IS PLAY N TRADE A GREAT FRANCHISE OPPORTUNITY?
January 26, 2008 by Sean Kelly
Filed under Business
(FranchisePick.com) According to a recent Play N Trade company press release:
Play N Trade is the largest and fastest-growing video game franchise worldwide. It is also one of the fastest-growing franchises worldwide across all industries. To date, the company has sold more than 400 franchises, opened more than 100 stores, and is now opening a new store every other day. The company provides exceptional training, support and marketing systems to its store owners, who in turn provide an outstanding customer experience for their shoppers. Play N Trade customers can try any video game before they buy, participate in local and national tournaments, have their consoles and games repaired, as well as buy, sell and trade video games.
ARE YOU FAMILIAR WITH THE PLAY N TRADE RETAIL CONCEPT OR THE PLAY N TRADE FRANCHISE OPPORTUNITY?
WHAT DO YOU THINK? PLEASE SHARE A COMMENT BELOW.
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Joe B wrote: …most of the complaints about the company are a result of franchisees that may not know exactly what they were getting into when they started.
Joe, that’s not just the case with PnT, but with many, if not most, franchisee unhappiness. Both sides can be at fault for unrealistic expectations, and in the end both sides suffer when there’s a disconnect.
On the Franchisor side, commissioned salespeople often want to close a sale even if a franchisees expectations are unrealistic. On the franchisee side, people will wire tens of thousands of dollars to strangers, and invest half a million, but would never consider taking a job at one of the places for a month to see if they hate it or get a sense of whether it works.
Your statement about the future of gaming smacks of what’s called “confirmation bias,” looking for ways to justify a positive decision rather than objectively analyzing the risks. If I knew that big changes were likely to be coming down the road, I would look very hard at the franchisor to see if they are tuned in to the threats and working on ways to adapt to changes in the industry. They should already be working on it.
I’m presently looking into a PnT franchise opportunity. One was just open around where I live and they seem to be doing well as I always see many customers everytime I visit the store.
Do any of you know what could possibly be the profit margin on both new and used video games?…What should be the minimun monthly sales volume for a store to be profitable?…
Best regards to everyone and thanks in advance for your input!
Anyone who knows anything about the video game industry knows that money is not now nor ever has been in selling systems. Microsoft and Sony have both admitted significant losses in getting systems into the market because they make more on selling the games. They are going for an installation base. It is the sign up for XYZ cellular service and we will give you a free phone because they wil re-coop the costs over the terms of the contract agreement.
So to look at investing in a Play and Trade with the expectations of making money on new games is systems is flawed from the beginning. Play and Trade is set up much like a “Dirt Lot” used car dealership … the margins on used games is huge! Considering you can buy a used copy of GTA 4 from a customer for $20 and sell it for $50. That is the model! Tie in the fact that they are the only store that clean scratched games, allow you to play before you buy and, in my market, buy used cell phones and iPods, and you have multiple revenue streams.
Now, if you are a gamer, like myself, you need to look at Gamestop, who is the only true competitor, and ask “what are they not offering that I as a gamer want?” and it comes down to extras that you as a PnT franchisee can provide. Video game related toys, t-shirts, posters, swag, imports and you begin to offer something different that the mega store does not offer. Also, on top of the tournaments offer game saves, information on new games and release dates … become a freaking resource!! The Gamestops in my area are filled with employees that know nothing about any of this stuff other than what they have on their dry erase boards.
Let’s also not forget about marketing … there are soooo many affordabe ways to market to young males that it makes my head spin. Play and Trade is an excellent opportunity if you are a gamer who is passionate about gaming.
Finally, downloadable game will not be a realistic reason to fear this industry for quite some time. Bandwith has already been discussed and because you and I may have it the national average for high speed (DSL is NOT high speed ATM) is only about 28-30%! Add to that the fact that no current gen system has enough storage space to hold all of the games, movies and shows. This too will change but what will not change is the fact that over 80% of gamers want the disc. If something happens to their system or storage device they want a backup.
I am rambling and don’t have time for spell check so I apologize for my ramblings. But, I do want it to be known that from what I can tell those who are complaining are not gamers and don’t know how to reach out to gamers. Play and Trade, regardless of the earlier posters thesis, is a viable model if done correctly. Just don’t go into it thinking your bread and butter is going to be coming from new games and systems … that is not the PnT model no matter what you thought you heard from corporate and those who know nothing about this industry!
I would like to throw out a few thoughts here. Niel stated that a owner, who was trying to sell him his store, stated that he “hated retail”. If I was trying to sell you junk I would not volunteer that it was junk but rather I would tell you whatever I thought you needed to hear in order to complete the sale. Another person said that it requires work and commitment to make the business work. I LIVED at my store, period! Since I did not have experience owning a business I followed my training to the letter and at the end of the day it did not work FOR ME! Matt stated that if a person wants to do some real research they should contact some of the 140 owners and get their thoughts. I would like to ask why do you not share the names and numbers of store owners that did not make it? When my store was open I was contacted daily by potential franchisee’s once I closed the store my phone has not rung once, and yes, my phone number at my new APARTMENT is the same as it WAS at my HOME.
