had it not been for the franchise. Looking at it another way, your direct cash-on-cash return is likely to be much higher with a franchise than it otherwise would be by starting a business on your own.

VALUABLE, PASSABLE OR SALABLE ASSET CREATION

Once you have an established, profitable franchise up and running you always have the option to open additional ones, and staff each with its own skilled manager. At that point, you are effectively the CEO, with Presidents at the various operating units.

Whether owning one or several franchise units, over time you will have built yourself a highly valuable cash flow generating investment vehicle that you can pass on to your children or family.

Similarly, as a clearly-delineated franchise model, the business can be sold to an individual or aggregator in a clean and efficiently-priced manner if you ever need the money for other ventures, needs, or simply choose to cash out.

Selling a one-off personal business or group of private businesses is not as easily done — and efficiently priced — as monetizing an established franchise brand. In fact, there are brokers that actually specialize in the resale of franchises, making the sales process relatively easy to facilitate.

DO YOUR HOMEWORK

One thing abundantly clear when considering a career and/or life-changing move into creating your own business for long-term success — You need to do your homework. This goes well beyond internet research. Investigate in other ways such as: visiting comparable businesses; talking with real estate professionals familiar with the market you are looking at; building detailed financial models to be able to realistically project viability — the list goes on and on.

This process is much easier when dealing with an experienced, structured franchise partner to walk you through it. NTY Franchise Company — and their upscale resale concept specialty — is one partner to consider in this journey.

Why? Their senior executives have decades of experience collectively, launching hundreds of businesses which are in fact generating sustainable long-term returns and success for their franchisees. 

MORE ABOUT NTY

Founded in 2006 and Located in Minnetonka, Minnesota, NTY Franchise Company is a pioneering and highly-experienced force in the rapidly growing category of upscale resale retailing. It is the umbrella organization for three proven national resale clothing franchise brands: Clothes Mentor (women’s designer clothing franchise); Children’s Orchard (kids clothing franchise); and NTY Clothing Exchange (teens and young adults clothing franchise).

NTY also has two other successful national franchise concepts: New Uses (household furniture, décor, appliances franchise) and Device Pitstop (electronics repair and resale franchise).

NTY specializes in working with franchisees at every stage of establishing one of its brands including: Research & Discovery; Business Planning & Budgeting; Store Location & Leasing; Financing; Design & Build-out; Point-of-Service Software & Systems; Coaching & Managing; as well as Marketing.

To learn more about NTY Franchise Company’s franchise opportunity visit our website or give us a call (952) 923-1223.

Top-Performing Women’s Resale Clothing Franchise Earns Spot on Franchise Times’ Annual Ranking of More Than 500 Franchise Systems

(MINNETONKA, Minn.) – Clothes Mentor, NTY Franchise Company’s national women’s resale clothing franchise headquartered in Minneapolis, Minnesota, is celebrating their inclusion in Franchise Times Top 200+® 2018 list. The annual ranking measures systemwide sales and units of the largest 500 U.S.-based franchise brands. It is the second national honor for Clothes Mentor this year, following their inclusion in Entrepreneur magazine’s Franchise 500 in January.

“It’s always an honor to be recognized by leading franchise media outlets like Franchise Times,” NTY Franchise Company COO Chad Olson said. “We’re very proud of the Clothes Mentor brand.”

Clothes Mentor was NTY Franchise Company’s first brand, launched when the company purchased the franchising rights in 2007. The resale designer clothing franchise has seen tremendous growth over the last three years, opening 38 new units around the United States since 2015. Clothes Mentor specializes in buying and selling like-new designer clothing, shoes and accessories for women.

Clothes Mentor jumped 11 spots from their position on the 2017 list, thanks to robust sales of more than $84 million from their 145 nationwide stores. Thanks to their community-friendly resale model, Clothes Mentor has successfully recycled more than 42 million items of mall brand and designer clothing; and paid women more than $172 million for their gently-used items since 2007.

“Clothes Mentor is leading the $17 billion resale industry today because we offer high quality, gently-used clothing for a fraction of their retail price, but we also put money in the pockets local families when we buy their gently-used items and donate their items we don’t buy to local charities,” Olson explained.

