PLAY N TRADE: Video Game Franchise Played Out?

129 thoughts on “PLAY N TRADE: Video Game Franchise Played Out?”

• Why would this hurt used game sales? All they are going to do is register your gamer tag and ask for payment new or used. Why would they squash their biggest outlet of their games, GameStop? Its a great business move because now they make money as well when a used game is sold. They don’t have to rely on selling new anymore. Food for Thought!

• This industry will get more challanging…if Play N Trade had trouble before, they won’t make it in the future.

  John

• I agree. The model was taken over by the people from Yakety Yak ever since the merger in like 2005. It was a great, solid concept until those people who had no idea what they where doing, took control. They raised royalties, approved anyone and they are still there behind the scenes. Look up Jared Turner and James Kindred. So if there is hope for this as a franchise, maybe Ron will do it. But I doubt it after what happened with Yakety Yak.

• I’m an attorney looking into this matter and it appears John is correct. I’ve reviewed PlayNtrade’s disclosure documents and the Founder hasn’t been C.E.O. since the merger. However Jared Turner has been Chairman of the Board for most of that time for both Yakety Yak and PlayNtrade. James Kindred has held numerous positions for both companies as of that date as well, and still does. Interesting, isn’t it?

• Look we hava shark in the house. Go away your half the problem…

• In PR I know that at least 5 Stores have closed operations and two of us are in Bankruptcy. I lost my house, the one never had a late mortgage payment but had to surrender to cover my loan debt, however the total debt was HUGE! It was a great dream but didn’t work. The remaining Puerto Rico stores are running under other names, with the exception of one I think.
  I congratulates those that are still making money, but I lost ALL, alsmot my family too, but GOD never let me down.
  If anyone have to money to spend, send it to Haiti, they will make better use of it. Don’t waste it!!!!

• Manny,

  My heart goes out to you. To have spent your life building everything you have, and then to lose it all because of your Play N trade franchise is very sad indeed. I know one of the Puerto Rico Play N Trade franchisees was Franchisee of the Year…is that Play N Trade Franchisee of the year still in business?

• I believe that He(Manny) was The franchisee of the year.

• Joe is right!

  I was the one!

• If the Play N Trade franchisee of the year had to declare bankruptcy, that doesn’t speak very well for the viabiliity of the Play N Trade franchise business model. I know that the Grand Rapids Michigan guy who said he was one of the top performing franchisees in the entire system is out of business. And I mean, come on, to say you are the fastest growing Video Game franchise, when you are closing more stores than you are opening is not puffing, in my opiinion it is a lie, and while I am not an attorney, it seems to me to be an actionable fraud. I am not a big fan of goverment regulation, but saying you are the fastest growing franchise while more locations are closing than opening should be something the state regulators should look at.

• John writes: “to say you are the fastest growing Video Game franchise, when you are closing more stores than you are opening is not puffing, in my opiinion it is a lie… an actionable fraud…”

  Can you back up your statement that PnT is closing more than opening? I just searched Google news and found references to new Play N Trade openings in Plainview, NY, Warrenton, VA, Austin, TX, ON, Canada, Chicago, IL, and Phoenix, AZ.

  John, can you name Play N Trade’s closed in 2010 that exceed these openings, or is your claim puffery? Or actionable fraud?

  “Play N Trade Franchise, Inc, the fastest growing video game franchise worldwide, is excited to announce a new store opening in Plainview, NY. Michael Weissberg… opened his first location in February…” http://www.theopenpress.com/index.php?a=press&id=73444

  Play N Trade Franchise, Inc, the fastest growing video game franchise worldwide, is excited to announce that Front Royal, VA franchisee, Will Lawrence is planning to open his second location in Warrenton, VA in June. Lawrence opened his first store in July of 2008…Lawrence already has plans for a third Play N Trade”
  http://pr-canada.net/index.php?option=com_content&task=view&id=188152&Itemid=36

  “April 23, 2010 — Play N Trade Franchise, Inc, the fastest growing video game franchise worldwide, is excited to bring a family owned and operated gaming business to Austin, TX. Brenda and Jason Wicker… plan to open their Play N Trade franchise May 7th, 2010.” http://www.prweb.com/releases/2010/04/prweb3894954.htm

  “Play N Trade Franchise, Inc, the fastest growing video game franchise worldwide, is excited to announce that father and son team, Robert and Shane Poon have opened their first Play N Trade in Bowmanville, ON, Canada.
  Play N Trade, Bowmanville opened its doors April 9th” http://pr-usa.net/index.php?option=com_content&task=view&id=384868&Itemid=32

  “Play N Trade Franchise, Inc, the fastest growing video game franchise worldwide is excited to announce a new store opening in Chicago’s Six Corners shopping district. Ernesto Ayala celebrated his store’s grand opening in March…” http://www.pr.com/press-release/229632

  “Steve Stevens of Phoenix, AZ has purchased his third franchise unit… Stevens plans to open his second store within the next 60 days and has a list of more than a dozen locations that would make sense to place a Play N Trade franchise. His current Play N Trade location in Phoenix, AZ…” http://prudentpressagency.com/modules/news/article.php?storyid=15913

  Closed: http://columbiaclosings.com/wordpress/?p=1696, http://famicomfreak.blogspot.com/2010/04/goodbye-play-n-trade.html

• Guest,

  Well at one point PnT had over 30-40 stores open California??
  Now you have 8?