Matt wrote: Matt stated that if a person wants to do some real research they should contact some of the 140 owners and get their thoughts. I would like to ask why do you not share the names and numbers of store owners that did not make it? When my store was open I was contacted daily by potential franchisee’s once I closed the store my phone has not rung once…
Before one purchases any franchise they should contact the closed, terminated franchisees and those who “transferred” their stores (which could mean sold at a substantial loss). Franchisors are required to list those franchisees – as well as all current ones – in the Franchise Disclosure Document furnished to all serious prospects.
Here are the latest lists for Play N Trade:
Play N Trade Terminated Franchisees (pdf)
Play N Trade Active Franchisees (pdf)
These lists can be dated, and the contact info can be (intentionally or not) out of date, but it’s a start. Be diligent in your due diligence.
Franchisees of Play N Trade Stores Closed/Terminated 2007
Henry Mangio, Kennesaw, GA (Terminated)
Don Kendall, Castle Rock, CO (Sold. Debranded?)
May & Naytyn Lui, San Jose, CA (Closed)
Gary & Carla LaPierre, Fernandina Beach, FL (Closed)
Jeremy & Mona Caneso Bantolina, Mililani, HI (Closed)
Ahmed Jarrar, Germantown, MD (Closed)
Jeff & Becky Drewlo, Blaine, MN (Closed)
Additionally, Scott Scharman transferred 5 units, and Brian Greshan and Daniel Chang each transferred a franchise to new franchisees.
Does anyone know the circumstances of these closings?
Folks let first and foremost say that I’m not a franchisee or an expert on Play n’ Trade’s business model. I am simply a customer and a gamer and probably fall into a very desirable demographic for Play n’ Trade.
I recently paid a visit to a local Play n’ Trade store here in Northern Virginia and to another store in Manchester, Mo while visiting some family.
A few things struck me immediately about the stores. First and foremost was the absolute lack of stock. Literally the shelves were bare or stock spaced out to try and cover up the obvious lack of games. The new games section was devoid in both stores of most of the current new titles for major platforms like the XBox 360, PS3 or PS2. The used games section fared a bit better and had more choices but in both stores the prices were painfully out of touch with the going rate for titles at places like GameStop/EB Games or online retailers like EBay or Amazon.com.
I’ve read many of the comments posted here concerning the “exploding video game market” and the profit margins of used games but if the stores don’t have games to buy how can they expect to turn a profit?
Granted I understand that I’ve only visited 2 stores, is this atypical for the company?
In my humble opinion the only way to compete with stores like GameStop/EB Games is to offer a better selection at a competitive price. I’ve been a gamer for most of my life – I’m 27 now – and can tell you that most of my buddies dislike GameStop/EB and would jump at the opportunity to support a new store; especially one that is locally owned.
In my experience GameStop/EB Games have some major shortcomings. One, the stores are not every very well organized. Games are littered all over the store and it’s a hunt to find a particular used title. Two, the stores are staffed by disinterested teens (usually) who are terrible at customer service. Three, more times than not employees of a GS/EB will insert their own bias or fanboyism into a transaction. I can’t buy a game for the PS3 without getting a comment about how, “it’s better on the X360″ or visa-versa. Four, GS/EB will not let you try a new game before buying it & the kiosk games are usually not new titles or the kiosks are broken altogether. Lastly and probably most importantly, most gamers get a sense that GS/EB Games are ripping them off. Of course that stems from GS/EB buying a used game for $20 (or less) and reselling it for $54.99.
After visiting the Play n’ Trade stores I really am pulling for you owners out there. I hope that your stores succeed and I hope that I can walk into one of your stores someday soon and purchase the games I want and maybe talk to another gamer and discover a new game or two. Good luck and I hope that some of you find my post helpful.
Run like hell from this franchise, It is dying. Most of the owners that have been in business for less than a year either want to sell or are closing due to several different reasons. First, the corporate support is horrible. You can call and get ten different answers to the same question from ten different people. Their management seems to be junior at best. Cannot compete with Gamestop or other stores like Best-buy. There are no margins and the used stuff doesnt move, cause well why do you think these kids traded in the game in the first place, they didnt like it. Matt on this post is trying to defend a dying brand and he knows it. I am sure after he gets home from being out visiting stores in his field training region he wonders how much longer the brand will survive. I understand why he does it, he is in very close with the founder, but even the founder is cashing in his chips and running for the hills. For some reason the people running the place thought a company yacht, plane, and almost 10 different VP’s for a company of 40 employee’s, if that many, throughout corporate was a good investment regardless of the fact that they do nothing to support or improve the company. Oh yeah, by the way the proprietary Point Of Sale software they require you to buy is really a “POS” also.
I must admit that I have not read ALL of the comments posted here. One thing that I have noticed with most franchises is that whether you have contact with corporate or not, they are going to let you handle things for yourself. Once they get a certain amount of money from you, their job is done and your success is dependant on you, your location, and your advertising skills, not a system designed for success. Im speaking from experience and realisticly. There will never be guidelines that will always work when it comes to dealing with other human beings. Human nature is not yet predictable enough to set up successful systems. All corporate is going to do is tell you “try this” and when that fails they tell you “try this” or “your not following the system.” I must say, I like how marty dropped off the face of the earth when he was questioned and provided no answers to anyones problems. Im not here to say anyone is right or wrong. I’m simply advising anyone who reads these comments to think in a realistic manner. Most franchises ARE all hype and you must get the customers to buy into thee hype as well.
