Mary Klapperich helped franchisees launch hundreds of stores, but her corporate travel schedule left her joking that she never knew what happened after the grand opening.
She does now, after buying a Style Encore franchise from her former employer, Plymouth-based Winmark Corp., and opening the state’s first location of the women’s apparel resale boutique in May in Eagan.
“I helped people get up to opening day, then I got on a plane and flew home,” Klapperich said.
Klapperich helped open some 200 stores during her seven years in field operations at Winmark, making two or three two-day stops at each throughout the United States and Canada.
Style Encore specializes in buying and selling used casual and business apparel for women in their late 20s through their mid-50s.
That makes it a natural extension of the brands Klapperich worked with at Winmark: Plato’s Closet, which buys and sells clothing and accessories for girls and women in their teens to mid- 20s, and Once Upon a Child, which buys and sells children’s clothing, toys, furniture and accessories.
‘Big sister’ franchise
“We call ourselves the big sister of Plato’s Closet and Once Upon a Child,” Klapperich said.
Klapperich and her husband, Don, are co-owners of the franchise, which they financed with a U.S. Small Business Administration loan they obtained through their bank. Initial investment requirements vary but range from $238,000 to $387,000, according to Winmark’s website.
Klapperich had looked into buying a Plato’s Closet franchise, but no Twin Cities locations were available. She was the first to submit a signed agreement after Winmark launched Style Encore in January 2013. The first Style Encore opened in August 2013 and a dozen were operating before the Eagan location opened its doors.
The success of Winmark’s other resale franchises and the support franchisees get from the company made her confident in buying a new franchise concept, Klapperich said.
“It wasn’t as big a concern because I know that the concept of recycled-reused made so much sense that in my eyes it was a no-brainer,” she said.
Steve Murphy, president of franchising at Winmark, said the company’s experience with the resale business model mitigates risks that could be associated with a new franchise brand. Winmark, which broke into resale franchising with Play It Again Sports in 1998 and also offers Music Go Round franchises, has 760 franchisees operating 1,100 locations.
“Because we’ve done this so long and have had a lot of success, especially with Once Upon a Child and Plato’s Closet, we don’t feel there’s a lot of risk there,” Murphy said. “We feel like there’s a lot of opportunity and it’s finding the right franchise partners.”
That may include Plato’s Closet and Once Upon a Child franchisees who have expressed strong interest in opening Style Encore stores, Murphy said.
Winmark expects that Style Encore stores “will follow quickly in the footsteps” of Plato’s Closet, with stores averaging sales of slightly more than $1 million yearly, and Once Upon a Child, with an average store sales volume of $922,000 a year.
Mike Accurso, a Twin Cities-based franchise consultant with the Entrepreneur’s Source, a national franchise and business consulting company, advises potential buyers on franchise opportunities. He said buyers should consider their risk tolerance in evaluating whether to buy a newly established franchise.
“I have had good success with new brands, new concepts, but the key thing is they’re not for everyone,” said Accurso, who has not sold Winmark franchises. “You have to have a certain level of risk capability to make it happen. And in many cases be more of a self-starter, too. With the new concepts, not only is the financial risk at least perceived to be stronger, the physical effort to pull all the pieces together sometimes is greater.”
The expert says: Mark Spriggs, associate professor and director of the Schulze School of Entrepreneurship at the University of St. Thomas’ Opus College of Business, said buying a new franchise “is always a bit of a risk more than if it’s an established franchise,” although Winmark’s experience helps mitigate the risk.
“This is a new brand but it’s not a new concept,” Spriggs said. “The Plato’s Closet and Once Upon a Child franchises have both done really well, so the system is well thought out.”
Klapperich is a “dream franchisee” because she knows the system, the franchiser and enjoys the business, Spriggs said. Some franchise consultants advise buying a franchise based on the economics of the opportunity rather than on the person’s affinity for the product or service.
“This is going to be their economic livelihood so people need to make a good economic decision as well as have a gut-feel passion about it,” Spriggs said.
Todd Nelson is a freelance writer in Woodbury. His e-mail address is firstname.lastname@example.org.