Clothing is BIG business. The apparel market in the U.S. is valued at almost $318 billion, and that figure from Statista doesn’t even include items specified as work clothes as well as other personal accessories such as watches and jewelry, handbags or similar items that do not count as actual articles of clothing.
Impacted significantly by the pandemic, fashion-related franchises are in the midst of bouncing back. According to data released in the Monthly Retail Trade Report by U.S. Census Bureau and referenced in the 2022 Franchising Economic Outlook, “Clothing and accessory stores contributed the most sales growth in 2021 [for the retail and food services industry], which increased at a rate of 48.4%, reflecting demands from consumers preparing for more out-of-home activities. […] Retail sales growth mostly came from in-person shopping; while ecommerce remained strong, sales grew at a slightly lower rate, accounting for 15% of retail sales as buying habits continue to normalize.”
Retail clothing, or fashion, franchises largely fall into two broad categories: boutique and resell.
Boutique franchises are typically small stores that sell firsthand goods and cater to a certain subset of the population. For instance, Apricot Lane Boutique markets itself as a “mother/daughter boutique” with a customer base ranging from 16 to 50+. It collects its merchandise from many of the largest fashion trade shows in the U.S.
Another boutique franchise is Fab’rik. Founded over 20 years ago, the motto of the franchise is “High style with heart, no attitude or sticker shock.” Fab’rik’s founder, Dana Spinola, wanted to be a pioneer of affordable luxury saying, “I wanted to create a place where everyone could afford to feel that beautiful feeling.”
The other main type deals primarily in secondhand sales: clothing resell franchises. Franchises in this area allow customers to sell goods that are in “like new” or “gently used” condition and sell them to the store. The store then resells those goods at a discounted rate to other customers.
The franchise leader in this area is Winmark Corporation, parent company of five, diverse resell concepts—three of which have a clothing focus: Once Upon A Child (children’s clothing and toys), Plato’s Closet (teen and young adult clothing), and Style Encore (women’s clothing and accessories).
While the market for these franchises has expanded considerably in recent years—from all walks of life and income level, the company sees resell franchises such as its brands gaining more business as more and more customers incorporate eco-friendly practices into their routines. “Our impact will only strengthen as we aim to further our position as the industry leader in resale and sustainability,” says Renae Gaudette, President of Franchising at Winmark Corporation.
The Importance of Marketing to Fashion Franchises
Marketing is of special importance to success for franchises such as these. In addition to the training and other support offered, prospective franchisees should pay special attention to the positioning of the franchise, or franchises, they are considering when doing their research.
Having a clear recognition of their market position (kind of clothing sold, primary audience for sales, etc.) is important for clothing retail franchises—and not just for optimizing sales. Positioning falls under the broader concept of marketing, and retail franchises also use marketing principles to attract the right type of potential franchisees to their franchise opportunity.
“Nothing is more exciting to a group of franchise candidates than market research with intimate knowledge of the behavior of their future customers. […] Nothing builds more leadership credits for the franchisor than raw marketing knowledge” Jim Bender, president and owner of Franchise System Builders has said about franchise marketing. “Candidates can buy equipment and inventory and rent real property, but success is not made of equipment alone. To sell the inventory they now own, they need the market research, test marketing, marketing agencies, and the years of experience the franchise company can provide.”
Finding the franchise that aligns with your positioning ideals is the first step to finding success as a franchisee. If the marketing is clear, the franchise has a good grasp of where it stands in the marketplace and what its opportunities for growth truly are amongst numerous clothing franchises that are similar upon first glance.
Prospective fashion franchisees may state that they are buying a franchise because of the franchisor’s success, average amount of money a unit in its system brings in, or the like. But, as Bender continues, what “they are really saying is, ‘[I’m buying a franchise’s] marketing expertise that generates the AUV (average unit volume i.e., sales), reduces the ramp-up curve, and ultimately provides the lifestyle I seek.”
Initial Investment and Opening Costs for Fashion Franchises
The amount necessary to open a franchise varies depending on the unique business system and execution requirements. The initial investment required for a fashion franchise can vary, mostly due to the real estate requirements of the franchise opened.
Our franchise profiles will present you with a basic range for the initial investment or minimum cash required to open a franchise. But when it comes to finding out the details of an initial investment, the FDD is the best place to look. Franchisors offer itemized estimates in their FDD based upon their experience establishing, and in some cases operating, units.
Keep in mind these estimates are just that, though—an estimate. Prospective franchisees should review the figures presented with a business advisor, taking into consideration their unique circumstances, before making the decision to enter into a franchise agreement.
Ongoing Costs for Fashion Franchises
Don’t forget about the additional costs required for nearly all franchise businesses. This includes expenses such as royalty fees, marketing fees, software fees, training fees, and more.
The most common is the royalty fee. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes, along with certain types of operational support. In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training.
It’s important to note that while many initial and ongoing costs are detailed in the FDD, there are some costs inherent to business ownership, like employee wages or utility costs, that aren’t.
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Fashion franchises have emerged as a suitable outlet for those wanting to indulge the fashionista in them as a career, but desire support with business operations. If you’re considering buying a franchise in this field that still offers great variety, check out our listing of fashion franchise opportunities.