FDD Talk: How Much Does an Uptown Cheapskate Franchise Make (Average Revenues and/or Profits)? (2024)

In this FDD Talk post, you’ll learn the following:

  • Section I – Background information on the Uptown Cheapskate franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for an Uptown Cheapskate franchise, based on Item 7 of the company’s 2021 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Uptown Cheapskate franchise, based on Items 5 and 6 of the company’s 2021 FDD
  • Section IV – Number of franchised and company-owned Uptown Cheapskate outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD
  • Section V – Presentation and analysis of Uptown Cheapskate’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
  • fiscal year 2020 average sales, cost of goods sold, gross profit, franchise royalty, administration, facility, marketing, sales expense, labor, total expenses, and net income for the 76 franchisees whose Uptown Cheapskate stores operated in the United States during the period of November 1, 2019 through October 31, 2020

Section I – Background Information

19 Things You Need to Know About the Uptown Cheapskate Franchise

Listed on Entrepreneur’s Best of the Best List

1. In early June 2021, Uptown Cheapskate ranked in the top 125 franchise concepts on the highly competitive Franchise 500 annual ranking from Entrepreneur magazine for 2021 as well as number one in the retail industry category section of the prestigious ranking leading to its listing on Entrepreneur’s Best of the Best list.

2. With more than 80 locations in 24 states (at the time of the announcement), Uptown Cheapskate focuses on giving young professionals and eco-conscious individuals a place to buy and sell fashionable, name-brand items. The brand provides a chic and trendy customer experience, as well as an opportunity for customers to save money while keeping their gently-used clothing out of landfills.

3. Scott Sloan, CEO of Uptown Cheapskate, said, “Uptown Cheapskate exists to bring affordable styles to the masses. We’re a mainstream alternative to resale. We appeal to a wider customer base than our competitors because we focus on an upscale experience that doesn’t feel like resale. We’ve been rapidly growing for years, and we’re going to add hundreds of locations in the years to come.”

Touts Itself as Low-Cost Business Opportunity That Gives Back to the Community and Helps the Planet

4. According to an Uptown Cheapskate blog post from early June 2021, the resale industry boom is being driven by consumers who want to save money and embrace eco-friendly shopping practices. The fashion industry is considered one of the most pollutive industries in the world. In 2019 alone, destroying or disposing of single-use outfits generated 208 million pounds of waste, according to research done by thredUP.

5. The resale market boom is expected to continue. The industry was valued at $28 billion in 2019, with a forecasted 39 percent annual growth rate, and is positioned to reach an estimated $64 billion by 2024. For entrepreneurs looking to capitalize on the incredible growth of the resale clothing industry, now is the time to invest in an Uptown Cheapskate resale clothing business.

6. According to Chelsea Sloan Carrol, co-founder and president of Uptown Cheapskate, “There’s a high cost for shopping new and consumers are waking up to the fact that fast-fashion brands are big polluters. The resale industry is growing faster than anyone expected, and our business model is going to be more relevant as people are going to need to save money on clothing, as well as make money from selling their clothes to us. The service that we provide to our customers is invaluable, and our strong unit economics reflects that. We’re looking forward to strong growth in 2021.”

Targets Younger Generation

7. Uptown Cheapskate stands out from other resale brands by specifically targeting the younger generation. However, there are a few adjacent demographics franchise owners should be aware of when they’re planning to market in their local communities.

8. Millennials and Generation Z – Uptown Cheapskate’s primary customers are younger buyers – typically Millennials and Generation Z shoppers. These buyers are ideally between 18 to 25, or teens and young adults. Younger shoppers are identifying their personal styles and want to try out new fashions, but they might not have a large budget to work with. They tend to be more cost-conscious, hunting for deals. Millennials and Gen Z buyers are also largely responsible for the rise of the resale fashion industry. With options to both upcycle and purchase gently-used clothes, Uptown Cheapskate is a great choice for these customers.