At least the tone is down in here. First, the gaming industry is growing very rapidly but you must consider you dont make crap on new games, 10% is the median. Used games are at about 60%, buy low sell high. Look at fanchises that have other streams of revenue other then sale of games. There is one franchise I won’t disclose that takes no royalties off new consoles. Do the research before you jump in. There are a few franchises out there that are growing slower out there the PNT that are more concentrated in growing slow and concentrating on making there stores work.
Though it is good to come in to the business with knowlege you must know what your getting into business wise. If you dont understand overhead and trying to keep overhead down, profit margins, marketing and so on owning a franchise is not for you. Knowing about games does not qualify you as a good businessman. Most of the sucessful stores are Owner Managed because, one, this keeps your overhead down becuase you dont hire managers, two, its your business and you care about haveing repeat business, three, customers like to know that you are dealing with someone at the very top. Four, theft prevention and time management for employees.
One of the question I noticed was one about cash flow. $18000.00 i think it was, lets call 30% of that profit, so 6k. not much to pay the bill with. No look at a store with more revenue streams with areas of higher profit with maybe a 85% margin in that area. So lets say now your profit is about 55% bringing your total $9900.00. Looks like the owner gets paid this month.
I saw another post about getting PNT to purchase and distribute. If they do that they need to create a distribution center, staff that center with purchasers and shippers. After thats all said and done you know lose $10 instead of $4. There are also some franchise laws that need to be followed as well. This brings me to the point of another franchise taking 0% on consoles giving you a +$4 in profit.
BTY Marty is a loyal employee not an owner. Owners are not arrogant the crave success and dont disrupt it with kid-like attitudes. Marty cant give us one tip or statistic that will help anyone.
At Disc Replay, we are a franchisor of stores that buy and sell used video games, used video game systems, dvs, and cds. Our company has been in business since 1994. 98% of what we sell is used. We do not bother with selling new games and systems. Our initial franchise fee is $12,500. Our royalty is 2.5%. We give a 5 mile protected radius. In our Franchise Disclosure Document, we use an item 19 Financial Performance Representation. We have had 3 company owned stores that were open for more than 12 months as of August 31, 2008. The volume for the 12 month period from September 1, 2007 to August 31, 2008 was as follows: $797,518 $747,418 $745,600. We do not represent that a new franchisee will acheive those numbers. They are merely a statement of fact about the volumes our stores have acheived.
We believe the used video game business is an excellent business. But we most importantly feel that a franchisor-franchisee relationship must be win-win. I cannot comment about any other system, but I can tell you that I believe we have a franchise program that is designed to be very fair. No matter what type of franchise you are looking at, you should look to see if the franchisor uses at item 19 claim. Also, ask existing franchisees what month they became profitable.
Post facts not lies
Henry Mangio was not terminated.
He was an owner from the start of the company with Ron and Andy.
Unfortunately the company was not ready to be rolled out.Henry was left hanging when the two owners were trying to figure there future out.
Just beware we thought we had some stand up people on our side.
I own a Play N Trade. We’ve been open just over a year. Not only do we not make money on new games and game systems, but many times the distributors won’t get us hot new games on release dates (they say they are “highly allocated” — meaning they have sold them all to the big corporate stores — GameStop, BestBuy, etc, leaving none for us).
I know a Blockbuster employee who shared with me what they make on new game systems and games and it makes me sick — they get a huge margin of profit because they have their own distribution center allowing them to get a **huge** discount for buying in bulk. We have no corporate distribution warehouse…
The only way to make money with this model is shear volume. If coprporate would spend money on national branding (commercials & ads in gamer mags and online) instead of asking the franchisees to foot the bill for lame local banner ads, we’d all be a lot better off.
I’d only recommend this Franchise if you have at least $300k liquid assets to invest, a vast knowledge of games, have a lot of retail management experience, and you have another source of income to pay your personal bills.
John Chesny, Give us names and numbers of store owners so we can ask them questions about your franchise. The entire list would be great not just your selected owners. With those numbers you just gave us seems like your profit is over 125% – 150%. I really find that hard to believe if you are running a store compatible as play an trade. 59k a month is just crazy. I want my piece of the pie now!
Debbie. Have you talked to your AD about him buying you out or finding a buyer for your store.
PNT prides themselve in being the fastest growing franchise and that is their goal franchising. Not helping you succeed. Their claim to fame is “We are the fastest growing franchise” not the most successful. For every 4 they open 1 closes. The stratigy to let them open stores next to big box stores is not good. The pnt by my house opened 300 feet next to a target. Target is always stocked with consoles and accessories. PNT is not, so not only are they sharing revenues with target they are loosing.
Bill,
We have just started franchising our concept two months ago. The sales numbers for the stores mentioned are for company owned stores that have been in business 12 months or more as of 8/31/08. These sales numbers are published in our Franchise Disclosure Document, and are actual real numbers. In fact, we could not include these numbers if they were just projections. These are the real numbers that we pay sales tax on. Again, what is also important to note, is that 98% of that volume comes from used product. If you would like more information about our franchise, please go to discreplay.com, and click on the franchise section. If you send us an inquiry, we will give you full information, and I will be happy to personally call you.
LOL. You guys all drive me insane. I and my partners are the largest franchise holder in the PNT family. I have personally seen stores close and fail from other people. Let me explain the reasons.
