Plato’s Closet Franchise Costs, Fees & FDD

Year Business Began: 1998

Franchising Since: 1999

Headquarters: Minneapolis, Minnesota

Estimated Number of Units: 515

Franchise Description: Winmark Corporation is the franchisor. The franchisee will own and operate a Plato’s Closet retail store from which the franchisee will sell quality used and new brand name teen and young adult clothing and accessories.
Training Overview: The franchisor conducts its two-part training program at Winmark’s training center in Minneapolis and through online training sessions. The first session of the training program, “Resale University 101 Training,” covers several aspects of set-up and opening of a privately-owned retail business. It takes place over a period of four days. At Resale University 101 Training, franchisees also will be required to participate in an online financial management course conducted by Winmark’s third party vendor. The second session of the Plato’s Closet training program, “Resale University 201 Training,” is attended after the franchisee is done securing financing, executing a lease for a retail site and completing the online financial management training program. It is conducted over a period of at least five days. The franchisor will not allow franchisees to open their store unless they successfully complete both sessions of the training program to its satisfaction. The franchisor will provide pre-opening assistance consisting of one to two days, typically three to five weeks prior to the actual store opening. The franchisor will also provide store opening assistance on the day before and the day of the initial opening of the store. The franchisor currently does not require franchisees to attend any additional training programs.

Territory Granted: Franchisees will receive an “exclusive territory” surrounding the location of the store when granted a Plato’s Closet franchise. Computer modeled mapping which factors in population density and average household income and consumer traffic patterns will determine the boundaries of the exclusive territory, which is typically a three to five mile radius around the store. The franchisor will designate a development area within the exclusive territory. Franchisees can select a site for their store within this development area, subject to the franchisor’s consent to that site. The exclusive territory for stores located in urban areas (metropolitan areas with a population in excess of 250,000 persons) generally will have a minimum population of 75,000 to 100,000 persons. The exclusive territory for stores located in all other areas generally will have a minimum population of 50,000 persons. The franchisor will not establish another franchised or company-owned Plato’s Closet store at a physical location in the exclusive territory.

Obligations and Restrictions: If franchisees are individuals, they must be the on-site owner/operator and personally manage the store unless they receive the franchisor’s prior consent to delegate their authority to do so. If franchisees operate more than one store, they may delegate their management duties for additional stores to one or more managers. The franchisor requires store managers for franchisees operating multiple stores to attend the second session of the new store training program. If franchisees are a corporate entity or a partnership, one individual must retain at least 50% of the equity and voting interest in the corporation entity or partnership and will be obligated to personally manage and operate the franchised business. Each individual who owns a 10% or greater interest in the franchisee entity is considered a principal owner and all principal owners and their spouses must sign the personal guaranty attached to the Franchise Agreement. Franchisees must offer and sell only those goods and services that the franchisor has approved. Franchisees also must offer all goods and services that the franchisor designates as required for all franchisees. Franchisees may not sell or accept in trade any used undergarments or any products that they believe may be stolen or that have been recalled, are knowingly counterfeit, or are otherwise not safe upon inspection. No new apparel may be sold in the store (only new accessories).

Term of Agreement and Renewal: The length of the initial franchise agreement is 10 years. If franchisees meet the renewal requirements set forth in the Franchise Agreement, they can renew the Franchise Agreement for additional 10 year periods.

Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee a franchisee’s note, lease, or obligation.

Estimated Initial Investment

Name of Fee	Low	High
Initial Franchise Fee	$25,000	$25,000
Fixtures and Supplies	$50,000	$65,000
Signs	$11,000	$16,000
Security Cameras	$1,500	$4,000
Point-of-Sale (POS) System	$22,200	$29,500
Leasehold Improvements	$15,000	$22,000
Build-Out	$30,000	$55,000
Deposits and Business Licenses	$5,000	$15,000
Opening Inventory	$65,000	$80,000
Miscellaneous Pre-Opening Expenses	$45,000	$60,000
Rent – first 3 months	$17,500	$27,500
Additional Funds – first 3 months	$40,000	$50,000
ESTIMATED TOTAL	$327,200	$449,000

 
Other Fees

Type of Fee	Amount
Continuing Fee	5% of gross sales.
Marketing Fee	$1,500 per year.
Cooperative Advertising	Maximum amount is 5% of gross sales.
Local Marketing Expenses	Minimum amount, when combined with cooperative advertising expenses, is 5% of gross sales.
Advertising Fee	If Winmark imposes this fee, franchisees will pay up to 2% of gross sales.
Transfer Fee	$10,000
Audit Expenses	Cost and expenses related to audit.
Renewal Fee	$10,000
DRS Maintenance Fee	The fee for the term of this Franchise Agreement is $1,000. Upon renewal, the then-current rate for the fee will be applied.
Technology Fee	Currently $0.
Remodeling Expenses	Will vary under circumstances.
Inventory	Will vary under circumstances.
Insurance	Will vary under certain circumstances.
Interest Expenses	Lesser of 18% per year or maximum rate permitted by law.
Costs and Attorney’s Fees	Will vary under certain circumstances.

The above information has been compiled from the FDD of Plato’s Closet. Year of FDD: 2025.
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