The Franchise Times Top 200+ is published in the October issue and available in a searchable database online. Along with measuring systemwide sales and units, it also analyzes industry sectors based on percentage change in sales growth, reports the 10 fastest growing franchises by four different measures, and includes exclusive news stories about the biggest names in franchising. The rankings and full report, and the searchable online database, are available at www.franchisetimes.com.

To learn more about NTY Franchising Company, visit their website at ntyfranchise.com.

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About Clothes Mentor

Clothes Mentor started with two existing locations in 2006 and began expanding the brand the same year. As of January 2018, the company has 145 stores in 42 states with many more in development. Clothes Mentor is a resale-based women’s designer fashion brand known as being cutting-edge in both high-end designer fashion and technology. The company buys and sells like-new apparel, shoes, and accessories for all women, Sizes 0-26, petites, and maternity. The inventory comes from the same customers who shop in the store, and sellers are offered cash on-the-spot or credit toward a new purchase. With stores throughout the United States, each store serves its local community in both buying and selling gently-used, designer clothing, shoes, boots, handbags, jewelry, and other accessories.

About NTY Franchise Company

Founded in 2006 by Ron Olson, NTY Franchise Company is the gold standard in resale franchising companies. NTY franchises five brands, all with a different focus: Clothes Mentor, Children’s Orchard, Device Pitstop, New Uses, and NTY Clothing Exchange. The brands are all resale-based and cover women’s designer fashions, children’s apparel and accessories, furniture and household goods, electronic sales and repair, and clothing for teens and young adults. All are great business opportunities with cutting-edge technology, unmatched support, and lucrative resale franchises. NTY Franchise Company has helped individuals to establish resale stores throughout the United States in many communities, and it has territories available to develop nationwide.

 

For Immediate Release
Matt DeMargel
919.459.8164
[email protected]

Clothes Mentor Franchise Tops $1 Million in Sales Before August 1

Fargo, North Dakota, location becomes first franchise in the brand’s 11-year franchise history to top seven figures by the end of July

(MINNETONKA, Minn.) – Clothes Mentor, a national women’s resale clothing franchise headquartered in Minneapolis, Minnesota, is celebrating its first franchise unit to top $1 million in sales before the end of July. The feat was accomplished by its Fargo, North Dakota, store, which surpassed the mark on July 28, 2018.

“It’s really an impressive milestone.” Chad Olson, Chief Operating Officer of Clothes Mentor’s parent firm, NTY Franchise Company, said. “The Fargo franchise has been one of our most impressive franchises since opening in 2010, and we have every reason to believe in their continued success.”

Clothes Mentor of Fargo has generated double-digit growth in five of the eight years it’s been in operation, spurring two expansions over that time. The 6,700 square foot store located at 2551 45th Street South, not only became the first of 146 franchise units to cross the million-dollar threshold this early, but they’ve also purchased more than $376,065 worth of clothing from local women this year.

Franchise Owner Christine Ilvedson, the 2017 recipient of NTY Franchise Company’s President’s Award, attributes her store’s success to the unwavering support of her local community.

“We are very fortunate to be in such a great community that is so supportive of small business. Fargo has such a friendly business environment and we are grateful to have such a wonderful and loyal customer base,” Ilvedson said. “I also credit our store’s success to the staff and management team. They work hard every day and keep everything running as smoothly as possible.”

Resale franchises are enjoying a $17 billion boom that began during the great recession and continues today as consumers flock to stores like Clothes Mentor to buy and sell their gently-used women’s fashion. Since 2017, Clothes Mentor has successfully recycled more than 42 million items of mall-brand and designer clothing and paid women more than $180 million for their gently-used items.

To learn more about Clothes Mentor, visit www.clothesmentor.com.

To learn more about franchising opportunities for Clothes Mentor, visit www.ntyfranchise.com/clothes-mentor.

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About Clothes Mentor

Clothes Mentor started with two existing locations in 2006 and began expanding the brand the same year. As of January 2018, the company has 146 stores in 42 states with many more in development. Clothes Mentor is a resale-based women’s designer fashion brand known as being cutting-edge in both high-end designer fashion and technology. The company buys and sells like-new apparel, shoes, and accessories for all women, sizes 0–26, petites, and maternity. The inventory comes from the same customers who shop in the store, and sellers are offered cash on-the-spot or credit toward a new purchase. With stores throughout the United States, each store serves its local community in both buying and selling gently-used, designer clothing, shoes, boots, handbags, jewelry, and other accessories.

