Gaming Franchise
Play N Trade Sells 200 Video Game Store Franchises in 10 Months
This is an interesting “full-service” approach to gaming. They have a “try before you buy†policy, do game console repairs, in-house tournaments, and sell all the gear a gamer needs. Selling 200 stores in 10 months (1,000 store goal in 3 years) is a dangerously fast - how can a young franchisor adequately service so many franchisees? I’m skeptical.
Update March 2, 2007:
Similar Posts:Great comment by a reader:
I think this concept will have legs for another 5 years, but then it will crumble. All the new game consoles and obviously the PC games are played in group mode online. Downloading patches and extended game mods are all the rage, so it only make sense to download the original game too (which PC users often do now). So, Play N Trade will live a short life much like video rental and trading.
Of all business to invest in, why would you choose a product that would obviously be replaced in the near term? I’d prefer a high-end game center because many kids can’t afford the $1,500 - $3,000 for top-of-the-line gaming PCs and video cards.
I think this concept will have legs for another 5 years, but then it will crumble. All the new game consoles and obviously the PC games are played in group mode online. Downloading patches and extended game mods are all the rage, so it only make sense to download the original game too (which PC users often do now). So, Play N Trade will live a short life much like video rental and trading.
Of all business to invest in, why would you choose a product that would obviously be replaced in the near term? I’d prefer a high-end game center because many kids can’t afford the $1,500 - $3,000 for top-of-the-line gaming PCs and video cards.
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I have got to agree with the previous poster - downloading would seem to whack this business concept. Both legal and illegal downloading have to be a huge problem for this business model. Look at how Video stores are getting whacked by both DVD downloads, kiosks, and monthly mail rentals. Do you want to be in Blockbuster business, today? I think not.
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I am not so sure, a Play N Trade opend about an hour from me and are busy as ever. I went to their Halo 2 tournament and it was pulled off. There were about 60 adults and kids there. Everybody seemd to be excited about the new store in town. I try to download things on my xbox360 but it never seems to work properly. I am still going to want to play the game a little before I buy it. The “demo” versions that you can get online don’t seem to work all that well. I also like to buy used games–I am a cheap-o. Finally there is an option to Gamestop/EB. In the end I would perfer selling video games and not sandwitches.
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Although an I’m sure an avid gamer, it’s obvious the previous poster is not very familiar with the business side of the video game industry. Having worked in the video game industry on a small business level for several years, I can tell you Play N Trade is here to stay. No one offers what they offer. Play N Trade is finally a game store by gamers for gamers, its about time. From a small business perspective, it is a very affordable opportunity. GME did over 3 Billion dollars in sales, there is no signs of a slow down in this industry and no slow down in site for Play N Trade.
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wrote on March 19, 2007 @ 6:24 pm:
Well, he is a gamer, so if your store is “by gamers for gamers”, isn’t he exactly the person who should be most impressed with Play N Trade?
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…and as we all know, gamers can predict the future.
I’ve been to the one in Alexandria and it’s awesome. No one here has yet mentioned that they sell vintage stuff.
I got Shining Force 2 for Genesis and Secret of Mana for SNES. I know you can get emulators but it’s really not the same. They also do console and disc repair, things that no one else really does.
Anyway, if Play N Trade goes out of business I guess I will be their last customer because I think the place is great.
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we are debating whether to open a play n trade or a quiznos, quiznos is being offered at 50,000 price is attractive and play n trade is 150,00 to open, just doing research what do yall know about both of these franchises
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anonymous wrote on May 16, 2007 @ 12:54 pm:
Man, I don’t know — I’ve (had) also been considering taking the Play N Trade route but in my research I keep reading about stores closing. Dallas, Las Vegas, Farmington, North Carolina, 3 in Colorado Springs — out of only 60 or so stores open? Check this out: http://www.cheapassgamer.com/forums/showthread.php?p=3387721#post3387721
I used to work in the QSR business and this is reminding me of how Boston Market was growing so explosively through focusing on selling new locations, not honing a business model that made money for the owners and within a short time the thing caved in. It was like a Panzi scheme and I’m starting to wonder if Play N Trade isn’t playing the same game — that the owners get in cheap but earn no money while the franchisor banks.
