Plato’s Closet Franchise Cost, Fees & Failure Rate 2024

Are you willing to invest in the Plato’s Closet franchise but have qualms about it? Then you are at the right place.

In this article, we are going to discuss the significant facts related to the Plato’s Closet franchise, like its profitability, cost, fees, and everything that needs to be known before investing in this franchise. So, let’s begin. 

Plato’s Closet Franchise

About Plato’s Closet

Plato’s Closet is a leading second-hand brand-named clothes and accessories store in North America. They sell quality used and new brand-name teen and young adult clothes and accessories.

Plato’s Closet was founded in 1998, and after one year of establishment, it started offering franchises. Today, it has more than 475 units across North America and is growing rapidly.

The business model of Plato’s Closet franchise is very flexible. They never require any prior experience, and the franchisee doesn’t need to follow any long or rigorous process to buy the franchise.

However, franchisees have to arrange the cost of the investment on their own because Plato’s does not provide any direct or indirect finance option, but they allow you to take third-party finance.

Moreover, they also provide a comprehensive training program and different types of support to franchisees to enhance the growth of the franchise business.

Also, the franchisees receive an “exclusive territory” surrounding the location of the store.

Plato’s Closet Franchise Model

Cost Or FeeAmount
 Initial Investment$150,000 and $500,000
 Area RequirementN/A
 Total Outlet475 

Plato’s Closet Revenue & Profit

The revenue and profit of different franchises may vary depending on the size, location, management of the store, etc.

However, on average, Plato’s Closet franchise owners make an annual $1,200,000 in revenue.

The best thing about Plato’s Closet franchise is that it ramps up really quickly, and this franchise owner earns revenue in millions right in one-two years of opening.

So if we assume a profit margin of 15%, then we can calculate that a Plato’s Closet franchise owner makes $180,000 in net profit on average.

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%1200000.00
Franchise Royalty Fees5.31%(63750.00)
Cost of Goods Sold (COGS)26.56%(318750.00)
Labor (Variable)13.81%(165750.00)
Total (Expenses)85.00%(1020000.00)
Net Profit15.00%180000.00

Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.

How Much Does A Plato Closet’s Franchise Owner Earn?

According to the data given in the FDD of Plato Closet, the company made average gross sales of $1,227,230 in the year 2021. The average gross profit was estimated to be $777,664 for the same year.

However, this also depends on factors such as the location of the franchise and how it is operated.

Failure Rate Of Plato Closet Franchise

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change

For the Franchised outlets:

  • In 2020, the growth rate was (2)/483×100≈0.41%
  • In 2021, the growth rate was (4)/485×100≈0.82%
  • In 2022, the growth rate was (11)/489×100≈2.24%

According to the above-mentioned data, we can see that the franchised outlets for Urban Air grew from 2020 to 2022, showing a growth rate between 0.41% and 2.24%.

Payback Period Of Plato’s Closet Franchise

With an investment of $500,000 and an estimated 15% profit on the average net sales, the yearly profit would be $180,000.

So, to find out how long it will take to earn back the initial investment:

Payback Period = Investment / Yearly Profit = $500,000 / $180,000= 2.7 years

Based on these figures, it will take approximately 3 years to pay back the initial investment for Plato’s Closet. This time period could be longer or shorter depending on your sales, revenue, and profit figures.

Training & Support Of Plato’s Closet

Plato’s Closet provides a comprehensive training program to all new franchises. The training program is conducted in two phases at Winmark’s training center.

The first phase consists of training-induced instruction related to the management and operation of a privately-owned retail store, real estate matters, business development plans, how to buy used products, and orientation.

In the second phase, they give you a guide on sales and marketing, store management, computer operation, personnel issues, and other topics that the franchisors want to explain to you related to the business.

Additionally, they also provide store opening assistance on the day before and the opening day of the store.

Term Of Agreement & Renewal

Plato's closet Term Of Agreement & Renewal

The length of the term of the franchise agreement of Plato’s Closet is 10 years. After the expiry of the term, the renewal of the agreement is available for another term of 10 years.

However, franchisees have to accomplish the requirements as directed by the franchisors. And also, the franchise should be in good standing and should be generating a decent amount of profit.

Plato’s Closet Financial Assistance

Plato’s Closet does not offer direct or indirect financing. And the franchisors are not responsible for any franchisees’ promissory note, lease, or other obligations.

However, Plato’s Closet provides the option of third-party finance or in-house financing

For those looking to open a franchise in the clothing industry, possibilities include Mainstream BoutiqueApricot Lane Boutique, and Zara franchises.

Plato’s Closet Comparison

CompanyPlato’s Closet Apricot Lane Boutique
Founded In19981996
Initial Investment$150,000 and $500,000$80,000 – $361,800
Total Outlet475 82
Annual Revenue$75 Million$7 Million

Frequently Asked Question

How many Plato’s Closet franchises are there?

Plato’s Closet has more than 475 units across the U.S.

Does the Plato’s Closet franchise offer financial assistance?

Yes, the Plato’s Closet franchise offers third-party finance to franchisees. 

Where is Plato’s Closet headquarters?

The Plato Closet’s headquarters is located in Minneapolis, MN.

Is Plato's Closet a franchise or a chain?

Plato’s Closet is part of a unique national retail resale chain that buys and sells guys’ and girls’ clothing under the name of the Winmark brand.

How much does the Plato's Closet franchise cost?

To buy the Plato’s Closet franchise, you’ll require an investment of $150,000 and $500,000, and $25,000 as an initial franchise fee.

Who owns Plato Closet?

Plato Closet is owned by Winmark Corporation, which also acquired 4 other franchised-based retail companies.

Who founded Plato Closet?

Lynn and Dennis Blum are the founders of Plato’s Closet. They opened their first outlet in Columbus, Ohio.

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