How Profitable Is Play It Again Sports

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

• Section I – Background information on the Play It Again Sports franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Play It Again Sports franchise, based on Item 7 of the company's 2020 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Play It Again Sports franchise, based on Items 5 and 6 of the company's 2020 FDD

• Section IV – Number of franchised and company-owned Play It Again Sports outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company's 2020 FDD

• Section V – Presentation and analysis of Play It Again Sports' financial performance representations, based on Item 19 of the company's 2020 FDD, including information on the:

• 2019 average, median, high, and low gross sales and average and median gross profit for the 257 franchised Play It Again Sports 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 28, 2019, grouped by year opened (2018, 2017, 2016, 2015, 2014, and 2013 and prior)

• 2019 average, median, high, and low gross sales and average and median gross profit for the first, second, third, and fourth quartiles of the 257 franchised Play It Again Sports 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 28, 2019

• number and percentage of franchised Play It Again Sports 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 28, 2019, 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

21 Things You Need to Know About the Play It Again Sports Franchise

Launches Online Store

1.  After a test run of Play It Again Sports' ecommerce site in 2017, Winmark Corporation launched the company's full service website in May 2019. The service allows franchisees to decide what items they allow for sale online, and whether or not those products are available for shipping or have to be picked up in-store.

2.  Since the launch, there's been a noticeable increase in how quickly higher-priced retail items have sold compared to in-store, with golf, hockey, and baseball equipment leading the sales. With the launch of Play It Again Sports' ecommerce marketplace, Winmark is continuing its goal to meet customers where they want to buy: online.

3.  The digital consumer trend is growing. Nearly two billion people made a purchase online in 2019. By 2021, over 2.14 billion people are expected to make an online purchase. One of the driving factors behind the booming digital marketplace is the value consumers see in finding exactly what they are looking for after just a few clicks. Sixty-two percent of shoppers cite this benefit as a reason they shop online.

4.  Play It Again Sports stores are stacked to the brim with quality used and new sporting equipment. Since each store's inventory depends on what equipment the community sells to the store, the stock can vary. By allowing customers to shop from all Play It Again Sports stores online at once, the ecommerce site is the perfect way to give more customers more access to more inventory.

5.  The introduction of online shopping for Play It Again Sports increases the brand's visibility and credibility by letting consumers shop how they want, when they want. Offering an ecommerce site for Play It Again Sports allows franchisees to widen their reach and attract customers from all over the country. The service provides an additional revenue stream for franchisees and a universal shopping cart for their customers.

Longtime Multi-Unit Franchisees Sell Last Store

6.  In late November 2019, The Ledger's online news site covered the story of Sandy and Judy Fortin, owners of S&J Sports Inc., once the franchise holder of 31 Florida stores in the Play It Again Sports chain. The Fortins were in the news because they sold one of their last stores to Mike and Shannon Johnson, who had both previously worked for S&J Sports.

7.  Earlier in 2019, the Johnsons had purchased the Lakeland, Florida Play It Again Sports franchise from the Fortins. The negotiation wasn't difficult because Shannon Johnson calls the Fortins "mom and dad" in other contexts, and she sat on the S&J board for many years while working in real estate.

8.  Mike Johnson had worked as vice president of operations for S&J for five years until 2008. Before purchasing the Lakeland Play It Again Sports, he had worked as the publisher of an alternative newspaper in Orlando and for a local office supply company.

9.  According to Sandy Fortin, the divestiture began "when Judy told me I needed to get a 'T' job." That stands for working "Tuesday to Thursday, 10 AM to 2 PM." After 26 years in the sporting goods business, it was time to retire, he said. "I wasn't going to do this forever," Fortin added. "I was involved in other things."

10.  The decision to buy was easy not because it was continuing a family legacy, Mike said, but because he was fully invested in the Play It Again Sports concept. The national chain, owned by Winmark Corp. in Minneapolis, sells new and used sporting goods. It gets the latter usually on trade-ins from previous customers upgrading to new equipment. "I never would have bought this store if it didn't have a used component," Mike said. "I've always loved this concept. I've always loved sports."

11.  After purchasing the Lakeland Play It Again Sports, the Johnsons decided they were going to build on the family legacy, not just rest on the Fortins' laurels. So far, they've invested more than $50,000 on an interior remodel, including new carpeting, displays, and a new addition – a netted batting cage on the mezzanine above the display floor, where kids can try out the latest baseball gear.

