Franchise regulation and labor law changes
More disclosure or liability rules could increase costs and burden the franchise model.
- Scope
- U.S. federal and state franchise laws
- Materiality
- high
Winmark Corporation
Winmark Corp. is a U.S.-based franchisor of resale retail concepts, including Plato’s Closet, Once Upon A Child, Play It Again Sports, Style Encore, and Music Go Round. The company’s model centers on franchising, brand support, and centralized buying services for franchisees across the United States and Canada.
64,3 %
96,4 %
48,4 %
+5,9 %
2.49
2.42
| % | |
|---|---|
| Franchise royalties | 70% Recurring royalties collected from franchisees based on store sales. |
| Initial franchise fees | 15% Fees collected when new franchise agreements are signed and stores open. |
| Centralized buying and related services | 10% Buying support and limited billing/credit services for franchisees. |
| Other franchise-related revenue | 5% Miscellaneous franchise support and other operating income items. |
Winmark’s direct customers are franchisees that operate its resale store brands, while the end consumers are shoppers...
- Franchise operatorsprimary
Independent owners who buy Winmark franchise rights, pay royalties, and use the operating system to run stores.
- Prospective franchiseesprimary
Entrepreneurs evaluating new territories and initial franchise agreements.
- End consumers of resale goodssecondary
Shoppers and sellers using the stores for affordable apparel, kids' items, sports gear, and music products.
- Canadian franchiseessecondary
Franchise operators in Canada that contribute a smaller but disclosed portion of revenue.
Winmark’s business is concentrated in the United States, where it generates the majority of revenue and where its...
- •United States is the primary revenue and operating base
- •Canada contributes a smaller, disclosed share of franchise revenue
- •Franchises operate across both countries rather than company-owned stores
- •Assets and support functions are mainly located in the U.S.
- •Geographic concentration makes U.S. franchise health most important
Winmark’s strategy is to expand its franchise system while supporting existing franchisees so they can grow store-level...
01
Expand the franchise networkmedium-term
More operating stores increase royalty and fee opportunities.
02
Protect and renew existing franchise agreementsshort-term
Renewals preserve the installed base that generates recurring royalties.
03
Modernize franchise technologymedium-term
A reliable POS platform is central to store operations and system control.
Winmark depends on franchisee performance, renewal activity, and the stability of its required store technology, so...
Required POS system disruption
Franchisees rely on a common POS platform for store operations and reporting.
- Scope
- System modernization and third-party vendor dependence
- Materiality
- high
Data security breach
Unauthorized access could cause legal claims, reputational damage, and remediation costs.
- Scope
- Employee, franchisee, customer, and supplier data
- Materiality
- medium
Franchisee renewal and store closure risk
The royalty base depends on keeping existing stores open and renewing agreements.
- Scope
- 10-year franchise agreements
- Materiality
- high
Competitive retail environment
Alternative resale and value retail concepts can pressure franchise growth and sales.
- Scope
- Resale and specialty retail
- Materiality
- medium
Royalty revenue recognition
Affects recurring revenue timing and receivables
Deferred franchise fee revenue
Creates deferred revenue liability and smooths revenue
Seasonality
Quarterly revenue and margin comparability
Leasing portfolio runoff
Non-core income and one-time items
Debt and liquidity disclosures
Balance sheet leverage and cash flow analysis
: 29.4.2026