  How is that Growth?

• Next time I am in my state capital, I will go the office where this information is public, and I will get Play N Trade Franchise Disclosure Document “FDD”. You use to be able to get it from caleasi website in California, but after the problems Play N Trade had in CA, I am not sure they are registered there anymore. There is no question stores continue to open, but stores are closing too. If anyone has 2009 statistics from the Play N Trade FDD, I would like to hear the numbers. All I am saying, is that I would like to know how they base that claim. There are Video Game franchise systems that doubled their size in 2009, and had no failures.

• Billy…the reason this will hurt used game sales is because you will be allowed to play online if you buy an EA Sports game new but be forced to pay 10 dollars if you buy it used. That 10 dollars goes straight to EA. Therefore stores wont be able to charge as much for a used game if all of the multiplayer value is gone from it. It cuts down on the profit margin and also encourages people to buy new instead of used. Afterall why buy a used game and then have to make a 10 dollar payment in addition to what you just paid to get it to work. Its great for the manufacturer, but it hurts the used game retailer.

• I can’t believe in this day and age with google that so many people are really “scammed” With all of the disclosure laws and research you can do before you buy any franchise, I think “I’ve been scammed” is an excuse for “I’m a failure and I’m looking for someone to blame” I’m not buying any franchise because if I succeed I did it myself and if I fail I won’t be coming to a website like this to make myself feel better (I’ll just look in the mirror}.

• John,

  You make a valid point. It is an owners job to do exhaustive due dilligance before they make their purchase decision. And, it is their responsibility to make their store a success. My comments on this board, are just to help people with their due dilligance when looking at a Play N Trade franchise, or any franchise. If they see that many have failed, and they choose to ignore that, it is that decision that they need to take responsibility for that if they fail. You are right, too many people are in a hurry to blame the franchisor. But for the people out there, if you buy any franchise where there have been many failures in the system, don’t be suprised if you fail too! It’s not just Play N Trade. Many franchise systems have a poor track record. Don’t be so quick to let a salesman “explain away” those failures. If you move forward…you know what you are getting into. Don’t make the mistake of thinking you are smarter than other people…you may be…but it doesn’t mean you will be a success.

  John

• I’m not making any excuses either. I am stating facts and trying to let people benefit from my experience with PNT. I share a huge amount of the burden for the failure of my store, and I made a lot of mistakes. I will say its my honest opinion that the store would not have worked even if run perfectly. It needed a lot more capital than we were told we needed.

  I will point out that when I bought in there were less than 10 stores so its kind of hard to do “due dilligance” with so little to research, and I made the stupid mistake of taking Ron’s word for a lot of things. I was buying into Ron’s vision of PNT as it was presented to me. He promised direct buying from all the major game companies after 100 stores were open. He promised that we would be able to count on getting games at the same time as or ahead of Gamestop. Plus many other things that didnt happen in my years with the company. Whether its his fault or not he didnt back up his word, and the people at PNT today arent carrying through on there promises either. I just wish I had gotten all of that in writing so I could be suing someone right now. If you’re looking for people who blame others, look no further than PNT corporate. Whenever something goes wrong it’s previous managements fault, or a distributer’s fault. I spent years complaing about our problems with game delivery and was constantly told its Ingrams fault. PNT corporate did nothing about it which is what they are getting paid for.

  As to the man who says “if I fail I won’t be coming to a website like this to make myself feel better”, then why are you here? To ridicule people? We are just owners and former owners sharing information to help each other out. You know so that others can have access to information on this company from the inside before they buy in.

• Also I would advise anybody reading this board to not take anything that is said at face value. Don’t believe me if you dont want to. However, I would just try to take everything in and ask PNT some of these questions and see if they can answer them to your satisfaction. Do your own research. Just use this as a useful guide.

• Disillusioned,

  I think you have every right to come here and present your information. You lived it and suffered the consequences. Prospective franchisees want to believe, they want to buy into the dream. Your story is an excellent lesson, and may save other people from the same fate you had. People risk so much when they open a franchise, it is important for them to know these things. When Play N Trade tries to explain these things away, it is important to hear from people like you.

  John

• Does anyone know how many stores closed in 2009. Also, how many were sold?

  Thanks.

• I seem to recall on another thread, that a franchisee had said that during a conference call talking about the California issue, the CEO gave a number thru April 09 of like 34 stores closed, 39 stores opened. I would guess that the number of stores closed in 09 would be anywhere between 70-90 stores.
  If you go back to 08, PnT said that they had sold like 585 stores, they now have what like 180-200 stores open, so 380 plus stores have either closed or never opended. Why would anyone ever get involved with that, unles they have a ton of money they dont mind losing.

