Fun Franchising with Play N Trade
Bringing to life a one-stop video game shop for buying, selling, trading, and repairing mobile entertainment, video game products, and services, Play N Trade (PNT) makes it easy for entrepreneurs nationwide to be a part of this innovative, fun franchise opportunity.
Founded in 2000 by Ron Simpson, Play N Trade was born to fill the gap the gaming world was missing: a franchise concept. Since the arrival of the first Nintendo in 1986 the video game industry has been booming, and while rival company Game Stop quickly grew to 6000 stores, their missing component was a franchise opportunity.
Building a franchise in this niche market Simpson made it possible for people to be a part of the industry by offering a franchise system that is both successful and fun. “The cultural impact of gaming presented an explosive opportunity,” says Simpson. Although gaming had a wide global distribution, the current retail distribution channel was not fulfilling the consumer demand for an interactive gaming experience, and the support infrastructure underserved the specialized needs of the gaming community.
Envisioning a retail environment where it was possible to know customers on a first name basis and sell to them based upon their buying habits, Simpson created Play N Trade’s business plan to include a personalized consultative selling process, in-store tournaments, fair pricing for used games, and exceptional customer service.
Opening its first franchise in California in 2003, today PNT has 120 stores throughout North America, South America, and the Middle East. Each PNT store provides customers with the convenience of stopping in to repair a broken mobile phone or gaming device, buy the latest game or gadget, sell or trade their used devices and games for cash or credit, or simply hang out to check out the latest products with the store’s “try before you buy” service.
In 2012 PNT acquired Dimension, a Canadian video game store founded in 1996 that specialized in the sale, exchange and renting of games, consoles and accessories. Making PNT the biggest video game franchise network in Canada, with Dimension’s expertise PNT became more international and started offering more languages. “Today we’re not a 6000 unit chain, but we are the biggest franchisor in video game sector in the world,” says Charles Beaupre, CEO of PNT.
For PNT the secret in its recipe isn’t to focus on new games, but trade. “Videogames is a hard area because everyone jumped on them in 2007 before the economy crashed,” Beaupre explains, adding that with new software it’s rare to get 10 to 15 percent margin on products sold. Trade also brings in new customers. “One of the best distributors is the customer. They bring in the games, trade them for cash or credit to save on another purchase, or buy a new release,” he says. “The company’s name fits perfectly. Customers play with their products, and then trade them in!”
Looking to expand its presence, PNT is looking for franchisees that are passionate about the industry, and more importantly, about their customers. “It’s easy to say but not easy to get. When a franchise owner loves the customers and their employees, it makes all the difference,” Beaupre says. While franchisees must also have a sales ability and love for technology, if a candidate doesn’t have all the entrepreneurial expertise it’s okay because they will be taught everything they need to know about the business by Play N Trade’s team. The entry fee to purchase a PNT franchise is $30,000, with the total cost ranging between $150,000 to $200,000. This depends on store size and includes all training, and inventory. PNT’s royalty is five percent.
PNT’s franchise process includes six key steps: Pre Qualification, Program Review, Disclosure Review, Franchisee Validation, Discovery Day, and Formalizing the Franchise Agreement.
During pre-qualification candidates work with either their local Area Developer or a PNT corporate member to learn about the opportunity and understand what type of candidate the company is seeking. The PNT rep will get to know the candidate and find out how much time the individual plans to invest in the day-to-day store operations.
Program Review educates the candidate on the benefits of being a PNT franchisee, the company’s mission, operations, marketing and management.
Disclosure Review reviews key areas of the FDD, Discover Day, funding options, and prepares for franchisee validation calls.
Franchisee Validation reviews franchisee conversations, their preliminary approval of financing, and the Discovery Day checklist.
Step five is Discovery Day. During this face-to-face meeting the candidate tours local franchisee operations, meets with the CEO, senior executives, their local Area Developer, training, operations, marketing, and real estate executives.
During the Formalizing the Franchise Agreement phase the committee decides whether or to extend a franchise offer or disqualify a candidate. Ideally, committee approved candidates sign their agreement and pay the franchise fee before leaving the Discovery Day event.
Once all paperwork is signed the new franchisee works with PNT’s real estate executives to find a site. “It’s so important in retail, where you open is everything,” Beaupre says. “An amazing operator could have a hard time reaching goals without the proper site. On the other side, someone without all the expertise is still able to make money with the right site.” While the franchisee is responsible for finding the territory, PNT sends a team member to approve of the site and assist in negotiation of the lease.
