[quote name='rcarlton4c']Wow, what a helpful discussion thread this is. I mentor my nephew who is hot to open a Play N Trade franchise. I've spent hours reading just this thread, but also looking at others.
Can anyone out there advise me on some key points?
1) It looks like there are about 90 Play N Trades that are actually open. Out of that there have been about 6 or so of them close (Blaine, MN, Farmington, NM, Plano, TX changed management as the first owners went under (I tracked them down), a couple in Denver - Colorado Springs). I'm a business consultant and based on my experience that's over double the normal rate for a concept at this stage of development.
The burning question is why do those of you who follow this industry and this retailer think such a high rate of failure? They seem to have no problem selling franchises, but what is causing the actual owners to fail and lose their investments? A certain number of any system will, but for such a new concept in such a burning hot category to have failed worries me to recommend this step to my nephew.
2) What about impending digital downloads? Can a system that is only now coming to the party in this space grow big enough to compete on COSTS of games (what they a PNT owner must pay based on their volume to the publishers that drives their profit margins) with giants like Best Buy, Wal-Mart, or GameStop? Play N Trade would be able to compete on costs with them no problem in, what, 10 years based on their aggressive growth, but will this retail space last that long with digtal downloads coming down the tracks?
3) I've read a couple of places GameStop/EB Games is about to start fanchising, and for less of an upfront investment than Play N Trade. What are the implications of that for Play N Trade? So many of the great postings in this string talk about the importance of connecting localy with gamers -- seems to me that's based most on the strength of the owner reaching out and choosing to have frequent tourneys etc. If that same owner lived in a GameStop system, wouldn't that be the 1-2 punch (because they'd also get the cost advantages)?
Please let me know your thoughts on this and again thanks for such a wealth of info on this string.
PS - here are some links where you can read about some of the things I have:
http://www.franchisepundit.com/forums/index.php/topic,177.0.html
http://franchisepundit.com/index.php/2007/03/01/gaming-franchise/
and of course
http://cheapassgamer.com/forums/newreply.phpdo=newreply&p=2853840
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Thanks for the comments and I hope I can answer alot of the questions you have...
1. When I first got into the franchise, there was only one store that defunct from PNT and it was very shady as he is running a store called "Trade N Play". He even admited that PNT are doing very well. As far as the failure rate, they are making strides to change this. This includes training that is now mandatory and becoming stricter on locations. I honestly believe you have to have the right goals if you go into something like this and understanding the industry is a plus. Not just knowing what Mario is... but knowing the industry as a whole. I do get a feeling that many of the owners don't know what they have gotten into and it was a toss up between this or a Subway.
2. Digital downloads are a threat but I do not believe will overtake the market place in the next 10 years. That is why PNT has a different take on retail verses most other stores because you can play the game before you buy. Also the experience is much different. We are already seeing that while there is profit for the publishers, the speed and storage space is just not there for the HD games as they could be. In the future when broadband speeds increase, we might see a shift but I think the industry as a whole have a different approach vs. what happened to the music industry. I also feel that many game purchases come from non gamers, and there isn't a system or way for your mom to buy you a digital game and put it under a tree. People like that tactile feel of owning something. Also a plus is the trade in value for when you are done with it. Gamers love that even though publishers do not.
3. Currently Gamestop is not franchising and I have not seen any plans to do so. It is possible that this may happen in the future but it is really up the store owner to make it a different experience then Gamestop or other bigbox stores.
http://phx.corporate-ir.net/phoenix.zhtml?c=130125&p=irol-faq#9411
It shows on their site that they do not franchise. I honestly do not see them franchising because they have a very large base and are continuing to grow. A large number of these stores were bought ala EB Games.
But you can't be afraid to fail... sure it will suck, but everyone has gone through their ups and downs. You just have to do your best and keep with it. I do feel that PNT offers a different experience that gamers and causal consumers crave and especially with new markets opening up to older and female gamers, PNT can help guide them instead of just offering to preorder games.
Hope that helps you out.