Investment

Clothes Mentor sells gently used name-brand and
designer clothing, shoes and accessories for up to
70% off of original retail prices

Investment

What does it cost?

With our proven resale business model, our franchisees see a swift return on their investment. The graphic below shows the average net profit, store sales and more from our top-performing stores, as reported in Item 19 of the Clothes Mentor Franchise Disclosure Document (FDD).

Think you can’t make money selling used clothes? Think again!

Inital investment range $193,000 to $310,000*

Average gross margin 66.92%**

Average top performing sales $1,018,843***

* $193,000 to $310,000 is the estimated initial investment range for the lease option amount option #2 listed in the Franchise Disclosure Document dated April 17, 2020.

** 66.92% is the average gross margin percentage of all 132 Clothes Mentor® stores in operation for the entire calendar year ended December 31, 2019. There is no assurance, however, that you will do as well. See Item 19 of the Clothes Mentor® Franchise Disclosure Document dated April 17, 2020, for more information.

*** $1,018,843 is the average net sales of the 33 stores included in the top 25% of Clothes Mentor® stores in operation for the entire calendar year ended December 31, 2019. Of the 33 stores included in the average net sales for the top 25% of all stores, 13 stores (39%) met or exceeded the average net sales. There is no assurance, however, that you will do as well. See Item 19 of the Clothes Mentor® Franchise Disclosure Document dated April 17, 2020 for more information.


Initial investment

The charts below show the approximate Clothes Mentor initial investments you need to get the doors open, have a working capital reserve, get stocked with inventory and be ready for your customers.

Estimated Range:

Estimated Range:
Low End Approximately$193,000*
High End Approximately$310,000*

While it’s likely that most stores will land in the targeted range listed above, it’s also dependent upon a number of variables. Further detailed information is outlined in our Franchise Disclosure Document (FDD). To get a copy of this document, please contact your Clothes Mentor franchise representative.

Type of ExpendituresPurchase Option AmountLease Option Amount*
Initial Franchise Fee$20,000 – $25,000 $20,000 – $25,000 
Leasehold Improvements$25,000 – $60,000$25,000 – $60,000
Signs$5,000 – $9,000$0 – 12,500
Fixtures$30,000 – $40,000
Proprietary Software and POS$16,000
Inventory$50,000 – $70,000$50,000 – $70,000
Deposits, Business Licenses and Permits$7,000 – $15,000$7,000 – $15,000
Legal and Accounting$0 – $4,000$0 – $4,000
Security$7,000 – $10,000$7,000 – $10,000
Travel Expenses to Attend Training$4,000 – $8,500 $4,000 – $8,500
Pre-opening Labor Expenses$10,000 – $15,000 $10,000 – $15,000
Grand Opening Advertising$16,000 – $20,000$16,000 – $20,000
Miscellaneous Pre-opening Expenses$14,000 – $20,000 $14,000 – $20,000
Rent – 3 Months$20,000 – $25,000$20,000 – $25,000
Additional Funds – 3 Months$20,000 – $25,000$20,000 – $25,000
Total$244,000 – $362,500$193,000 – $310,000

FRANCHISEE REQUIREMENTS:

Net Worth: $400,000

Liquid Captial Available: $90,000

 

See what several of our franchisees have to say about this frequently asked question:

Low fees

What motivates us to provide you with the most up-to-date tools, training and on-going support long after you’ve opened?

Royalty

Like most franchise companies, it’s how we get paid to do all that we do in supporting you with our proven business operating system. In exchange for royalty payments, you get all the support you need to run your store.

Our Value Proposition

Get the support of a very experienced franchisor at some of the lowest fees in our niche of the industry. This way, you can build your business and keep more of what you make.

The chart below shows how Clothes Mentor compares to four other top-rated apparel and accessories competitors in the key categories of a.) initial franchise fee and b.) royalty fees. As you can see, our fees are significantly less, and our low royalty fee means Clothes Mentor franchisees keep more of what they make on an ongoing basis.

Clothes Mentor Fees Compared to Similar Franchises:

FranchiseInitial Franchise FeeOngoing Royalty
Company A$25,0005%
Company B$35,0005%
Company C$29,5005%
Company D$25,0005%
Clothes Mentor$25,0004%

Our VP of Franchising walks you through Item 6 of the FDD, covering all fees:

Financing options

Ways to Finance your Clothes Mentor Franchise

Let’s talk a bit about one of the elephants in the room when we connect with prospects — how am I going to pay for that initial investment? The good news is there are a number of ways that you can open a Clothes Mentor store. We can help you every step of the way to take the stress out of this part of opening your business.

Small Business Administration (SBA) Loan:

SBA 7(a) loans are small-business loans that are federally guaranteed by the SBA and issued by banks. SBA loans are without a doubt a popular choice for funding a Clothes Mentor franchise. The SBA can guarantee up to 85% of loans of $150,000 or less and 75% of loans of more than $150,000. For the issuing bank, this is very attractive because the bank only guarantees a small portion of the entire loan. To further streamline the lending process, Clothes Mentor is a preapproved franchise with the SBA.

If you would like to learn more about SBA loans or obtain a prequalification for your new Clothes Mentor franchise, select one of the lending resources below. This is a very short but popular list that will get you started in your quest for financing your Clothes Mentor franchise:

  • Diamond Financial
  • Apple Pie Capital
  • Benetrends
  • Wells Fargo
Rollover 401(k):

This is a very popular way to fund your new Clothes Mentor franchise. Instead of taking out a traditional loan for your business, you can utilize the money in your 401(k) to fund your new Clothes Mentor business WITHOUT triggering any early withdrawal penalties or taxable distributions. This is accomplished by first establishing a C Corporation, and then buying private stock shares of that new C Corporation (aka your new Clothes Mentor franchise store) from your 401k funds. These funds then become available to start up your Clothes Mentor store debt free!