1) Play N Trade let people buy a franchise that had no business having a franchise.
2) They went into the franchise underfunded
3) They whine and cry and expect Play N Trade to make it all better. Fact of the matter is that you are a self employed business owner. Stop your whining and “make” your business work.
4) Play N Trade is a new franchise in a great market. They have made mistakes. To error is human but they are working hard to correct them.
5) PNT is still small and does not hold the bargaining power “yet” to negotiate better contracts.
These are the main issues for failure. As a business owner it is “your” responsibility to make “your” business profitable not corporate PNT. We run 60-70% margins because we are smart and make our business work. I will give you all a few tips on how to do this.
1) advertise! Advertise to your correct demo first and foremost. Young new age rock stations are perfect. Sustain your marketing efforts. Second when youy advertise give a call to action. When you first open advertise the fact you are a local business that wanted to invest in your community. Advertise 50% more on trades for a week when you open. This will stock your stores up and allow you to get butts in the door so they can see just how great you are. Dont do live radio remotes. They do not provide a good ROI (return on investment).
2) even before you open your store get yourself a great commercial broker. Interview the hell out of them. Want to know how much we pay to open a store right now? 15,000 max. Why? The landlords are hurting terribly bad and need to fill their space. so we make them pay for almost everything plus give us 6-12 months free rent per location.
3) dont hammer on new merchandise. You dont make money on new. You make money on used. Used comes from trades. get the picture? Pre orders should be pushed by giving 20% more on trades when they pre order.
4) market your niche. Trade in cell phones, more for trades, repair systems, disc repair, try before you buy, local business.
5) People People People! No one can get a job you have the pick of the litter. Look for personality first game experience second. People come to stores not to just buy gamnes. You can do that all over the place. They will come to interact with the people they enjoy interacting with. Hire a dynamic personailty and watch your customer base grow.
6) Hammer your memberships. Membership e-mail and cell phone databases give you free marketing directly to your base.
7) sign walkers. We use them at every store at peak hours. We hire a sign walker for 20 hours a week at every store. It is well worth the 7.15 an hour you have to pay to get butts in your store. It is simply effective.
8) Signage! Negotiate for the big pylon space on the monument signs! You will get it. If they cant see you they cant shop you.
I would be happy to assist and advise any struggling franchisee in the system.
For the rest of you guys smearing play n trade… They are not perfect. The economy is terrible and I frankly dont know any business that is doing well right now. My corporation is making money even in this environment and I am in Michigan the worst ecoonomy in america. If we can do it anyone can. SO stop whining and take responsibility for your own failures and shortcomings and stop blaming other people.
Robert Meyers
CEO
Gamers Guild Holdings Inc
EMPIRE/Robert Meyers:
I have created a full post on the last comment. Feel free to read, review and comment there.
http://www.franchisepick.com/play-n-trade-franchisee-shares-secrets-of-success-blasts-whiners/
I think what people need to realize is that Play N Trade is really a relative new concept.
They seem to attract a ton of interest and really are one of the few franchisees in the country that are growing right now.
They have a great management team in place now and have made tremendous investments to take the company to the next phase.
From what I can tell any issues they have have been with franchisees that were ill prepared to properly fund or run their businesses.
I have talked to many of them and the ones that seem to be in the business in the more recently seem to have much better expectations of what it will take to be successful and have really good things to say about the company.
Its something that I am continuing to look at very seriously.
I just don’t see any industry that is near as sexy or has the long term potential that Play N Trade has.
All things considered is very impressive what they have been able to do in relatively short amount of time.
One thing I keep hearing is its the franchisees fault and they are under funded. Well, it is the franchisor job to qualify the franchisee to make sure they will have enough funds to carry him through a certain period after open. Was this overlooked just to get the stores open so they could put another notch on the pole. Their UFDD outlines how much you are going to spend and how much you are going to need in your contingency fund. Was this under estimated or did they not check to see if some of these franchisees had enough reserves. All the ads I see for pnt is “We are the fastest growing franchise”, NOT “We have the Most Successful Franchises”. That is really great for them but in the midst of all this they forgot about the franchisee. Growing to fast is a problem too.
It is their job to say “Oh crap this guy is in trouble. We need to bring him in and retrain on marketing and budgeting. Trim down the fat and look at what is going on in his local market.”
I would love to poll the 200 franchisees to see how they feel the support system is. I heard one story of a guy that was having problems his first year and when a prospective franchisee asked the AD about it. He had no clue who he was talking about.
We all know a business doesn’t really make any money for 2-5 years or has a good exit strategy. What these franchisees should know is that they will eat, sleep and breath these stores for at least that long.
Bill stop whining. It is not PNT’s responsibility to do a franchisees accounting or do the marketing for them locally. Read the UFOC. If you look close PNT gives you all the tools you need to be succesful. You can lead a horse to water but cant make them drink. Yes the first 50 people in the system were quoted wrong on the cost to open a store. I was one of them. We had a shortfall of over 50,000 a store at the start. This has since been corrected. Once again PNT is not perfect and they are learning. Want to hear an interesting fact? Subway is a great franchise right? I mean they are huge! No way they dont have their act together. Yet one franchisee who had 40 stores, just failed and closed all his stores in Michigan. Mr Bill you also said a business doesnt make money for 2-5 years? You need to put down whtaever drugs you are on. I can find you a good rehab place if you want? Just that comment alone means you have zero business sense and you should not be polluting this blog with your ineptitude. It is people like you who fail when they get into a PNT franchise. So far you have whined, complained, blamed others and shown you have no business aptitude. I just scrolled up to see if you had other posts on here.. To my non surprise there you are with tons of posts on how terrible Play N Trade is. Did you own a store and fail? Maybe just maybe if you put this much effort into making your store run properly instead of blaming everyone else but yourself, you would have made it eh? Now please stop your QQ ing. QQing is a internet term for whining for future reference.