• Is Play N Trade staging a comeback?
  Anyone know the status of the CA franchise registration?

  PLAY N TRADE Franchise: 30 Stores to Open in 2010

• I am looking at Play N Trade and they are not only registered in California, but have recently opened a new store in San Diego. The new store looks great and my research shows they’ve opened nearly 40 of them in the past year and that they are doing pretty well. They also recently rolled out a new POS technology package and are working on new web pages, national advertising and e-commerce solutions this Fall.

• I AM REALLY CONSIDERING TO BE A PART OF PNT. I LIVE IN SOUTH TEXAS AND HAVE BEEN RESEARCHING IF IT WILL BE IN MY FAVOR TO BUY INTO THIS FRANCHISE. SOMEBODY PLEASE GIVE ME SOME ADVICE. I UNDERSTAND THAT THE DOMINATING FRANCHISE IN THE RIO GRANDE VALLEY IS GAMESTOP. ALTHOUGH I HAVE ENDLESS COMPLAINS ON GAMESTOP AND JUST ABOUT EVERYBODY WILL AGREE WITH ME ON SOME OF THOSE ISSUES WITH GAMESTOP. I JUST WANT TO KNOW IF IT WILL WORK IN A SPOT THAT IS IN NEED OF A GAMING STORE AND IS CURRENTLY NEUTRAL ON COMPETITION. I WOULD REALLY APRECIATE ANY ADVICE ON THIS TOPIC. I WOULD LOVE A REPLY ASAP SINCE I HAVE A MEETING IN A COUPLE OF WEEKS WITH A REAL ESTATE AGENT, CONCERNING A STORE OR LOT WHICH WILL FIT PNT’s REQUIREMENTS. WHAT IS THE AMOUNT OF MONEY THAT I WILL NEED TO TAKE OUT OF MY POCKET TO START THIS WHOLE BUSINESS OPPORUNITY?

  JUAN

• Juan,
  As a current Franchisee of the PNT System…I would recommend $250K minimum. The buildout is more expensive now than when I got in at the height of the expansion. You will need at least $100K in working capital to keep you going in this trying time of economic downturn.
  Never underestimate the power of Gamestop. Even though your potential customers are telling you “they hate GS, the customer service sucks, they don’t know anything”…you are still at a an extreme disadvantage when it comes to title allocation, product assortment and vendor support.

  Instead of talking/asking people on this board about “what you should do”…call at least 10-15 franchisees in different locations and ask them thier experience. Not calling 10 franchisees is dooming you to fail and if you do not have the $100K working capital…you will.

  Money comes slowly in this business…you may well feel you are alone out there but there are dozens of franchisees that are willing to help…just have to get to the right ones.

• Juan,

  Well I would really do my homework on this, I would call all of the franchisee’s that are still open in Texas. I would take the the amount PnT say you need and double it, so I would plan on having atleast 500k, if going the SBA loan route, to borrow that amount, you will need atleast 100-150k out of pocket. if they will even give u a loan based off PnT’s stellar sucess rate. I would ask PnT for a current list of closed stores as of today’s date, and a list of people who purchased the right to open a store, but never did, and try to talk to every last one of em. I would also ask PnT for a current list as of Today, any pending lawsuits for and against PnT. In 2008, Pnt had listed 594 stores sold, today they have 210(Insert Joke here) stores open, you do the math, but thats not a very good number. My advice to you would be if you really want to open a store, do it yourself.

• THANK YOU BOTH FOR YOUR ADVICE!!!! I WILL DO EXACTLY WHAT YOU RECOMMENDED!!! APRECIATE YOUR TIME AND ADVICE.. HAVE A MARVELOUS DAY AND MAY GOD BLESS YOU ALL!!! : )

• Sometimes people dont want to share personal information. Ask a franchisee, “Systemwide, for a guy that works in the store 40 hours a week, how much money does the average owner make after paying his loan expenses year 1 and year 2?”

• OK, I’ve been reading through a few of these threads. I am a business owner, still struggling but in business for 4 years now.
  My rules which I read in many books and information sources about business/entrepreneurship.
  -Open something you know and you like.
  -Research, research, research, particularly if you you are going the franchise route.
  -Location, location, location (which I screwed up a bit)
  -Don’t expect to make money your first year, maybe even your first two years sometimes, depending on the industry. Make sure you have back up funds to live off of.
  I didn’t go the franchise route, I wanted to do things my way and had read so much that franchises have so many rules (not a bad thing, just not for me)
  My understanding though, is part of what you pay for with a franchise is the name. When you buy a McDonald’s, everyone knows McDonald’s and that is part of what you are paying for. PNT to me, not a big name in my opinion. So why not start a solo venture doing the same thing if that’s what you are in to?