12.  That's an important addition as some top-end new baseball bats sell for $500, the Johnsons said. Baseball equipment is one of the Lakeland store's top lines, running neck and neck with fitness equipment, such as treadmills, ellipticals, weights, and exercise balls, he said. Golf equipment runs third.

13.  Sandy Fortin purchased his first Play It Again Sports in Lakeland in December 1993 after a career in the Belk department store chain, which he joined right after graduation from Lakeland High School in 1964. That first store, initially in the nearby Southgate Shopping Center, was an immediate hit, selling more than $1 million in its first year, he said. That was unheard of in the Play It Again Sports chain for a first-year store, Fortin added.

14.  That led to a subsequent agreement with the chain for an exclusive franchise in Florida. Fortin used the opportunity to open 31 stores across Florida by 2006. The growth stopped the following year with the onset of the Great Recession.

15.  Fortin began selling off those stores in 2011 in anticipation of his retirement. He also became busy with other business ventures, including becoming a founding member on the board of directors of the former Community Southern Bank in 2006 and holding various leadership posts for the Florida Retail Federation in Tallahassee, the industry's trade group.

16.  He sold most of his Play It Again Sports stores to local and regional managers who had worked at S&J Sports. In addition to selling the Lakeland store in March, he completed his divestiture earlier in 2019 by selling the Gainesville, Ocala, and Vero Beach stores to former managers. Although he'll help the Johnsons and former managers when asked – not often – he is completely out of Play It Again Sports and his other business interests.

17.  The Johnsons said their first goal is to return the Lakeland store to $1 million in annual sales, which they expect to do by the end of 2020. In addition to the owners, who are very much working managers, the Lakeland Play It Again Sports employs three other full-time employees and one part-time employee.

18.  Beyond that, the Johnsons said they would consider buying other Play It Again Sports stores in Central Florida, but probably not as many as 31 properties. "I'm excited about owning a family business," Shannon said. "I'm excited about where we can take this store, the opportunity it presents."

Company History

19.  Play It Again Sports was founded in 1983 by Martha Morris in Uptown, Minneapolis. Morris decided to resell used sporting goods because many sports require equipment that can easily outlast participants. After growing Play It Again Sports for a few years, Morris sold the company to the Winmark Corporation in 1988. After the acquisition, Winmark started franchising the Play It Again Sports concept. This was the first franchise for Winmark.

20.  Over the next few decades, Play It Again Sports grew around the United States, and later expanded into Canada. Play It Again Sports is now the biggest franchise in the Winmark family, which also includes Style Encore, Plato's Closet, Once Upon A Child, and Music Go Round. While Play It Again Sports sells used goods, about 70% of the products that come in are almost brand new.

Entrepreneur's Franchise 500

21.  Play It Again Sports ranked No. 269 on Entrepreneur's 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Play It Again Sports franchise costs, based on Item 7 of the company's 2020 FDD.

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

• Please click here for detailed information on Play It Again Sports' initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company's 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year:  283
• Outlets at the End of the Year:  281
• Net Change:  -2

2018

• Outlets at the Start of the Year:  281
• Outlets at the End of the Year:  281
• Net Change:  0

2019

• Outlets at the Start of the Year:  281
• Outlets at the End of the Year:  280
• Net Change:  -1

Company-Owned

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

2019

• 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, 2020 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 28, 2019 (Winmark's fiscal year) as reported by 257 of the 258 franchised Play It Again Sports Stores in the United States and Canada that commenced operations during the years 1988 through 2018.

• This statement includes information from only those Play It Again Sports Stores located in the United States and Canada that had been in operation by the same franchisee or owners for the 12-month period ended December 28, 2019.

• There are no material financial and operational characteristics of the U S. Stores that differ materially from the Canadian Stores included in this financial performance representation.

• No other Play It Again Sports Stores are included in this statement due to insufficient history of operations (not in operation for the 12-month period ended December 28, 2019 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 258 franchised Play It Again Sports Stores which had been in operation by the same franchisee or owners for the 12-month period ended December 28, 2019. Only 257 of the 258 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 22 Play It Again Sports Stores that opened or transferred in 2019. No Stores closed in 2019 after being opened less than 12 months.

Part 1 – Statement of Average Gross Sales and Gross Profit of 257 of the 258 Franchised Play It Again Sports Stores for the Fiscal Year Ended December 28, 2019

Year Opened – 2018

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Source: https://www.franchisechatter.com/2020/05/26/fdd-talk-2020-play-it-again-sports-franchise-review-financial-performance-analysis-costs-fees-and-more/

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