Empire: I think you made some good points previously. Don’t undo it by making personal attacks on those you disagree with. Bill isn’t whining; he’s making some of the same points you are.
You stated that PnT sold franchises to people they shouldn’t have, people who are undercapitalized and were oversold on what they’d be provided.
You stated that the first 50 were given incorrect information about the investment and capitalization needed. Those are pretty serious errors, so maybe you should cut those who invested under those circumstances a little slack.
If I were in your position, I’d be very concerned that those errors are being corrected and that the franchisees who are being recruited now are being screened more carefully and their expectations are realistic. This is no easy feat when franchises are being sold by Area Developers whose own investment depends on new franchise sales. Are there controls in place to keep from spawning more unhappy franchisees who will trash the brand in the future?
Ultimately, the buck stops with the franchisor. It’s NOT the franchisors job to make each franchisee successful. However, it IS the franchisor’s job to make sure that franchises are awarded to financially qualified prospects who understand the risks involved, and who understand that, ultimately, success is the franchisee’s own responsibility. It’s the franchisor’s job to deliver the level of service promised, and to make sure that ADs, brokers and commissioned salespeople have not overpromised.
The best way for a franchisor and ADs to stop the whining is to put some real effort into addressing the franchisee’s concerns and give them solid tools for building their businesses. It’s not an easy process, because it’s not going to be what the franchisees want to hear, but it’s essential to building the brand long-term, and protecting everyone’s investment in it.
LOL you crack me up Empire. You just said it yopurself they made the mistake. Im not getting into a shouting match with you. Dont tell me I dont know business. I have currently 3 franchies and are looking for a 4th. Im not looking for an argument Im looking for an idea and for yo to come out and tell me Im on crack tells me im dealing with someone a little more younger then we assumed and yes this is a documentewd fact that it takes 2 to 5 years to show a profit. Also 7 of 10 new business close in the first two years. Eitherway here is my offer to you. Since your units are so successful I would like meet and show me exactly how to manage a successfull PNT because I really do want one. I can fly out anytime after Thanksgiving. Im in Florida.
If it really takes 2-5 years to become profitable, you should really consider other franchises. There are many franchise concepts that the average franchisee is profitable in the first year. You do make excellent points about under capitalized franchisees. When a franchisee is burdened with high debt service, or does not have proper capital, odds are they will fail. We have already turned down several people who applied for a franchise in our system because they lacked the cash. When a franchisor uses a master franchise program, that places high development quotas on the regional owners, you are potentially asking for trouble. Their is just too much temptation to take a marginal candidate, just to meet your quota.
Good points guys. This is what everyone needs to here. Don’t go into business under funded. I know they tell you what to have ready just in case but form the front lines or the owners in here what is a realistic amount you should have in your reserve? Also, can someone explain to me with the huge investment in Area Development, How do you recover that investment. Im not educated in the AD aspect of franchising.
Hey Empire and Bill, if your serious about meeting I would like to attend. I have been looking at PNT for a few months and a meeting of owners like this would really give me an inside look at the business. I would be flying out of Tacoma. Where are your stores Empire?
As for what was mentioned up top here. I own 2 subways and a gas station in Seattle. Subway has a proven system that works and thats what im looking for. Though this franchise would be ran by my sons I want to make sure that they have a the right systems in place that will help them succeed. My first subway didn’t start making money for 14 months but only lost 15% of what we had in our reservations. We know operate monthly +25%. My second store took a little less time to show a +.
Please let me know when this meeting is to occur. Thanks for your time.
Dear Mr Bill.
As I told everyone in the franchise system of Play N Trade. I am more than willing to assist and teach those who would like to learn. We would welcome you to any of our locations throughout Michigan and Ohio. We will have 10 stores open by the end of the year with 20 more slotted for next year. I can also assist with the selection of succesful sites and negotiations so you wont have to invest more than 25-40 grand to get into your store(s). We have a winning model for what we do and know how to implement it. I will leave my phone number here if any wish to give a call. Let me add one more thing. Ask me if I agree with everything Play N trade corporate does? No. I do not. When I ask them to correct a wrong they are quick on response. The CEO of Play N Trade who has also become a friend to me flew out here to Michigan to see us recently. Tom became the CEO of Play N Trade not too long ago and I gotta tell ya I am very excited about where he wants to go with this company and how he is changing Play N Trade. When we talked I went right down the list of the problems we are facing out in the field. From the initial cost, vendor relations, royalties on systems and sometimes having to go to a Costco to get merchandise because with shipping fees sometimes its less expensive. I showed him our model and why we are succesful, showed him how we only spend 15-20k to open a store now. Some of the problems he already had seen and showed me what they were doing to fix them. Some things they still need to work on. Make no mistake about it Play N trade needs to screen franchisee’s better. They cant let someone in just because they are waving around that franchise fee. Those bad franchisee’s are getting weeded out of our system slowly. The new ones coming in are more people like myself, people who understand business. I welcome any business person to talk to me about Play N Trade. Play N Trade is not a get rich quick scheme. it takes blood sacrafice, hard work and a steel will. With 10 stores that we have bled and worked and screamed for we will make just under a million dollars profit next year. We also have zero debt. Yes, this is net profit not gross margin. So in conclusion if you want some advice and really want to come into our family of stores please feel free to give me a call. Im not an AD and I dont work for PNT corporate but we could really use some more savvy people in the system to help me and others like me build Play N Trade into the powerhouse it is destined to become.