  Oh, and expect to work a LOT in your first couple years, unless you can afford to pay someone else to. I put in up to 70 hours some weeks in my first few years. In the last year I’ve finally been able to start taking 2 days off a week and working only about 50-60 hours per week. I don’t mind it at all, I’d rather work 60 for me than 40 for someone else. Make sure you warn your spouse though, chances are your mega hours are gonna cause some issues, mine did, but we made it through.

  I’m not saying that any of these failed franchisees didn’t know all of this, but I do get the impression that SOME (not all) are a little naieve when buying a franchise, or even opening any business. Do your homework. And if like me you think you did it all, do more just to be sure. My intention was not to insult anyone and I apologize if I did.

• Marco Opolo is correct, expect to work most of the hours alone or with part time help. Relationships will become stressed and your patience will run thin.

  I think PNT corp is trying but with the amount of store failures, uncollectible royalties, and weak performance of stores in general (in a franchise system there will always be a percentage of stores that just will do great for a multitude of reasons) thier cash flow is changing from month to month. Staff reductions, changes and the introduction of a new POS system, hopefully will allow them to create a plan looking down the road into 2012.

  Is now the right time to get into PNT? Yes if you are heavy on cash, long on work ethic, and realize that you may really only realize 10-15% profit margins in the first 2-5 years until you establish your selves as the gaming leader in your community. Your profit will go directly into paying back creditors, vendors and rent.

  Unfortunatly in PNT there are so many stores failing due to lack of knowledge/support from the first sets of CEO/Franchisors that we are underfunded and overextended.

  The newer PNT’s seem to be doing better but they have not been out there long enough to see the long term effects of low margins, limited product allocation, and the true effect of Gamestop’s buying power and marketing.

  Gamestop is the big dog for a reason.

• can anyone tell me whom to contact at Play N Trade to get on their ‘preferred vendor list” I was told as a franchise owner that you get a list of select vendors to buy your equipment from. If you are a franchise owner can you tell me what type of safes are offered on your list and what brand name?

  Thank you!

• Juan or any one else,

  I have a complete store (2 years old) in a POD storage unit. We closed our store. Comptuers, TV, consoles, inventory, SWAG. Disk cleaner, storage, coolers, halo suit, fixtures, indoor out door sign,you name it. Everything. Worth 150k or more. we were allowed out of our lease. Asking 60-65k, make an offer it will be shipped to you. I will provide complete inv and fixture info if you want.

• For the person who said they have a store for sale:

  If you are legit I would like a complete list of what you have. I am seriously considering pulling the trigger on a franchise soon (and yes I have read everything on this blog), and I am looking to cut some costs if I can.
  My email addy is
  [redacted]

  Thanks!

  Admin note: We don’t allow posting of personal contact info, including email addresses, phones #s, etc. If you’d like to have your contact info forwarded, please email your request to site Admin at UnhappyFranchisee[at]gmail.com. Thanks.

• Jim,

  I have requested to the admin of this site to provide you with my email address or vica versa. In addition, it is a legit post. I will provide whatever info you need. We are completing the exiting of our store location and completing the paper work with corp this week. I can provide a complete inventory, assets, fixture, etc.. with all other materials as well (i.e. signs, swag, office supplies, storage). We are simply going to store it, so it is available immediately. Once I either recieve your email or you mine from the admin of this site I will pass along any info and would be available to talk.

  LRW

• Hello All,

  I am currently own a Play N Trade Franchise. I am limping toward my third year. I would highly advise against EVER OPENING a FRANCHISE!

  Don’t believe me please talk to at least 5 Franchisee owners about the help corp has provided them. Also what was “PROMISED”.

  Do the Math! Build OUT, franchisee fees, Advertising fees, percentage of gross sales, equals a very large whole with no rope.

  Unfortunately when I opened only 2 stores closed. So I had nothing to go on. But I guess meeting the area developer should have caused some red flags. He basically told me to pay for the franchisee fee and your in. OK my family were shopping other franchises and this never happed. I said what!? NO, financial background check!??? He said not needed. I came to find out later. That this guy was just collecting part of the Franchise fee. And promising the world to cash in. He could give two craps if you survived or not. He left in his and PNT wake of destroyed families and peoples financial in ruins.

  I went to Headquarters and met other new franchise owners. I was shocked to see that most of them were not really into games and was told this was basically a turn key operation. This is NOT TRUE. I have retail gaming experience and sales experience so I knew how retailed worked. These poor folks were relying on corp to train them. You would think if your making a $300k investment they would train you right?!? WRONG! A week of video game history and company over was it. Still I already put my money in this so Im gonna make it work!!

  Back home im trying to open with NO CORP help at all. They DO NOT SEND anyone from corp to help you open. I guess you just watch videos and read manuals. Wait a min they have manuals!?! At the time they didnt really. So because of some helpful franchisees near me. They helped me open and did training. They also stated the same frustration with corp. They said it’s us against them. Sad that it’s franchises vs corp.