About NTY Franchise Company

Founded in 2006 by Ron Olson, NTY Franchise Company is the gold standard in resale franchising companies. NTY franchises five brands, all with a different focus: Clothes Mentor, Children’s Orchard, Device Pitstop, New Uses, and NTY Clothing Exchange. The brands are all resale-based and cover women’s designer fashions, children’s apparel and accessories, furniture and household goods, electronic sales and repair, and clothing for teens and young adults. All are great business opportunities with cutting-edge technology, unmatched support, and lucrative resale franchises. NTY Franchise Company has helped individuals to establish resale stores throughout the United States in many communities, and it has territories available to develop nationwide. Learn more at www.ntyfranchise.com.

Considering investing in a clothing franchise? Don’t get tricked or hung up focusing on revenues and revenue growth potential. You need to focus on margins! Unlike other brands, we at Clothes Mentor are very transparent about our margins (65% +) This in the FDD because they are amazing compared to other businesses, especially those in the retail space.

What Do We Mean by Margins?

Margin (or more specifically Gross Margin) is the difference between what price a product sells for and what it costs to make or acquire it. More specifically, it is Net Sales less Cost of Goods Sold — before considering such items as overhead, payroll, general operating expenses, taxes, interest expense, etc. That amount is then divided by the total dollar value of sales to get to a company’s Gross Margin percent i.e. (Net Sales – COGS)/Net Sales = GM%.

For example, at Clothes Mentor, the margin we make on a dress is the price we sell a dress at less the cost of what we paid a customer to take in that gently-used dress. To figure out our overall Gross Margin, we take this margin on all the clothes/items we sell and then divide it by the total dollar value of sales.

Gross Margin gets right to the heart of the profit potential of a given product or service. It can’t be manipulated or influenced by much — including aggressive or risky operating strategies or financial engineering. Basically, if you start with a weak Gross Margin selling a product; it’s hard to improve it that much. Similarly, if you start with a strong Gross Margin; it’s typically difficult to mess up the profit potential. Sounds straightforward, right?

65 Percent Plus

We at NTY Franchise Company know how important Gross Margin is to the success of a brand from our own early experience when we purchased the franchise rights to Clothes Mentor in December 2006. At that time there were only two locations.

NTY Franchise Company purchased the franchise rights to Clothes Mentor after seeing first-hand the highly-attractive 65+% gross margins being generated at the two existing locations. This level compared well with typical 30–35 percent for traditional specialty retailers.  Shortly thereafter, in early 2007, we began marketing and selling the franchise rights to Clothes Mentor; and since then franchisees have been able to replicate these margins.

Impressive Growth; Stunning Consistency

You’re likely wondering to what degree the 65%+ Gross Margin level is replicable; particularly at scale? Well, consider that in just over eleven years since we purchased the franchise rights (when there were only two units), Clothes Mentor is now that largest women’s upscale resale franchise company in America; with 145 stores today and plans to reach over 200 within the next five years.

Beyond impressive franchise store unit growth, in a recently concluded analysis of 135 Clothes Mentor stores that provided 2017 data — the average Gross Margin in EACH quartile of the group (split up into four, by level of sales) was 65 percent. Yes, each of the four quartiles averaged 65 percent versus the 30–35 percent industry average. This stunning consistency speaks bibles toward the effectiveness of the business model and power of the Clothes Mentor brand.

Why are Clothes Mentor’s Gross Margins so Strong?

The key reason why Clothes Mentor’s Gross Margins are so strong (and well ahead of industry averages) is the unique way in which it acquires and sells product. “We pay cash upfront and on the spot when we acquire product from customers — unlike most other resellers or consignment stores that wait for the merchandise to sell on the floor and then typically often only offer store credit or pay the customer when the product is sold,” notes Chad Olson, Chief Operations Officer of NTY Franchise Company.  “Through paying cash upfront we take on the Inventory Risk and as such are rewarded with a much lower average cost of merchandise,” he says.

Remember from the earlier definition of Gross Margin — one of the two required components to strong returns is low cost to make or acquire a product. By taking on the Inventory Risk in this cash upfront manner, Clothes Mentor is able to pay much less for the merchandise it acquires from sellers.

How Does Clothes Mentor Effectively Assume Inventory Risk?