Robert Meyers
CEO
Gamers Guild Holdings Inc.
[Withheld]
No sales calls please as this is my private number.
Bill,
There are some terms in franchising that are sometimes interchangable and confusing. An area development agreement can be where one franchisee signs up for a certain area or state, and agrees to open a certain number of outlets. For example, you could agree to open 10 stores in North Carolina. You pay your royalties directly to the franchisor, and the franchisor delivers you the support services. An area development agreement may also take the form of a “master franchise” arrangement. In this case, a person buys the right to develop a certain area. This person will become a master franchisee or “area developer”. The area developer then sells franchises in his state or area. He normally keeps about half of the initial franchise fee and royalties, and the other half goes to the franchisor. The area developer is often the one who provides support services to the franchisee on the local level. Often times the initial fee for the right to be a “master” in a state may be 200k-300k, depending on population. With that agreement, there is usually a “development schedule” that requires the master or “area developer” to sell a certain number of franchisees in a certain amount of time. If the area developer does not meet his quota, he may end up in violation of his agreement, and may lose his master franchise. I beleive that Play N Trade uses this franchise format. I am not saying it is good or bad, that is just an explanation of how it works.
Thanks guys. Im glad we all com to an agreement that we are not bashing PNT but trying to figure out whats good for the franchisee and ourselves.
Empire, sounds like you have a great “Empire” and am very impressed with your units being built for less then 20k out of pocket. I would really like to here how you do this and would like to replicate your model down here in the south. I do not want to waste your time with a wasted visit if you have a business plan you can share with other franchisees and prospective franchisees as myself. If a visit is required to see how you operation is able to put a unit in place I will call you and make arrangements to meet.
Thanks again guys!
Keeping your build out costs to a minimum by getting the landlord to pay for most or all of it is critical when opening a franchise. In Michigan, due to the economy, landlords are scared, but that same fear is leading landlords to cave, all across the US. Because you are a franchise and not an independent you have great power in dealing with landlords. Landlords want franchises as tenants becuase they know there is a better chance you will be a fast paying long term tenant. Landlords are making deals today that are very aggressive. They know the landlord down the street wants you, and they are opening their wallets. In that sense, it is a very good time to be opening a store.
It seems to me that the used video game business would be a good business to get into. A franchise like a Disc Replay or a Play N Trade offers consumers a chance to get good deals. More and more people are going to be staying home, not going on vacations, not going out to eat. I think a lot of people are going to stay home, eat frozen pizzas, and play used video games. It seems like Play N trade is expanding fast, and Disc Replay is up and coming. These businesses seem to be poised for the new economic realities.
A new Play N Trade just opened in Herndon, Virginia about 6 months ago. The Play N Trade is currently located in my everyday “lunch” shopping center, so I walk by the Play N Trade almost every day of the week.
I’d say about half the time, the store isn’t even open, and when it is, there aren’t any actual customers in the store.
Personally, I’ll go in there every once in awhile to check things out (given there’s no Gamestop within about 5 miles). I noticed that on Wednesdays, Play N Trade rarely has any of the new releases in stock. I’d say that there is a good week-long lag before this Play N Trade gets the new stuff.
A few weeks ago, I went in to ask if they would price match the Resistance 2 deal (it was $50 at circuit city), and the guy at the counter literally looked at me and said “now how am I supposed to make any money if I sell you the game for $50?” I looked at him and said “uh, well, you’d be getting a new customer…” I guess that didn’t matter to him. very unprofessional if you ask me.
So, I have a feeling that the store in this location will be going kaput by Q1 next year. And not because it’s a bad location at all. There just isn’t enough marketing, and Gamestop’s presence is just too strong in these more affluent areas. Play N Trade just doesn’t have the caliber of branding that Gamestop has, and until Play N trade gets better branding, the Gamestops will continue to dominate. Personally, I’d love to find a good reason to stop shopping at Gamestop, but the management at Play N Trade has convinced me that Gamestop still owns the #1 position.
Empire, can you explain how you open the store with only the amount you stated. thank you for your time
Any business that gives cash for items off of the street will do well. Downloadable games won’t happen….why drive to the store you ask? and pay tax (or shipping)? THE RESALE VALUE. Current downloadable games have NO RESALE VALUE. Just like PC games because they all have stupid CD keys. I hope games don’t become downloable only, as much as I like to download.
Sorry guys have not had time to check this posting in a while. Let me respond to a few of your questions.
My first response is to Jason.