  Ok well like I said my retail side kicked in and hired well. Focusing on customer service and knowledgeable staff. We overcame alot by local events, flyers, social networking. Also getting the word out. Corp was like wrap your car. Also all the while NO CORP ADS. They DO NOT ADVERTISE FOR YOU!! Even quizno’s the worst of the worst has national ads!

  Now all the franchisees that helped me started closing one by one. As corp stays on the side line watching their slow demise. I still refuse to go out. I actually could make it if I didnt have to pay their ridiculous fees. My advise is if you really want to get into play n trade. Buy someone’s store. You get training, save money on fixtures and build out. If you are a business owner already. Try to open a game store yourself. Dont worry about vendors. Play N trade has not helped us at all. You could google it your self and probably get better terms and pricing.

  I tell the truth when “Potential” Franchisees ask me about play n trade. I will not let corp hide the truth and destroy another family!!! So please do your homework folks and ask around. You’ll see im not the only one.

  I’ve left out other horrible details. But you guys get the picture. I plan to get the monkey of PLayNTrade off my back. But now im doing my homework with my lawyers!

  Take Care,
  Frustrated.

• Thanks for sharing your story. My heart goes out to you. When you started no one knew what failure rate Play N Trade would have, and how many Play N Trade stores would close and fail. Today though, people know, and if they don’t see that as a red flag, then that is a business decision that they are free to make.

• PNT is a pile of crap from the top down plain and simple….I’ve gone over there company records and minutes from the day I bought my franchise to the day it was closed down. A five year old could come up with a better plan….I’m jokin there but only slightly. PNT’s basic plan is hey give us 300k, we will train you for 1week and you are on your own….oh they have customer support but its a different guy every other month cause they move on to other jobs and nobody at there corporate headquarters communicates. We sent them a notice by mail, fax, and email to several different addresses 3 months before we closed letting them know the appropriate info about the shutdown date and signing the proper paper work….but as usual this company cut F-up a cup of coffee….we get a call 1 week after the store is closed from one of the VP’s saying “we’ve been calling your store MR. **** and we are getting no dial tone, are you having some kind of problem?”

  My Response “No problem we went out of business”

  His Reply in a smarta** tone “well did you think to tell anyone?”

  My Reply “Yessir I did I emailed you personally as well as your staff. I also faxed you a copy of our termination agreement and sent you a registered letter 3 months ago, do you people communicate out there or not?”

  His Reply “Yes we have perfect communication and teamwork out here, I’ll have to check in to this”…obviously not believing me.

  Well since they had milked us for all they could we never got a call back saying yes we got that paper work sorry for the confusion thanks for 5 years of your time and 100s of thousands of dollars of your money. We got basically the middle finger from this company. I work for a much larger and more well put together operation now. Its like the difference between Pre-School and Grad-School, and I’m not even saying this place is that great, thats just how bad PNT is.

  Ingram the company that supplied us was late, and consistently sending incorrect orders for the entire 5 years. PNT didnt do jack about it despite constant complaints and Ingram did nothing. My new company had a supply problem and took care of that crap in 1 week….I’m not exaggerating here people, PNT is a gigantic pyramid scheme, designed for those in corporate to pick apart the few stores that succeed, turn them corporate and suck them dry.

  What are we on CEO number 5 or 6 in just 5 years…..oh well after Larry Plotnick leaves I’m sure the next guy will come up with the 7th plan that is supposed to save the company and make the owners rich.

• As far as lawyers go, keep us posted “Frustrated”…..a class action suit culd be a possibility.

• Hello everyone,

  My brother in law was a chief in the US Navy. When he was diagnosed with Croan’s disease a few years back the navy gave him a medical discharge. He intended to serve the navy throughout his career but quickly had to come up with a new means of supporting his wife and kids. He was trained in electronics. He researched PNT and it was a perfect match for him, a love of video games, a business with concept that no other company was using and a background in diagnosing/repairing electronics. He was on his way and opened his store two years ago. He happened to open when the economy was not at it’s best but was still able to make it through the first year. He had a jingle on the radio, his vehicle was a wrapped in advertisement, had a room in the back for children’s bday parties, joined a local sports bar in holding ‘Guitar Hero’ and other game competitions there…all responses were great but the business kept sinking. First off, the company doesn’t buy the game systems in a large enough quantity or at a low enough price for the owners to make a profit. He only made $5 on every game system sold! He could not up the price b/c then he could not compete with other vendors. He did ok with repairs and with game sales but it was not enough to sustain his business. Other businesses in his strip mall were being effected by the economy with quite a few closing. The rest of the businesses went to the landlord to negotiate a lower lease rate for the remainder of the leases…the landlord refused and would not allow anyone to break their lease without it costing them big. PNT could offer no help as my brother in law worked day and night trying to keep that business afloat. He just closed the door for good last week. His wife is on a navy ship overseas, she has yet to find out that their investment is gone, they must file bankruptcy, and her husband has to search for a job in an economy that it not doing much hiring. I tell you he fought so hard for that business only to watch it crumble. I would err on the side of caution before deciding to open a PNT.