When you franchise a Clothes Mentor you tap into a wealth of experience in upscale resale. Rest assured, this isn’t a “Mom & Pop” operation where people behind the counter randomly decide “Hey, I think this would sell,” or “Nah, we don’t need any of these.” There is actually a decent amount of science behind it.

You might be wondering, “What type of science?” Well, it’s based on continuously-updated Price Matrix software that assists the franchisee in deciding what brands, styles, sizes, etc. to buy; what not to buy, and very importantly — how to price them. Every item that comes into the store for potential purchase by the franchisee is run through this Price Matrix system by a “Certified Buyer” who is properly trained on how to use the system.

Amazingly, the software also lets you track the buying performance of each Certified Buyer within your store. In other words, it tracks how effective the buyers are at using the platform to make purchase/pricing decisions based on the ultimate sales data of those items they specifically purchased. Through regular comparison of this data, the franchisee can see if any further training or adjustments are needed. That’s a heck of a way to run a tight ship!

As if the Price Matrix software and Certified Buyer strategy weren’t enough, there is also a Continuing Buyer Training Program where regional managers assist franchisees in staying current on local style/demand trends and overall best buying/operating practices. These individuals help you adjust, tweak and maximize your business quarterly.

Clothes Mentor’s success is built on smart product inventory acquisition. Buying smart brands, styles and sizes with a high likelihood of selling (and selling quickly) means a higher volume of sales and higher Inventory Turnover in which to make the attractive 65%+ margins. This is done over and over again, in a classic wash, rinse, repeat cycle that yields impressive returns for the franchisee.

Build It and They Will Come — For the Cash!

You may be wondering if it’s challenging for Clothes Mentor to establish and maintain a big enough inventory from which to leverage into strong Gross Margins? This is a very common question asked by potential franchisees. The simple answer is it is not difficult at all and the dynamic of “Build it and they will come for cash,” is truly front and center here.

“Cash is king, and I can assure you we have no trouble acquiring inventory with that very unique message,” preaches James Wollman, Vice President of Franchising for NTY. “We live in busy times right now, so the idea of selling in an online auction or sending it to someone else who’s paying cash online is not convenient because of the cost and time involved with shipping and transportation. People can come right in our front door, and we’ll pay cash on the spot, right over the counter, for that merchandise,” he notes. This is truly a win/win for the franchisee (and the customer) and Clothes Mentor’s high Gross Margins prove it.

Appearance Counts Too

Beyond effectively acquiring the right merchandise at very favorable prices, what also allows Clothes Mentor to realize such strong Gross Margins is the ability to price the merchandise higher than they otherwise would by providing an inviting, efficient shopping experience. Unlike stereotypical consignment shops or private reseller stores, Clothes Mentor stores are bright, clean and fresh-aired. They have well-planned shopping layouts with smart, organized shelving and racks. Merchandise is organized by size and color, making the shopping experience pleasurable and easy. And we all know — with how busy everyone is nowadays — there is a premium placed on clarity and ease when shopping. Clothes Mentor fully leverages this dynamic to achieve higher pricing and ultimately — Yes, those strong Gross Margins!

More Information on Franchise Opportunities

To learn more about Clothes Mentor’s strong Gross Margins, about the business, or about franchising a Clothes Mentor for yourself, please visit our franchising website or feel free to just give us a call (866)-261-2030.

NTY Franchise Company at a Glance

Founded in 2006 and Located in Minnetonka, Minnesota, NTY Franchise Company is a pioneering and highly-experienced force in the rapidly growing category of upscale resale retailing. It is the umbrella organization for three proven national resale clothing franchise brands: Clothes Mentor (women’s designer clothing franchise); Children’s Orchard (kids’ clothing franchise); and NTY Clothing Exchange (teens’ and young adults’ clothing franchise).

NTY also has two other successful national franchise concepts: New Uses (household furniture, décor, appliances franchise) and Device Pitstop (electronics repair and resale franchise).

NTY specializes in working with entrepreneurs at every stage of establishing one of these five successful upscale resale branded concepts including: Research & Discovery; Business Planning; Store Location & Leasing; Financing; Design & Build-Out; Point of Service Software & Systems; Coaching & Managing; and Marketing.

To learn more about NTY Franchise Company please visit our main page or give us a call (866)-261-2030.

Before you hand over your life’s savings to invest in a franchise, you need to make sure you’re buying into a company that’s completely transparent about the financial performance of the franchisees and the potential money you can make.