Next, franchisees undergo one month of training. Spending the first eight hours participating in classroom training, franchisees learn about culture sharing, tools, and technology. Franchisees are also given a manual covering A-Z of company operations. In March 2013 PNT invested in a unique Customer Relationship System (CRM). Comparing this software to the Berlin Wall, Beaupre says the new CRM breaks the divide between the franchisor and franchisees. “It’s important that PNT franchisees feel like a part of a family so we ensure they have access to communications, marketing, and training videos,” he says. “When a new franchisee joins they don’t feel alone because they have one corporate person with them in all processes of store training, and growth.” In addition to operating their store, franchisees are a sister-store for other PNT shops, meaning they will be involved in helping other franchisees when needed.
After the classroom training franchisees spend two weeks working in an existing store alongside a franchisee, putting to practice everything they have learned. Next they spend their first two weeks open working with a corporate member. “We don’t want franchisees to be alone during the first two weeks of being open, we offer corporate support to make the first two weeks a start to a successful future.”
Ongoing support is available to franchisees throughout PNT’s internal system. Relaying every franchisee on a single system where they can speak to each other and the corporate team, franchisees have access to phenomenal support. “It’s our way of saying ‘we are family,’ and if you need help, let us know.” With 120 stores this means 120 support guides are available on the network, which along with the company’s POS system, is owned and controlled by PNT. “Ongoing support and training is just as important as initial training,” Beaupre says.
While PNT marketing has evolved over the years, the company has taken its printing budget and transferred it to invest in digital distribution. “Every ad we create is available digitally for franchisees to choose which ones they wish to print and use,” Beaupre says. Rather than in the past where franchisees would receive packages of promo posters, today they download material that is relevant to their local markets. The remainder of PNT’s marketing dollars is invested in Facebook and Google ads, direct mail, YouTube, and local campaigns. “We are able to get more impressions for a better price,” Beaupre says. “All marketing materials are available to franchisees, so if someone wants to push their local campaign themselves we will teach them how to do so.” As a franchisor that focuses on the revenue of its franchisees, the only money PNT makes is from the sales of franchise stores. “Every new revenue stream needs to be built for the franchisee, not the franchisor.”
While PNT was known for being a video game store, the arrival of mobile devices, tablets, and smartphones changed things. “PNT’s products (i.e. gaming consoles) used to have a life cycle of five years- the time between new console releases. When a new console is released people trade in their old ones for the new one and games. When mobile devices arrived people weren’t buying the physical game but downloading the app so there was panic. However, this is actually the best thing that could happen because the life cycle of mobile devices is much shorter than that of a console. Instead of a five year cycle, it’s one year,” Beaupre explains. And so, like sugar in a coffee, PNT added mobile devices to their system.
By the year 2016 17.5 billion people will own a smartphone so the PNT of tomorrow will allow customers to bring in their iPhones and tablets to upgrade to a new device. Referring to the business as “Play N Trade Entertainment,” Beaupre says that everything that can be played with will be at PNT. “No one else does the trade in business. It’s ecological, economical and techno. We are doing what Game Stop did 10 years ago with the video game market in that we don’t need to rely on the publisher, because the publisher is the customer,” he explains.
Investing 255,000 into redesigning the store space, PNT will be sporting two new prototypes: PNT 3.0 and PNT 4.0. Equip with a large model stand, the new look is designed so that all devices have the same importance as video games. In March 2014 all existing stores will switch to the PNT 3.0 model, while up and coming stores will be designed to boost the PNT 4.0 model. “We want franchisees to feel the experience of the physical social approach,” Beaupre says. “PNT 3.0 is a step towards the new model to facilitate the evolution for the franchisee.” All stores will also feature an area to repair products on site.
Recognized in 2008 as the number one growing franchise in the U.S., today PNT is rapidly growing internationally. Changing its concept to become a trade and entertainment store, this notion is new to Latin America, which recently opened two PNT stores in Panama, and two in Columbia. The Middle East is also jumping on board, opening two stores in Egypt and signing a Master Franchise Agreement to open 25 stores in the next five years. Last month China ended the ban on gaming consoles and has since connected with PNT to discuss business opportunities. Aiming to reach 3000 stores within the next three years, PNT will also introduce kiosk stores to their business plan in April 2014.
“We’re doing something not many people are doing, and that’s focusing on trade,” Beaupre explains. “Our message is different. Instead of promoting store sales we can give customers money while offering many services under the same roof. It’s quite unique.” With rumors of Apple soon to be offering the trade in service Beaupre isn’t worried about the competition because he says it will validate what PNT is doing. “The value of PNT franchise is greater than ever,” he adds.
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