A New Recession-Resistant Franchise
Low start-up costs + strong average unit sales
There's a new recession-resistant franchise that could explode over the next few years.
It's a retail concept with low build-out costs, low employees, & strong average unit sales. A few big developers have already bought-out entire markets
Let's dive into PayMore
PayMore is a modern pawn-shop focusing solely on consumer electronics: cell phones, tablets, laptops, gaming systems, & more.
People walk in with used electronics and walk out with cash.
The item is immediately listed online on multiple websites with the goal of flipping it within 48 hours. The gross profit is the arbitrage between the amount someone will accept for an instant cash offer vs. the actual value.
Secondary market businesses like PayMore can thrive in good times & bad.
The brain of the operation is a custom-built point-of-sale software that runs the entire business.
The software crawls the web to determine the real-time value of every item. The POS then backs into a purchase price based on target gross profit margins.
This takes all valuations, negotiating & decision-making out of the employee's hands.
This is a HUGE benefit for scaling a franchise. The fewer decisions an individual has to make, the more a process drives the business, the better.
PayMore is one of the lowest-cost retail franchises due to the simplicity of the build-out.
You start with 2,000 square foot strip-center space in a Class-B area. This location will act as your hub store. It'll cost between $134k to $257k to start up, including the franchise fee & working capital.
Area developers who own multiple locations will utilize a hub-and-spoke model. The small spoke locations (700-900 square feet) primarily do collection & light retail.
The hub store will inventory, list & ship all the products online.
The 2023 FDD shows the sales of the 4 locations open for all 12 months in 2022.
These 4 locations averaged $1.79M of sales per location, up 27% from 2021.
Today they've got ~10 open, ~40 in development, plus many more territories sold.
Unfortunately, the FDD does not mention gross or net margins; you must speak to franchisees to get that information.
You only need a few employees to run these locations. You'll have 2-3 salespeople up front and 2-3 dorks in the back who run the operations. They take pictures of all the products, get them listed on websites & pack/ship sold products.
The employees don't need specialized skills—just friendly tech enthusiasts with good attention to detail. Most employees are passionate about technology, easy to hire, and don't turn over.
Most of the locations have family-friendly hours:
Monday-Friday 10 am - 6 pm
Saturdays 11 am - 3 pm
They are looking for tech-savvy, driven entrepreneurs who want to develop multiple locations within a market. They currently have a 3-location minimum.
Net Worth: $500k minimum
Liquidity: $100k minimum
They allow investors to contribute to net worth and liquidity requirements.
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