Benetrends is a popular company that specializes in this type of funding. If you are interested in learning more about this type of self-financing or to prequalify with Benetrends, simply click the link below to learn more and become pre-approved.

  • Diamond Financial
  • Benetrends
Alternative Franchise Lending:

The first type of financing most franchise business seekers turn to is traditional financing from large national banks. Little do they know that many alternative financing opportunities exist and can help them secure the money they need faster and with less hassle. These alternative lending institutions have a wide portfolio of products for franchise seekers that typically do not meet all the requirements larger, more stringent, national banks require. These firms have many creative programs to secure the franchise lending you need. In many cases, this also includes SBA loans.

If you are interested in learning more about alternative financing programs or for pre-approval, please select from the one of the lenders below:

  • Diamond Financial
  • Alliance Funding Group
  • Capital Leasing Solutions
Home Equity Loan / Cash Out Refinance:

Tapping into your home equity or performing a cash out refinance of your property is becoming more of a possibility for many franchise seekers as housing values across the country continue to increase in value. This funding source is a way to collateralize the value of your home in order to start your very own Clothes Mentor franchise business. This model is also a way to secure a more stable interest rate than traditional business financing.

Leasing Alternatives:

Leasing is a great option for reducing the cash-down requirement amounts for start-up costs and the down payment amount needed for additional funding of the business. Leasing gives you the option to lease up to $50,000 for your fixtures, technology and signs. This lease payment simply becomes a monthly payment termed out over 60 months.

If you would like to learn more about leasing options or to get pre-approved, contact the lender below.

  • Diamond Financial – Franchise Leasing Divison
  • Capital Leasing Solutions
Portfolio Loans:

Portfolio loans allow individuals to borrow up to 80% of the value of their stock, bond and mutual funds. Unlike traditional loans, this type of credit is brokered out as an interest-only payment. These types of loans are collateralized by your portfolio, so you cannot withdraw the funds or fall below the 80 percent loan-to-value ratio in the account. Contact your financial advisor for more details.

Unsecured Loans:

Unsecured loans are typically referred to as “signature loans.” This type of lending is extended to a borrower based on their credit history and requires no collateralization. To qualify for these types of loans, a borrower typically needs a very high credit score, no derogatory credit history, and is using a fractional percentage of current credit accounts such as credit cards and other lines of credit.

Friends and Family:

This common source of business financing allows friends and family to make a monetary investment in your business, typically for an equity position or a fixed rate of return. These individuals know you are reliable and competent and see the opportunity to make money investing in you and a Clothes Mentor franchise.

Cash:

All cash funding is an option. This is very straight forward and self-explanatory. The ability to fund your franchise with all cash is a funding option for those investors with larger amounts of capital to deploy.

Watch this video to learn details about NTY’s recommended financing option through Wells Fargo from our VP of Franchising:

FDD highlights

An important step in your research is reviewing the Franchise Disclosure Document (FDD). It’s filled with a lot of useful information, but it’s often overwhelming for someone viewing one for the first time.

Clothes Mentor Franchise
Disclosure Document below

 

Items 1 and 2

Background

We have been involved in resale retail franchising this type of business model for more than 25 years.

Item 3

Litigation

None. This shows that we are good business partners.

Item 4

No Bankruptcies

We have been very wise in our financial investments.

Items 5

Initial Fee

Some of the lowest in the franchise business.

Item 6

Other Fees

These are fees you will see in the operation of your business. You can view the breakdown on the chart listed in Item 6 in the FDD.

Item 7

Estimated Initial Fees

These are the fees to open your store, they can vary from store to store or state to state. This is the estimated amount to get the “doors open for business.” There is a chart with the breakdown of the fees listed in Item 7. We also have a relationship with Wells Fargo, which will help with setting up your financing. We are also listed on the SBA registry, which makes it easier to work with all SBA approved banks.

Item 11

Franchisor Assistance

This is an explanation of the assistance we as the franchisor will give to you. This is the minimum you will receive from us, hopefully, you have seen today that we have much more for you to use in the development of your business.

Item 12

Protected Territory

Describes your protected market, this area will be exclusive to you as a franchised location and will be outlined in the “Exhibit A” portion of the Franchise Agreement. We will go through a mapping session to layout your territory with you before the Franchise Agreement is prepared.

Item 17

Renewal

The term of our Franchise Agreement is 10 years, which you are able to renew as stated in this item.

Item 19

Financial Performance Representations

Everyone wants to look at this, as it explains our sales history for our franchise locations. Make sure you read the explanation at the top of Item 19, as it will explain what information was used in putting the chart together.

Item 20 & Exhibit A

Financial Statements

This represents our franchise brands, not individual stores. We’ve invested a lot in staff, tools, and technology in advance of our brand growth.

Exhibit B

Franchise Agreement

Ours is only 27 pages long. Everyone signs the same agreement. You will want to read the Franchise Agreement first because it is what you sign, what we sign, and what we both abide by in our business relationship.  The only difference between the Franchise Agreement, which is contained within the FDD, and the original printed document that you would sign is that we fill in your name and protected territory.

Exhibit C

List of Franchised Stores

This is where you’ll find locations and contact information for all of our stores. You should make phone calls to validate our information.

Exhibit I

Receipt

A signed receipt is our proof that we provided you with the FDD, which is required by the Federal Trade Commission.

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