It sounds like you are around one of the weaker Franchisees I was talking about earlier. If you would come to Grand Rapids Michigan you would see a much different situation where GameStop is reeling and on their heels due to our aggresive marketing and superior business model. You will always find our stores stocked and open. 95% of the time we have new releases released at midnight or the next day depending on the game and demand. Once in a while we will miss a drop date because of things that are not in our control. Keep in mind Play N Trade is a family of independant business owners. The bad ones weed themselves out. GameStop may be the big boys on the block and #1 where you are; that is not the case everywhere my friend. I will relay this information to corporate for you on the store not being open alot of the time though. They have a responsibility laid out in their franchise agreement that states they must have an open store. Thank you for the information.
In response to Bill.
Let me explain the culture of my staff and how I lay it out to everyone that works for me and maybe it will give you a better understanding of why I say what I do. We raise our children with the understanding that as long as you go in there and give it your best thats what matters. Think about this for a minute… As long as you try hard thats what matters. So if you try hard to get to work on time but don’t its the effort that counts? You try to pay your cell phone bill and the cell phone company says, well as long as your trying hard?! Nope they are going to shut your service off till you give them results. I train all my staff that it is about results not effort. As the great Yoda once said. You do, or do not, there is no try. Every employee also understands that we buy their time. We are an “at will” employer. We do not force people to work for us we give them the “opportunity” to work for us. As long as the employee is selling their time willingly to us and we are buying their time willingly we have an understanding. It does not matter if we have them scrubbing toilets, walking sign by the road, helping customers or even playing video games in the store to learn the product, we have paid for their time. We do not coddle our employees or accept the public standard. We expect our people to be the absolute best there is. We build leaders in work and outside of work. We are not a totalitarian work environment though. We care deeply about our employees and when they come to work for us they come under our wing of protection. We teach them work ethic and reponsibility. We explain to every employee from a sign walker to top management that their position in the company is based on their performance. Our managers we salary at $450.00 a week. This is not a lot of money. We set up performance based pay though. When they hit $15,000 in gross margin for the month they get a $500.00 bonus then they profit share 20% with the company after $15,000.00. We base these numbers on profitability for reasons im sure you all understand. Managers need to be thinking abour profit. Profit pays the bills not gross sales. They also must manage their shrinkage because that also affects their bonus. Performance driven pay is key to obtaining performance. Take this lesson with you for the rest of your life. If you want to make someone take ownership of the solution, you must first make them take ownership of the problem. I could go on and on about this, however, let me close this part saying this.. We are a no excuse company. QQing is not allowed. When I see people whining and making excuses it makes all the muscles tighten in my body. If people put more effort into solutions than sitting around whining, the world would be a better place.
Ok next on the agenda is Dee.
I open a store with very little moneybecause i think outside the box. I am a creative thinker and I don’t accept the mold or the caste system society enslaves itself with. When someone tells me no, it can’t be done. My answer is “why”? Look at the economy. People sit around whining about it. I take advantage of it. Landlords need to fill space. You can get amazing deals on rent and landlord contributions. I have also questioned all the costs in building my stores. I don’t use Play N Trade vendors to get my builds or interior fixtures done. I get them done for 75% less than they do. I get my 32″ 1080p LCD screens (they run $895.00 with PNT vendor) for $399.00 out the door. This includes a 3 year warranty which is important for commercial applications. I could go on and on about every facet, however, my fingers are hurting from typing this much lol :) Fact of the matter though is that the deals are out there. Never settle. Wen you start settling is when you start losing. Negotiate everything. My mother is a very wise woman. She told me once that a closed mouth never gets fed. No harm in asking is there? Well that is all for now guys. Keep your chins up, work hard, don’t settle. I’ll check back every so often and respond when able.
Robert Meyers
CEO
Gamers Guild Holdings Inc
Robert:
Thanks for your participation, insights & opinions.
Who are you Mr. Meyers? And where and how long have you owed these so called 10 play n trade stores.
I know all the big players in this game and I’ve never heard anything about you!
I have been reading these posts today and my oh my have PNT corporate cronies and employees been busy blogging forums. NO WONDER WE’RE NOT GETTING ANYTHNG DONE LIKE YOUR BEING TOLD TO. iF i SEE ANY MORE BS BLOGS FROM CORPORATE EMPLOYEES ON THIS THREAD. i’m GOING TO OPEN UP A CAN OF WOOPa_ _ ON THE WHOLE STORY OF WHY one of the best possible franchise business’ out there is falling to peices. And beleive me they don’t want to swallow this cod liver oiled spoonful of truth.
Bottom line, if you have millions sitting around just burning a hole in your pocket and you like video games..go for it.
If your risking your entire life savings on a dream and a prayer to become an entrepeneur find another business.
Yes you can make some money in this gig but there are far more lucrative business opportunities out there.
Interesting?! So how long after opening the original store did franchise sales start? What benefit is there to opening a game store as a franchise? In this niche market is there enough players in the area to have a shop? And why won’t any good gamer sit at home in the comfort of their own place and download or play games? Sounds like another feeble attempt at the ol’ franchiser get rich quick game. Think carefully before signing on the dotted line!
Chance,
Like any business you should always do your research before jumping in. The benefit of opening any store franchise is the systems that are in place and the branding. Go to the bank and ask for a business loan. You will find that your loan will be approved easier if you are purchasing a franchise and almost impossible if you are opening a mom and pop.
