Consignment Franchises

There are pros and cons to buying a consignment franchise, but depending on who you are, all the pros could line up, or all the cons could line up. As with most things in life, though, the list of pros and cons for you and this time in your life will not be so perfectly divided. You will probably have to make do on some things and hope your choice seems as good in three to five years as it does now.



Franchises are a good choice if
1) you can afford to buy one without going into debt
2) you are new to the business (or new enough) that you want extra guidance and to be just told how to do things without coming up with your own system for everything
3) you pick a franchise that's got good systems, a good reputation, and a good value for its franchisees
4) marketing and promotion completely terrifies you and you'd like to outsource as much as possible, but you can't possibly afford to hire an ad agency
5) you might want to sell your store in a few years


Franchises are a bad choice if
1) you want to develop and control every aspect of your consignment store, from how the sign looks to firing employees
2) you can't afford to buy one without overleveraging yourself into substantial debt
3) you have experience working at two or more different consignment stores, perferably as a manager
4) you are inherently resistant to authority
5) you want to build a consignment store like no other -- a completely unique, but profitable, expression of yourself, and that is the true source of drive for you to open a store.


As with all things, consider your exit strategy carefully as your review consignment store franchises. If you ever wanted to get out of the franchise, but continue at the same location with your own consignment shop, could you do that? What requirements is the chain going to put on you? How much input will you have about how the entire chain is run, and what other franchisors can or can't do?

The cost of franchises can vary dramatically, and is usually heavily determined by the size and location of the retail store. For example, one consignment franchise, Consignment 1st, had a store for sale in Myrtle Beach South Carolina for $60,000. But their Atlanta, Georgia store carried a price tag of $250,000. Even the Raleigh/Durham, North Carolina and Tampa/Saint Petersburg locations were $150,000 each.

Another consignment franchise, Kid to Kid, will hold your hand for the entire store setup process from negotiating a lease and doing a grand opening to having an on call IT department that will fix your computer systems at a moment's notice. They are totally hands on, but you can not get into this chain for less than $50,000, and you'll need a net worth of $300,000 for them to even consider talking to you about getting in on their business.

If your startup budget or startup savings is only $15,000, clearly you're going to have to go it on your own as a small independent store. And, frankly, if that's the money you've got to work with, you'd do far better to stretch every dime of it with your own store than to go into debt that deeply. Its hard enough making a profit and paying taxes without having to add a 10 to 15% interest rate just to make the monthly payments for the priviledge of owning a franchise.

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