Beware of companies that don’t reveal the important numbers or hide behind fuzzy franchise figures that keep you in the dark about true profits.

Here at NTY Franchise Company, the parent company of Clothes Mentor, we’re proud to be one of the most financially transparent franchisors, allowing you, the prospect, a deep dive into the numbers that will make or break you as an owner. We’ve opened our books because we’re proud of our impressive sales figures that blow away competitors along with our 65% profit margin – all amazing retail stats we want to brag about!

In this blog, we’ve laid out a research roadmap you need to follow to make sure you’re buying into a company that will support you and your family in the American dream of business ownership.

First Comes the FDD

Pay close attention to the FDD. It’s a legal document that spells out all the terms of a franchise agreement to you the franchise buyer. It’s a full disclosure of the critical factors you should consider during the most-serious stage of due-diligence — before agreements are ultimately finalized and endorsed.

According to Franchise Rule law — established and enforced by the Federal Trade Commission (FTC), prospective franchisees must receive a copy of the FDD at least 14 days before they are asked to sign a contract or pay any money to a franchisor.

Every FDD is required to have 23 sections or “Items” — each with its own purpose. These range all the way from a history of the franchise concept to fees; services provided; actual contracts to be signed; and even acknowledgment of receipt of the document. Of the 23 Items required within FDDs, the one that often gets the most attention by prospects is the Item 19.

Look for a Detailed and Transparent Item 19

The FDD Item 19 details Financial Performance Representations. It’s the section that, according to FTC law, “permits but does not require” franchisors to provide prospects with a window into how much money they could potentially make owning and running a franchise. It typically details the performance of existing units or groups of units.

According to FTC franchise law, a franchisor is permitted to provide written or oral representations about the actual or potential financial performance of its franchise and/or franchisor-owned units if there is a reasonable basis for the information AND if the information is included in the FDD Item 19. Financial performance information that differs from that included in the Item 19 may be given only if: 1) A franchisor provides the actual records of an existing outlet that one is considering buying or; 2) A franchisor supplements the information provided in Item 19, for example, by providing information about possible performance at a location or under particular circumstances.

Believe it or not, if the above FDD 19 requirements are not met, it is literally illegal for a franchisor (or for their existing franchisees/affiliates) to provide you with any other financial performance information or projections of future income — either orally or written. For franchisors that choose to not disclose any formal representations in the FDD Item 19 (again — a right they have under FTC law) you as a prospect are completely on your own to project how the business will perform. Believe it or not this “no disclosure” dynamic is the case for roughly 50% of all franchise concepts out there. So, buyer beware if you’re considering buying a franchise that does not give you detailed performance financial information. On the contrary, NTY Franchise Company’s Clothes Mentor lays it all out so there are no mysteries or guesswork.

A MODEL FOR ITEM 19 DISCLOSURES

We at NTY Franchise Company are proud we’re a leader in the rapidly growing category of upscale resale and a model for financial disclosures in our detailed Item 19.

Clothes Mentor was NTY Franchise Company’s first — and remains its most popular — franchise concept within its portfolio of five established franchise brands. NTY Franchise Company acquired the franchise rights to Clothes Mentor in December 2006 when there were only two stores operating in Ohio. Shortly thereafter, in early 2007, NTY Franchise Company began marketing and selling franchise rights to the brand.

In a little over a decade, since NTY Franchise Company began franchising the Clothes Mentor brand, it has become the largest women’s upscale resale franchise company in America — with 145 stores today. With plans to reach a total of 200+ over the next several years, Clothes Mentor is quickly becoming a force in the global discussion on women’s upscale resale clothing.

Since Clothes Mentor is well established, with a significant number of units generating performance data, we go way out of our way in our FDD 19 to provide a wealth of information to prospective franchisees on how the fleet performs.

While other brands’ Item 19 may list net sales only, Clothes Mentor’s Item 19 digs deeper to give you net sales, gross profit/gross profit margin, operating expense breakdown and financial performance by years in operation – unheard of details for most franchise brands!

Check out the details in Clothes Mentor’s FDD Item 19 for 2017 and then compare it to other brands!