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Jake wrote on September 23, 2007 @ 10:09 pm:
To me the Play N Trade closings aren’t as big a deal as the huge opportunity that’s slowly getting out about GameStop being about to start selling franchises. Read here: http://www.franchisepundit.com/forums/index.php/topic,177.0.html
If choosing between a vulnerable new concept coming to the industry late in the game, with very small purchasing power in the industry (I’m in the business and trust me scale means everything for costs) versus the established, leading concept with 5K GameStop locations of buying power behind it, I’d pick buying a GameStop any day. I’ve watched a lot of others struggle to compete but you can’t catch up to GameStop’s volume cost advantages.
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I just learned in October/November ‘07 all 8 Play n Trade stores in Sale Lake City went under and were sold to a new owner and the Branson, MO store also closed. These added to the previous 6 recent closings makes a staggering 15% of the existing 100ish Play N Trade stores have gone under and/or been sold.
This is an alarming track record for anyone considering purchasing a franchise. Play N Trade seems to do a great job selling franchises but once open, the stores have a devastating track record. Worst of all, the ones taking the hit are the franchisees while corporate keeps selling the overly rosy story.
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Michael Webster wrote on March 2, 2007 @ 7:22 pm:
Well I do believe you make some great points in this comment I must say that you missed a very crutial point expecially for game consoles. That is that when it comes to illegal downloads of movies and music there really is no way to control who is using them. But like the first poster said most gamers play in grouped online sessions. Now I don’t know about pc’s but for a game console most online servers can detect mod chips that allow consoles to play burned games in the first place. And because the makers of these games do have the upper hand in the online world it also gives them the ability to create new ways to stop illegal use of their games. As a result the game store lives on….
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wrote on March 19, 2007 @ 6:24 pm:
They may not be slowing down but they sure are ripping people off!
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I found the quote below in a Play N Trade press release (http://www.pr-inside.com/play-n-trade-video-games-launches-r444103.htm) titled “Play N Trade Video Games Launches Franchisee Advisory Board”
“Roger Lloyd, CEO of Play N Trade. “The Play N Trade business model is franchisee-based. We have no corporate-owned stores, and are dedicated to the success of our franchisees. The FAB will provide an open forum for franchisees to offer feedback and make recommendations that will contribute to the continued enhancement of training and support, and improvement of franchisee operations.”"
I think it’s a big red flag when a franchisor does not operate any franchise units. Installing a Franchise Advisory Board (FAB), is a good thing to do, but when the company doesn’t operate franchise units to test systems, etc., a FAB may be expected to act as that test, that’s a lot to ask of franchisees. The franchisor should have franchise units to test things on their own in addition to a FAB.
Just an observation.
Jim Coen
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Jim Coen wrote on February 20, 2008 @ 7:57 am:
NO WAY! The last thing I want to see, as a franchisee, is a franchisor running corporate stores. . . I want to know that they have in the past, but I don’t want them to currently be doing so. Why? Because, if you run a very successful store, and the franchisor has corporate stores, what is stopping them from coming in as close as possible to you? Also, a franchisor that owns stores would give themselves the best real estate, pricing, etc.
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Play N Trade is the best thing to happen to the Video Game Industry since the NES. It’s a franchise model, which means the owners have the ability to make alot of money or screw it up. The store and everything it stands for, is the best thing out there. Why does everyone jump on the Franchisor and forget about the moron that didn’t follow their proven system? If you are going to let negative blogs affect you decision about Quiznos, or Play N Trade or any other franchise out there, Stay in your dead end job! Your too weak minded to make it anyway. Owning a franchise is for the strong minded, not the weak and pathetic.
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wrote on November 20, 2007 @ 1:53 am:
All the stores are still open in salt lake, what are you talking about moron?
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Jim Coen wrote on February 20, 2008 @ 7:57 am:
Jim,
You are an idiot, if you read the bio’s of the company, you will see that both the founder and Roger Lloyd both owned their own stores then franchised them so they wouldn’t compete with the franchisees! Wake Up!
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wrote on February 19, 2008 @ 2:31 pm:
If they were ripping people off, why are so many stores raving about how good they are doing? Get your facts straight before making a comment like that stupid!!!
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wrote on November 20, 2007 @ 1:53 am:
Have you visited the stores in Salt Lake, anonymous Jack ass? They are all still open and doing well!Learn the facts before you post idiot!
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brem wrote on September 25, 2007 @ 1:32 am:
Again, check your facts the stores in colorado are still open and the store in NC moved to another location. Your the one acting like a panzi not a ponzi!