9. Chelsea Sloan Carrol, co-founder and president of Uptown Cheapskate, said, “We serve the 18-25 year-old demographic perfectly. Our primary demographic is a college-aged person or a person just out of college who needs to invest in a J. Crew blazer for a job interview but doesn’t want to spend $165 for it.”

10. Parents of Teens – Because Uptown Cheapskate carries clothing for teens, it’s likely that some of its customers will be shopping with their parents or guardians. Parents often shop with their kids for back-to-school wardrobes and holiday gifts. They, too, are interested in finding deals and getting great quality for less money.

11. Female and Male Shoppers – Many teen- and young adult-focused fashion brands cater more heavily to female buyers. However, Uptown Cheapskate buys and sells clothing for both men and women. Resale is a great choice for men, especially when the store is organized and offers quality garments.

12. In addition to a great shopping experience for younger buyers, Uptown Cheapskate’s clothing is generally marked down as low as 70% off original retail. This creates huge savings for buyers every single day. For today’s shoppers, getting clothing for less is more important than ever before. The Great Recession impacted Millennials entering the workforce, and the effects are still present. Combined with current events, Millennials and Gen Z shoppers have less disposable income than their parents and grandparents did. Uptown Cheapskate allows them to find great-quality items without overextending their budgets.

13. Conscious consumerism is huge for younger demographics. Millennials and Gen Z shoppers want to know that the brands they frequent are doing good things for the world. Uptown Cheapskate appeals to this mindset in a few ways. First and foremost, the brand’s resale clothing franchise puts sustainability at the forefront. Buying used instead of new allows a buyer to reduce their carbon footprint by 60-70%. With 77 percent of Millennials wanting to buy from environmentally conscious brands, these numbers are critical.

14. Additionally, Uptown Cheapskate is also a local operation. Although owners have support from the nationwide brand and parent company, the clothes they circulate come from the local community. Uptown Cheapskate pays customers for their used clothes and pays local employees to work in the stores, which benefits the regional economy.

15. On a final note, Uptown Cheapskate stores are well-lit, use an open layout, and organize clothing by size and color. This allows the brand to offer a chic and trendy experience that isn’t found in other secondhand or thrift stores. Uptown Cheapskate also stocks name brands that are popular with buyers, ensuring they can find pieces they love for a fraction of their original cost.

Company History

16. Uptown Cheapskate was founded in 2008 by brother and sister team Chelsea Sloan Carroll and Scott Sloan in Salt Lake City, Utah. The siblings aren’t strangers to running a business, as their parents, Brent and Shauna Sloan, founded resale franchise Kid to Kid in 1992. Watching their parents’ success (and hardships) inspired Carroll and Sloan to start their own business.

17. They wanted Uptown Cheapskate to “disrupt the resale industry by offering an upscale, hip environment for young adults to buy and sell fashion that didn’t feel like a typical mom & pop thrift store.” Building on their parents’ business model, Uptown Cheapskate was a success from the start. The first franchise location opened just a few months after the initial store.

18. Uptown Cheapskate’s growth has been steady and there are now locations in more than 24 states.

Entrepreneur’s Franchise 500

19. Uptown Cheapskate ranked No. 178 on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

  • Detailed estimates of Uptown Cheapskate franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Detailed information on Uptown Cheapskate’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

  • Outlets at the Start of the Year: 56
  • Outlets at the End of the Year: 67
  • Net Change: +11

2019

  • Outlets at the Start of the Year: 67
  • Outlets at the End of the Year: 67
  • Net Change: 0

2020

  • Outlets at the Start of the Year: 67
  • Outlets at the End of the Year: 79
  • Net Change: +12

Company-Owned

2018

  • Outlets at the Start of the Year: 2
  • Outlets at the End of the Year: 3
  • Net Change: +1

2019

  • Outlets at the Start of the Year: 3
  • Outlets at the End of the Year: 5
  • Net Change: +2

2020

  • Outlets at the Start of the Year: 5
  • Outlets at the End of the Year: 6
  • Net Change: +1

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

  • The following charts were compiled from unaudited financial reports (using the accrual basis) submitted to Uptown Cheapskate from 76 franchisees whose stores operated in the United States during the period of November 1, 2019 through October 31, 2020.
  • Of the 76 stores, 64 were in operation for 12 months and 12 were in operation for an average of 7.59 months (for which monthly numbers have been annualized).
  • Stores have been separated into quartiles by gross sales.
  • Uptown Cheapskate believes that the information is correct but cannot verify the accuracy of the information submitted to it.
  • Uptown Cheapskate’s study measured its franchisees’ performance in a variety of different markets.