• In my opinion, Play N Trade corporate is blaming a bad economy, but many in this industry are seeing same store sale increases year over year. My heart goes out to your brother, please thank him for his service to our country. If you are willing, could you please share what state or part of the country the store was located in?

• I have never written about Play N Trade before. I signed a non disclosure agreement and felt it best just to keep quiet about what should be obvious to anyone at this point. But circumstances compel me to speak out and If I can save even one person from financial ruin, I will be happy.

  I been following Play N Trade for a few years ever since I flew down to California to meet with their top executives and negotiate a Master Franchise deal for Canada.

  I was there for a week and looked closely and deeply at every aspect of their business.

  In short, it was clear to me that their business model was very flawed. They had some great ideas and an exciting vision but putting this into action was all about selling Franchises and not about the sustainability of each Franchise.

  In touring their operation, it was easy to see that they were very top heavy on Sales and Marketing for Franchises and sadly weak in Franchisee support. They were totally focused on Selling as many Franchises as they could, as quickly as they could. It felt more like a Telemarketing office more than anything else.

  I felt this “serious” corporate vision flaw was fixable mostly because of my 4 days of conversations with the then CEO. He was honest and sincere and I asked him directly “who is the decision maker here?” he replied “I am”. I was comfortable proceeding almost solely on his strength as a leader even though the company was kind of a joke without him (of note, he was a former VP for Starbucks).

  So I weighed the pros and cons. Huge upside in the Video Game industry. A new and very capable CEO with the right motivation. Strong intitial sales to get over the threshold hump for National recognition vs. a ridiculously poor business model that would get an F in any high school marketing class.

  I felt the latter could be worked on and the CEO and I tabled a working agreement to be negotiated to final form after my return to Toronto.

  Over the next few months I set to work, I hired a researcher and starting preparing a business plan. We had some back and forth and came close to a deal with one major hurdle. My plan called for 6 to 8 stores to be opened in the first year. They wanted 30 (a very strong indication of their true motivation).

  My plan also included a business plan for an individual store. This was because I wanted to open a few corporate stores and I had to figure out the viability of a single store in order to project the viability of the brand as a whole. In other words, make it all work from the ground up, not the top down.

  I argued with them for 3 months that they should charge no royalties in year one to new franchisees so they could get off the ground. I also argued in several heated emails and phone calls that 30 stores minimum would put a type of pressure on me that would force me to sell franchise rights to just about anyone who enquired and that came up with the 27,000 fee. I said that I would not lose my social conscience just to sell a Franchise. I explained that my model would ensure that eveyone who bought a Franchise, would succeed as a Franchisee. I explained that I did not want to focus on short term cash Franchise sales, but rather long term Franchise Royalties by providing solid support to successful happy Franchisees – a win/win for everyone.

  Play N Trade didn’t agree. I think at the end they insisted on 20, where my very clear model showed this to be essentially impossible without taking advantage of ill informed people.

  I still felt that with the right model Play N Trade could be a success in Canada for both the Franchisor and the Franchisee and I put a considerable effort into both convincing Play N Trade that I had it right and trying to get them to give me the autonomy I needed to make it happen.

  I failed to get a workable agreement in place and abandoned the project.

  Since this happened they have opened less stores in Canada in 3 years that I had guaranteed in the first year under my leadership. They ignored my warnings of mass store closings if they continued on their current path (not because they didn’t understand my numbers) but because, other than the ex CEO, I don’t think they cared.

  A litte later they got their franchise licence revoked. Stores started closing. More reports of non profitability started trickling in underground internet reports and over all its a bleak picture.

  Here is why the business model fails. I offer this extremely valuable advice free of charge. Heed it well.

  You sell a Console for 299. Play and Trade takes 5% of the GROSS SALE not your profit!!! Be clear on this. That means you pay them $15. Your net profit on the console (to compete and after shippting and inventory costs etc) is about 8%, thus you make $24.00. If the customer pays with Visa, you will pay 2% to them for the priveledge ($6) If you dont have to throw a cable in to make the sale, you will net in your pocket $3. And you will have to fight for that $3.

  If you were a particularly good money manager, and you understood how to push used games and social gaming in your store, you might get lucky and actually see a 20% profit. Assuming 3000 a month rent, one employee at 2000 per month plus sundry expenses, you would have 6000 a month in expenses. To cover your expenses you would need …. are you ready … to do 30,000 a month in sales just to break even. But wait! you still have to pay Play N Trade so really that’s not enough either.

  In fact at 40,000 per month in sales, you are making 8k in profit minus 6k expenses and 2k!!!! to PLAY N TRADE so that is your break even point. Thats Almost half a million dollars a year in sales just to pay the bills.