As for the GOOD gamer sitting at home…..again do the research. The demographic for a gamer is 5-55 with the median purchasing age of 33-37. Download a game? Any gamer knows there is no resale value in downloading a game. After you done with a downloaded game you cant trade it in.
I drove down to Miami last weekend from Jacksonville to check out the franchise expo especially Play N Trade. At the expo I saw 4 franchise players. Play N Trade, Game On, Gamer Doc and Disc Replays. Interesting enough Game On’s booth was the stand out. 30+ people standing around talking to the developers. This was the only booth in the show that had a crowd like that. Play n trade, Gamer Doc and especially Disc Replays had no factor in the show. The guy at Disk Replays actually looked lonely quite amusing. All of them had great things to say about the industry but Game On stood out. I forget the CEO’s name but she said the are not looking for fast growth. The wanted hand pick their franchisees and pay as much attention to them to succeed and fast growth was not their concern. The had great things to say about Play N Trade and actually told me to go check out all the competition.
Sorry guys I was going with Play N Trade all the way but it looks like I have more research to do. I like the fact the the other franchises are small and will be more attentive to my needs. Im planing to make my purchase in the spring and be open summer and ramp up for Christmas 09.
Bill wrote: …Game On’s booth was the stand out. 30+ people standing around talking to the developers. This was the only booth in the show that had a crowd like that.
Bill, how did Game On attract that crowd? Most at that show are only familiar with the major national brands, so they must have had a more energetic, interactive or creative presentation. Or an aggressive sales team.
Bill,
Yes, I was the guy you spoke with at the Disc Replay booth. And yes, I told you we are not looking for fast growth. And yes, I did not knock the competition, in fact I did tell you to go look at them.
You see Bill, I have been running company owned Disc Replay stores since 1994. As far as that goes, I could retire now and never have to work again. I am franchising out of a desire to share my companies concept with select people, not merely to make the most money possible.
Disc Replay is my baby, and I would like to see it grow, but I am going to be very selective. My goal is highly successful franchisees, not mere quantity.
That is why we only charge a 2.5% royalty. That is why are initial franchise fee is only $12,500. That is why we give a big protected area. I believe our franchise company will make plenty of money, but I make my money with company owned stores. In fact, we have opened 4 more company owned stores in the last 16 months.
So why do I encourage people to go talk to the competition? I do believe all of the competitors in this space are quality companies. But I honestly in my heart believe that if people look at all of the companies, and then look at us, we will shine even more brightly by example.
Our corporate culture is very very different. Our corporate goals are different. I take every franchisees decision to become part of the Disc Replay team very seriously. For me its not about throwing up numbers on the wall. Behind every franchise store is a family, and a life savings at stake. My goal is not to be the #1 franchise, my goal is to never have a franchisee fail. I cannot guarantee that of course, all businesses including Disc Replay’s carry an element of risk, but that is my goal. And I honestly believe that all of the CEO’s of the other franchise companies deeply care about their franchisees, I would never suggest otherwise. I can just tell you in our franchise it is our over arching concern first above all else.
Regardless of which franchise you choose, I wish you the best of luck. It is a very exciting industry.
John Chesny
President and Founder
Disc Replay
John
I have done the research on you and I am very impressed with what you have done. I do like the low franchise fee and royalties, this says a lot about your company. I will seriously consider you in my decision and will contact you soon to have a one on one conversation and come up and see your stores. Thanks again for all the information.
Sean,
They just looked very approachable and had a very nice booth. They didn’t try to sell me anything. Just gave me a 30 second run down on what they do handed me an info packet and told me to make sure to visit all my options. I ended up coming back and spending 20 minutes with them.
Bill,
Thank you very much. I am looking forward to speaking with you. I do hope you take the time to come and see one of our Disc Replay stores. Opening a franchise is an important decision, and it is always prudent to spend the time to look closely at all the options.
John
I have been doing some research on game stores and i am looking into opening a store if its possible.
John Chesny i would very much like to talk to you about your franchise and just get into some more detail about your business. I am takign some entrepreneur coursers so that i can learn more about managing a business and many more things so if you could please get back to me that would be great
STAY AWAY! The profit margins are razor thin. I concur with the people that say that we have to buy product from our competitors because there is basically no distribution system in place. I found a wholesaler on my own which has helped. There is ZERO marketing from corporate. The corporate representative that I am assigned is a petty, small man who offers nothing but headaches with his drama-queen type attitude. You will easily sink over $200k into this business and will not see a profit unless you are VERY lucky. I have everything in place to be successful but have seen ZERO return on my investment since opening. STAY AWAY or you’ll be sorry.
I am thinking of franchising a PNT. I have bought the intuit retail software, and was wondering if i can use that for my build. Robert, you mention saving money by using your own vendors rather than PnTs to save money. I was wondering if you use the software and POS system they do. and did you get it yourself or go through their vendors for it. Does anybody know good software to use and how much its going to run me?
Interesting comment by Play N Trade 2007 franchisee of the year Manny Velez on UnhappyFranchisee.com, here:
http://www.unhappyfranchisee.com/2008/08/play-n-trade-video-game-franchise-played-out/
A year after receiving the award he was out of business. He doesn’t badmouth PnT, but comments on capital needed to survive.
Ed:
As I understand the PnT business model, if you are a franchise owner you MUST use their POS terminals and software. This has been a recurring complaint from the franchise owners that I’ve talked with.