NET SALES DISCLOSURE
Net Sales is all revenues received from the sale of goods and services — less sales taxes, discounts, customer refunds and returns. With data on 135 Clothes Mentor stores open more than a year, NTY Franchise Company provides Net Sales data for each quartile of stores within the group — including what percent of stores within each quartile met or exceeded the average within the quartile. Let’s cover some of the numbers:

Of the 135 measured Clothes Mentor stores, the top quartile had Average Net Sales of $952K in 2017 (with a range of $1.62M – $757K); the bottom $328K (range of $440K – $153K); and the average — $600K. Roughly 43% of the stores in each quartile met or exceeded the average for the quartile. “These figures say a lot — as in my 26 years of experience I’ve observed how independent, non-franchised women’s apparel consignment stores typically generate annual sales revenues of $175,000 – $225,000,” notes Jim Wollman, Vice President of Franchising and Franchise Coach at NTY.

Looking at this relative performance another way, according to the 2010 U.S. census (most recent conducted), only 11% of ALL small businesses (defined as 20 employees or less) have annual sales revenues that exceeded $500K. This compares with roughly 60% of the 135 measured Clothes Mentor units having Net Sales over $500K. Clearly, 60% versus 11% is a heck of a comparison — further illustrating the power of the Clothes Mentor brand.

GROSS PROFIT DISCLOSURE
Net Sales is one thing, but Gross Profits is another — and often more relevant when analyzing a business. Gross Profit is Net Sales less Cost of Goods Sold. Note that Gross Profit does not reflect various store Operating Expenses (which we’ll get to later).

NTY Franchise Company provides Gross Profit and Gross Profit Margin (which is Gross Profit as a percent of Net Sales) for each Clothes Mentor performance group quartile — including again what percent of stores within each quartile met or exceeded the average of the quartile.

Of the 135 stores, the top Clothes Mentor quartile had an average Gross Profit of $618K in 2017 (with a range of $1.101M – $493K); the bottom $213K (range $293K – 104K); and the average — $390K. Roughly 42% of the stores in each quartile met or exceeded the average within the quartile. Overall, all quartiles have an average Gross Profit Margin of 65%. This 65% level is very attractive when compared with the approximate 30 – 35% average Gross Profit Margin for traditional specialty retailers — also highlighting the power of the Clothes Mentor franchise brand.

PERFORMANCE BY YEARS OF OPERATION
We go even one step further in the Clothes Mentor FDD Item 19 by disclosing Net Sales and Gross Profit/Gross Profit Margin by stores’ years in operation — including also what percent within each age category met or exceeded the average within the category. This disclosure is unheard of in many brand’s Item 19s and gives you visibility into how stores progress in performance over time. To no surprise, the longer the units are open — the better the performance.

For example, Average Net Sales for the oldest Clothes Mentor stores (8 – 10 yrs.) was $776K in 2017 (ranging from $1.527M – $427K); while the youngest category (1 – 2 yrs.) was $409K (ranging from $847K – $182K). Average Gross Profit for the oldest Clothes Mentor stores was $509K (range $1.032M – $270K); with the youngest being $264K (range $539K – $125K). Roughly 41% of the stores in each age group met or exceeded the average for the group. Quite impressively, average Clothes Mentor Gross Profit Margin remained consistent at around 65% among all store age categories — exceptional when compared with the 30 – 35% approximate average of specialty retailers.

OPERATING EXPENSE BREAKDOWN

Here at NTY Franchise Company, we also give you the prospect a peek into operating expenses, so you get a true picture of what it takes to run a store, pay for employees, insurance, etc. This is also grouped by age of store for the average of 82 Clothes Mentor units that have provided enough data for the compilation. This includes average: Rent/Insurance (12.9%), Marketing (5.2%), Payroll (22.7%), and Other (13.2% — which includes royalty fees of 4% of net sales). Collectively, when considering all the components and qualifiers of these figures detailed in the FDD 19, these compare remarkably well with traditional specialty retailers.

With an honest and detailed financial picture, you can easily see the potential of the brand- under various scenarios — to project your income potential as a Clothes Mentor franchise. With other brands, it’s just guess work and you should insist “Show me the numbers!”

PUTTING FDD ITEM 19 INTO PERSPECTIVE

It’s clear that we at NTY Franchise Company include a significant amount of information in our Clothes Mentor franchisee FDD Item 19 and the numbers are impressive versus industry averages. However, even with transparent disclosures, you need to keep in mind how various factors could influence some of the data regardless of which franchise concept you’re considering.