  I tried very hard to present a model to them that would make a store profitable at 250 a year in sales and I believe I had worked it out. 250 is a doable figure for most stores after their first year. I personally believe that the Franchise would work well for everyone involved if Play N trade were getting 12,500 per store doing 250k at 30 stores the net revenue to (me and them) would be nearly 400k per year just on revenues. Plus another 600k from territory sales would net a nice and tidy profit. Again, with focus on makeing each store sustainable.

  All this said, it should be an easy decision for anyone considering a PNT. If you think you have the mustard to move 250k in video games from a 1100 to 1300 sf shop. You DONT need PNT to build it out for you. Take your investment, get a designer, make your own store and put the majority of your capital into inventory and ADVERTISING. You should only ever buy a Franchise because you want a turn key operation that is tried and true and will bring customers into your shop simply because of the name… really that is what you are paying the Franchisor for, to get customers for you. If they don’t do that, they really aren’t doing anything at all.

  If you decide, despite the warnings to proceed, at least remember this… Negotiate your Franchise Agreement. They need you more than you need them. Know this always. What are they giving you for your dollar that you cant get on your own or elsewhere? Negotiate with strength and if they won’t work with you, walk away and try another Franchise, their are literally thousands of potential Franchises all happy to take your money.

  Good luck what ever you decide.

  P.S. I had the opportunity to meet with The Founder at a Party Hosted by one of the current execs. Ron was … refreshing. He basically told me, without stating it outright, eyes open buddy… Things are not as they seem. A very subtle but poweful warning right from the mouth of the founder who had sold his interest in the company.

• Mike,

  Very interesting read, when I was looking into Play N Trade, I talked to Tom McMahon also, he was very candid about the business, even at one point agreeing with me that the numbers they give potential franchisee’s about start up costs were way off, when I pointed out that there was no way in hell you could start up a store for 129k, with 30k or less in operating capital for the first 12-18 months, basically saying that was all done before he got there, and he personally was having them change it, well they really never did, he was gone pretty quick. Ive talked to 30-40 franchiee’s both during my due diligence, and after I decided to pass on this business, and not 1 was making any money, and they ranged for stores doing 10k a month, up to stores doing 60k+ a month. As far as Ron Simpson goes, I find it funny that he would say that, being this was his baby, I talked to him also, and he made all kinds of statements from they would have 1000+ stores open to they were about sign agreements with all the hardware, and major software developers to go direct, which you really have to have to go up against the Gamestops and Best Buy’s, Walmarts. When I asked him if he would put that in writing, I never talked to him again, because it was all lies, none of that ever came to pass, and I have would guess that none of that was ever in consideration, just a carrot to dangle in front of me to get me to sign up.Bottom line is that this is not a easy business, and you HAVE alot of money to make it work

• Hey Joe,

  I wonder if you met with Ron after or before I did. Of course he said great things about the company, but after he and I found out we had some common ground and he seemed quite interested in my pervious adventures, his tone changed a bit.

  So of course I kept my eyes open. To clarify, The PNT concept is an excellent one. A franchise video game store to compete with GameStop should work. Sadly, the string pullers, formerly of Yakity Yak (look this gem up), just dont care if you succeed or fail so long as they get paid.

  If you get sucked dry in the process, too bad.

• When you talk about store overhead, are you including utilities, insurance, advertising, credit card processing, supplies, repairs and maintenance, unemployment insurance, workmens compensation insurance, FICA match, payroll processing, accounting fees, security system monitoring, loss to employee theft, loss due to buying damaged used items, customer returns, rent, common area maintenance, real estate taxes, etc. How many hours is the owner supposed to work? You mention one part time employee…what happens when the owner is sick and throwing up? Better budget for a shop vac for when the smash and grab thief busts out your front glass window at night. That $3.00…well it better go a long way! I can’t imagine whty any franchisees are closing or unhappy.

• I talked to the founder in the early days and he was hopeful that PNT and very straight forward about the risk of owning a business and I think really thought they could compete with Gamestop. However, after the merger with I think a cell phone franchise, everything changed. Then soon after, everyone I knew was fired or laid off by the new crew (including him!) It kind of reminds me of what happened to the guys at Infinity Ward!!!No wonder things went the way they did…

• As a current franchisee, I would recommend the following to any other prospective franchisee purchaser:
  Visit with no less than 20 current franchisees (not managers) and see what they think. Pick Franchises in different locations of the country with varying demographics to your current demographics. Each store is unique and so will yours.
  Do your due diligence. Do lots of math. You must sell alot of games with $5 profit to make your rent, utilities, phone, internet and payroll. Currently most games are turning a $10 profit but many are turning less.
  Call all of the vendors that yu can get numbers for and ask for the Play N Trade sales reps. They have a good pulse on the industry and how stores are doing.

  Make sure your attorney reads the documents that the corporate office sends you. Negotiate something if it doesn’t feel right to you. Everything is up for negotiation.

  Don’t settle for the hard sell. This is YOUR money and your business, don’t let someone else run it for you or tell you what your deal is. Be willing to walk away.