Part 1 – Average Profit and Loss Statements, by Quartile

First Quartile 2020 (Consisting of 19 Units Operating from November 1, 2019 through October 31, 2020)

Sales: $1,137,473 (100%)

Cost of Goods Sold: $419,744 (37%)

Gross Profit: $717,729 (63%)

Expenses

  • Franchise Royalty: $49,279 (4.3%)
  • Administration: $41,810 (3.7%)
  • Facility: $132,497 (11.6%)
  • Marketing: $44,250 (3.9%)
  • Sales Expense: $7,424 (0.7%)
  • Labor: $241,759 (21.3%)
  • Total Expense: $517,019 (45.5%)

Net Income: $200,710 (17.6%)

Second Quartile 2020 (Consisting of 19 Units Operating from November 1, 2019 through October 31, 2020)

Sales: $862,683 (100%)

Cost of Goods Sold: $308,029 (36%)

Gross Profit: $554,654 (64%)

Expenses

  • Franchise Royalty: $38,503 (4.5%)
  • Administration: $33,162 (3.8%)
  • Facility: $123,457 (14.3%)
  • Marketing: $38,033 (4.4%)
  • Sales Expense: $3,084 (0.4%)
  • Labor: $186,356 (21.6%)
  • Total Expense: $422,595 (49.0%)

Net Income: $132,059 (15.3%)

Third Quartile 2020 (Consisting of 19 Units Operating from November 1, 2019 through October 31, 2020)

Sales: $672,812 (100.0%)

Cost of Goods Sold: $234,719 (35.0%)

Gross Profit: $438,093 (65.0%)

Expenses

  • Franchise Royalty: $31,087 (4.6%)
  • Administration: $27,989 (4.2%)
  • Facility: $121,023 (18.0%)
  • Marketing: $29,950 (4.5%)
  • Sales Expense: $2,592 (0.4%)
  • Labor: $135,469 (20.1%)
  • Total Expense: $348,110 (51.7%)

Net Income: $89,983 (13.4%)

Fourth Quartile 2020 (Consisting of 19 Units Operating from November 1, 2019 through October 31, 2020)

Sales: $427,329 (100.0%)

Cost of Goods Sold: $167,339 (39.0%)

Gross Profit: $259,990 (61.0%)

Expenses

  • Franchise Royalty: $19,608 (4.6%)
  • Administration: $23,668 (5.5%)
  • Facility: $84,857 (19.9%)
  • Marketing: $23,736 (5.6%)
  • Sales Expense: $2,697 (0.6%)
  • Labor: $101,995 (23.9%)
  • Total Expense: $256,561 (60.0%)

Net Income: $3,429 (0.8%)

Average of Four Quartiles in 2020

Sales: $775,074 (100.0%)

Cost of Goods Sold: $282,458 (36.4%)

Gross Profit: $492,616 (63.6%)

Expenses

  • Franchise Royalty: $34,619 (4.5%)
  • Administration: $31,657 (4.1%)
  • Facility: $115,458 (14.9%)
  • Marketing: $33,992 (4.4%)
  • Sales Expense: $3,949 (0.5%)
  • Labor: $166,395 (21.5%)
  • Total Expense: $386,070 (49.8%)

Net Income: $106,546 (13.7%)

  • Some stores have earned these amounts. Your results are likely to differ. There is no assurance that you will earn as much.

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FDD Talk: How Much Does an Uptown Cheapskate Franchise Make (Average Revenues and/or Profits)? (4)

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FDD Talk: How Much Does an Uptown Cheapskate Franchise Make (Average Revenues and/or Profits)? (2024)
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