A key example is that some franchise owners draw direct meaningful salaries for themselves — included in payroll expenses of their units — while others do not. By providing disclosures compiled of data from so many units, NTY Franchise Company strives to make apples-to-apples comparisons easier — but the process is never perfect.

The bottom line is that a robust FDD Item 19 — like the one NTY Franchise Company provides on Clothes Mentor — goes a long way to help you make an educated, intelligent decision on whether to invest in a given concept. You should use this information as a key piece of the due-diligence process and enhance it with “kicking the tires” — including visiting franchise locations and calling owners themselves.

THE GOOD-OL’ ADMONITION ACKNOWLEDGMENT
Any discussion of the FDD Item 19 would not be complete without covering the admonition acknowledgment. Whether related to Item 19 or any other phase of your due-diligence process, you need to know that past performance is no guarantee of future results. The FTC requires such language in the FDD Item 19 — to caution prospective franchisees that their results may differ from that detailed in the Item 19.

While the FTC does not require specific language with the admonition, we at NTY Franchise Company say “Clothes Mentor stores have earned this amount. Your individual results may differ. There is no assurance that you will achieve the same or similar results.”

A SMART CHOICE FOR SUCCESS
Remember, there are no guarantees on anything in the franchise world — or life for that matter — regardless of how good the data or situation looks. But with more than a decade of impressive expansion in store count; very favorable data evident within its FDD 19; and the seasoned, highly-effective support infrastructure at NTY Franchise Company, the stage is well set for you, a prospective Clothes Mentor franchisee, to realize success. Mix in real focus, determination, some grit and hard work — and we know you will be great success!

NTY FRANCHISE COMPANY
Founded in 2006 and Located in Minnetonka, Minnesota, NTY Franchise Company is a pioneering leader in the rapidly growing category of upscale resale. It is the umbrella organization for three proven national resale clothing franchise brands: Clothes Mentor (women’s designer clothing franchise); Children’s Orchard (kids clothing franchise); and NTY Clothing Exchange (teens and young adults clothing franchise).
NTY also has two other successful national franchise concepts: New Uses (household furniture, décor, appliances franchise) and Device Pitstop (electronics repair and resale franchise).
NTY specializes in working with entrepreneurs at every stage of establishing one of its franchise brands including: Research & Discovery; Business Planning; Store Location & Leasing; Financing; Design & Build-out; Point of Service Software & Systems; Coaching & Managing; and Marketing.
To learn more about franchising a Clothes Mentor — or about NTY Franchise Company and the other lucrative opportunities in upscale resale franchising — explore our main page or feel free to give us a call (952)-923-1223

(MINNETONKA, Minn.) – Clothes Mentor, a national women’s resale clothing franchise headquartered in Minneapolis, Minnesota, recently opened their third location in Michigan and 144th store in the United States, continuing their successful run of new store openings since the brand launched in 2006.

Clothes Mentor of Rochester Hills, Michigan (1180 S. Rochester Rd, Rochester Hills, MI 48307) opened for business on March 15, 2018, in a 3,975-square-foot location with 2,987 square feet of selling space.

“We’re excited to add Clothes Mentor of Rochester Hills, Michigan, to the family,” Chad Olson, Chief Operating Officer of Clothes Mentor’s parent firm, NTY Franchise Company, said. “We’ve had great success in Michigan with our stores in Novi and Portage, so we couldn’t be happier to see a third store open there.”

Franchise owner Carolyn Webb was a corporate vice president of strategic planning for a pharmaceutical wholesale company who decided the time was right for a change. The mother of three knew she wouldn’t be in her corporate job forever, so decided the time was right to explore entrepreneurship.

“Corporate America will quickly hire people half your age at half your salary to do your job, so rather than wait for that to happen, I took charge of my destiny and became a small business owner,” she said.

Resale franchises are enjoying a $17 billion boom that began during the great recession and continues today as consumers flock to stores like Clothes Mentor to buy and sell their gently used women’s fashion. Since 2017, Clothes Mentor has successfully recycled more than 42 million items of mall-brand and designer clothing and paid women more than $180 million for their gently-used items.

To learn more about Clothes Mentor, visit www.clothesmentor.com

To learn more about franchising opportunities for Clothes Mentor, visit www.ntyfranchise.com/clothes-mentor