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anonymous wrote on May 16, 2007 @ 12:54 pm:
Look at all the lawsuits quiznos has (a ton) then look at all the suits from franchisees on Play N Trade (0) then you decide!
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wrote on March 2, 2007 @ 1:45 pm:
If you understood this business at all you would know that less than 30% of gamers are online. Don’t you think the publishers know that? Also Gamestops stock is at an all time high, don’t you think wallstreet knows more than you moron!
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brem wrote on September 25, 2007 @ 1:32 am:
If you read GameStop’s press at all you would know they have no intention of Franchising. Even if they did, they still couldn’t offer what Play N Trade does.
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Wow, I like the flood of pro-Play N Trade commentary on April 10th.
That being said, I don’t necessarily agree that Play N Trade is slowly but inevitably headed towards oblivion. Console games will always be around, primarily because it has the potential to appeal to a larger demographic. You’ve all see the Wii commercials with old people pretending to bowl. But PC gaming is a different issue. PC games typically require more in the way of hardware, but the games tend to have the potential to be better because of the hardware. But this is a double-edged sword. Consoles remain fixed, hardware-wise, for about 3 or some odd years until a new version is released. PC’s can continuously be updated (more RAM, better video cards, etc). But because the PC games are founded upon a system that can have higher requirements year by year, there are costs associated with the upkeep of these PC systems, making it less marketable as most either do not want to mess with such upkeep, or simply do not have the ability to update their machines to play the latest games. Unfortunately, that means that video game designers are increasingly targeting console systems, simply because it offers more of a return on their investment given that it has the potential to appeal to a larger demographic, leaving the PC gaming industry to wait for console ports, which traditionally have been very inferior in comparison to console versions of the same game. Ironic given the PC’s ability to have better quality games.
So, not to make any statement on the viability of the Play N Trade as a franchise system, but video games are here to stay. In fact, there is a slew of news articles commenting on the fact that the video game industry has not been impacted by the slumping economy. I guess if it is too expensive to drive anywhere, you can just stay home and pretend to bowl.
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If you want to see what some play n trade’s make, go to some business resale websites like bizbuysell.com type in video game as your search words. I saw 2 or 3 play n trades for sale that appear to be losing money. Some were only doing $250,000-$350,000 a year in sales!!! You need a used business that sells dvds too. Disc Replay has just started franchising. If you go to Indianapolis and go to a Disc Replay store, and then go to a play n trade, I doubt you would think very highly of play n trade
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If you go to bizbuysell.com, you will also see several regional owners are trying to sell their regions!
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Does anyone know the initial investment required for this franchise? Royalties?
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Is there any particular brand loyalty in this market - does the average consumer make a conscious distinction between Play N Trade, Gamestop and others?
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Disc Replay franchises have a $12,500 initial franchise fee and a 2.5% royalty! They say they have built their business providing an excellent value proposition to the public, and they intend to do that with their franchising concept as well. The founder started the company in 1994, and before that had years experience in franchising, including working as aNational Franchise Director of a franchising company. In the past, he also owned a Sunbelt Business Brokerage franchise as well.
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Play N Trade is a scam. Many of the employees that are listed on their website have been fired. The company is falling appart based upon so many pending lawsuits and store closings.
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joe breckenridge wrote on July 27, 2008 @ 12:20 am:
Joe, how do you know about these “pending lawsuits and store closings”? I’ve been researching PNT and haven’t found any evidence of this. Thanks.
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Often times a franchise disclosure document can be many months old. I don’t know about
PNT, but recent closings and lawsuits may not be reflected in the disclosure documents you have from a franchisor if the document is say 6 months old. It is always a good idea when buying ANY franchise to ask for a list of closed units and lawsuits not listed in the disclosure documents. Ask for it in writing. Look closely at units that have been transfered to other owners when looking at any franchise. When a guy opens a store for $200k, and then sells it for 50K, I wouldn’t consider that a success.
Franchising can be good, but how much do they make, and when it comes time to sell, do the owners get more than they had invested.
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Over 80% of Plan N trade franchisees are failing. I was one of them. Also, I’m one of many who is in the process of litigating against the franchisor. Many others are on their way. The business model is flawed. It’s not profitable. 1 in every 10 franchisees is barely making it. The rest are all losing money.