• One thing I don’t see any of the franchisee’s on here doing is admitting that some of the stores DID close because the franchisee did not know how to properly run their business. I’m not saying the business model isn’t flawed or corporate doesn’t do a bad job, I’ve never owned a PnT, so I can’t make those assertions or validate the statements you all have made. I’m an avid PnT customer who has shopped at 15 or more different stores and I’ve noticed ONE major flaw that some store owners don’t seem to realize. (For reference, I’ve mainly shopped at the 6 that are and were once in and around Raleigh, NC but I’ve also shopped at PnTs in Virginia, Florida, and California).

  The main thing these store owners overlook is:

  YOU CAN’T CHARGE EBAY PRICES IN A BRICK AND MORTAR STORE!

  eBay is a market of MILLIONS of customers, at any given time there is only ONE person willing to pay X dollars for Z game. What is the chance that one person overlaps your stores comparatively tiny customer pool? I watched silently as a PnT literally drowned in inventory because they were charging eBay prices for all their games. Needless to say, that store failed in under a year. It actually ended with the franchisee being locked out of his own store by the landlord. He had put so much money in to inventory and failed to move nearly all of it (due to his prices), and thus, went broke.

  I’m sure he has seething words of hatred about PnT and their flawed business models, but in the end he caused his own demise. He won’t admit it I’m sure, but it was his fault when he actually thought that John Doe wondering off the streets would actually drop $40 for a PS2 Network Adapter. Yes, those things sell for that on eBay, but if the guy had done his research he’d learn they were all going overseas (for use in piracy). No one in the US would pay that, there’s a reason Gamestop sells them for $15. On that note, there’s a reason Gamestop rarely charges eBay prices for in demand games. IT DOESN’T WORK.

  PnT’s corporate prices that are set in the POS system work. If you keep your games priced to their system, they will move and you will see more success then you will by marking your games up to eBay.

  With that said: as a customer, I really like PnT, but that is primarily due to the fact that my main store is run by some very competent and great people. From what I’ve seen on the internet (look no further than CheapAssGamer.com) the PnT brand name is worthless. Gamers associate the name with high prices (I’m not just saying this to drive home my main point, it’s absolutely true, just ask around) and unfair, seemingly arbitrary trade-in values. Don’t waste your money franchising with them, open your own mom and pop store, start your own brand. With the PnT brand name being worthless to the vast majority of gamers (except those who like me have excellent stores in their area), you just wouldn’t get enough value out of paying for the franchise.

  If you start your own store and innovate enough (and charge prices your customers will actually pay), you’ll likely have more success than you would dropping $250k to open a PnT store. For the record, 3 out of 6 stores in my area have gone under: one from a lack of inventory, one from a hemorrhage of inventory, and one that I genuinely believe to be the fault of corporate (they were denied on their original choice of location).

• According to the Jan. 2011 Entrepreneur magazine franchise 500, at the end of 2009 there were 247 franchised Play N Trade stores. At the end of 2010, there were 188 franchised Play N Trade stores. A net loss of 59 stores in one year. And if 30 new stores, for example opened in 2010, that would mean that 89 closed. That failure rate is nothing short of stunning! How many more are open and losing money, and how many owners lucked our and sold their stores, and at least got pennies on the dollar. There are too many quality opportunities out there to consider this.

• While Josh makes a valid “I never owned a PNT or managed it” just shopped there, I think he is missing some of the points of this thread.

  As independent owners in regional markets, some products sell better in some markets then in others…simple case of supply and demand.

  As he states..the pricing works…how would youk now if you are not an “insider” to the particular business. About 90% of the pricing we all have is based on corporate pricing, the rest is left up to the manager/owner/franchisee. You can go into any store and pick out a product and say we are over priced but on 90% of the products we are getting the same pricing as gamestop, walmart, bestbuy.

  i looked on Cheapassgamer.com and could not find the negative remarks you wrote of. But the bad thing is that there is little to no blogs or forum posts on PNT. That is a bit disturbing.

  Comparing a single store to EBAY is like comparing a kids yellow tonka truck to a F-150. You can find good deals everyday online on Ebay and ina brick and mortar store. just because an owner chooses to “markup” an item up to ebay prices doesn’t mean he is a failure.

  Failure comes in many forms and yours boils down to 1 (ONE) aspect of the business. Your comment does not take into account the rent, payroll, inventory costs, loans outstanding, utilities, vendor relationships, credit worthiness and community standing.

  If you think it is so easy to open a “mom and pop” store and make a few bucks going against the likes of Walmart, who can offer a $50 gift card on every console they sell, then I have more than 1 piece of advice for you when you try. everytime $50 leaves your store and you have to pay for it…its a challenge.

  Deep pockets are just that deep pockets. big box competition has the ability to drop prices below your cost. you will face the same irate customers we do and it will be frustrating everyday to wake up and relaize that “mom and pop” ain’t worth it.

• Good luck. Amazon is quietly stealing this market.