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Wow! That really is too bad. I’m sorry to hear about your loss. Good luck to you. In my opinion, many playntrades are not in very good locations, did they give you much help in picking out a location. Also, many stores don’t have much used inventory. What do you think were the problems with the system?
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The poster above was correct…the business model is seriously flawed. The UFOC states that the average cost to replenish new inventory is approximately 1K per month while actual costs run 10-30 times higher. Margins are razor thin on new games and non-existant on new consoles. Several of the store owners in my area are losing money by the bucket and will likely close within a year…
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If anyone thinks that you make money on new consoles, no one makes money on em, Best Buy, Walmart, Circut City, Gamestop, its allways been that way, so If you bought a game store thinking you were going to make a killing selling Wii’s or Playstation 3’s you probably have gone out of business. The key in the Video Game business is volume, the margins on new games, while not great, are not terrible either, at 49.99 game at sheet price sells for 59.99, so 20% markup, the key is volume, and throwing in some nice used game sales. Being a former GM of a Gamestop, there is money to be made, but the key is volume.
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The key to success is high volume of used product. Unlike PlayNTrade, the Disc Replay franchise uses an earnings claim in their ufoc.
98% of everything they sell is used, and their stores do an excellent volume. I would never buy a franchise, where the franchisor did not make a representation in their offering circular as to store volumes.
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I see that Disc Replay makes an Item 19 earnings claim in their franchise disclosure document. Does anyone know if Play N Trade does, or does anyone have any idea what kind of volume a playN Trade franchise store does? Thanks for your help.
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It seems like the used video game business is a good model. Even in an economic downturn the used video game business offers a chance for the average Joe to still have fun while he is sitting at home, without spending alot of money. It seems to me like a franchise like Disc Replay or Play N Trade would do well in a slowing economy, relative to other kinds of franchise businesses. The used video game franchises also seem to have a low investment compared to franchises like Subway or Quizno’s.
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Seems like the Disc Replay people are all over the Play n Trade franchise. In my research, I also see posters from their company bashing PNT and then plugging their company. This has happened every web site that talked about PnT. I’m guessing a lot of this bashing could be from the Disc Replay people or other competitors. I own another franchise with a different market and we do seek opportunities to bash the competition. It’s nothing new. I would suggest calling as many owners as you can get ahold of and visiting some stores. See a. how musch it costs to run the store each month and b. what revenure can you expect. Keep asking! Make up a Q&A sheet before calling so you don’t sound unorganized. I hope this helps and I wouldn’t bank on the infomration listed here as being very accurate. Getting a good idea on a company is not going to come from sitting on the couch surfering the internet. Sorry, just being honest with you.
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Jim,
Doing research with existing franchisees is critical. A franchisor that gives an item 19 is helpful, but ask the existing franchisees questions like:
“In your opinion, what do you think an AVERAGE franchisee who runs the store day to day will net in his first year…and his second year?
“In your opinion, what is the total average start-up cost to get a store going before it reaches profitability?”
“How long do you think it takes for the average store to become profitable?”
“What is the average cost of goods sold?”
“What do you think the average rent is systemwide?”
“What do you think the average gross sales volume a new franchisee can expect to acheive year one and year two?”
“Do you think the franchise business model is a sound model?”
“Do you think the franchisor is most interested in selling franchises, or do they really care about your success?”
“If you were having trouble, how hard would it be to get someone from corporate to come out and help you?”
“How likely is it that you will open additional units?”
“Knowing what you know now, would you have made the same decision to buy this franchise?”
If it is a small and new franchisor like Disc Replay seems to be, you should talk to every franchisee. For a larger franchise like Play N Trade, you should talk to at least 15 franchisees. These should be picked at random from the UFOC. Be aware that if you are talking to a franchisee in the same market where you want to open, you may get answers with an agenda. For example if you call a franchisee that wants to open 3-5 more stores, he may want to discoourage you from opening. You should also call 3-4 terminated franchisees to get their views.
If you call closed stores, ask them why they think it didn’t work. Were they under capitalized? Was the system bad? Did they not follow the system? Did they have a bad location?
If you call someone who sold their store, ask: “When a franchisee sells his store, is he normally able to sell it for more than he paid upfront to get it going?”
So whetther you are looking to open a new play n trade video game franchise, or a Disc Replay video game franchise, or a Subway, or any other kind of franchise out there, do the research, ask the questions, visit existing locations, and listen to your gut.
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