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Contents

Children’s Resale Owner FAQ

Questions and answers for current and future children’s resale business owners.

Getting Started

Is children’s resale the business for me?

Children’s resale is hard work, but the personal and financial rewards can make it worthwhile. How do your goals and personal characteristics match the demands of being a children’s resale store owner? Take the quiz, and we’ll offer our opinion.

QUIZ: Is Children’s Resale for Me?

Request a free consultation

Interests*(check all that apply)  Free Phone Consultation Website Web Services The Knowledge Base Point of Sale (POS)
Are you currently an owner of a children's resale/consignment business?  Yes No
Are you in the beginning stages of researching information on children's resale/consignment?  Yes No
Are you further along in the process, nearly ready to open?  Yes No
Your Name*
Email*
Phone (*required for free consultation)
Message (optional)

Should I operate independently, independently with NextGen’s help, or as a franchisee?

What’s best for you depends on your knowledge of children’s resale, your finances, and how much time you have to invest. Independently, you’ll save money at first, but risk losing it during your trial and error, early year(s), as you try to figure out the children’s resale business.  Without help, the odds are against your making it beyond the first year.  As a franchisee, you get support and you’ll be up and running much faster, but be prepared for a lifetime of stiff royalties and fees, and resign yourself to the fact that it is legally their store not yours. As a NextGen client—like a franchisee—you  get the know-how, systems, and support you need to get up and running quickly and efficiently, at a small fraction of the cost to be a franchisee and you avoid the costly lifetime entanglements. You also avoid the risky learning curve as an independent.

How much does it cost to open a children’s resale store?

The old adage, it takes money to make money applies to the children’s resale business like any other.  Start-up costs can range widely.  At a minimum, we suggest that new store owners have access to $50,000 in cash and have the collateral necessary to borrow another $50,000 – $100,000 as needed. The amount needed varies primarily on whether an owner is buying on consignment or buying outright to start, and as a function of the cost of leasing and building out a space.

Why open a children’s resale store?

Owning a children’s resale shop is exciting, rewarding, and can be very profitable. According to the latest figures available, from 2008 to 2009 resale sales grew 12.7%. At the same time, regular retail sales declined 7.3%1. Cash-strapped parents are looking for affordable clothing options, and “green” shoppers recognize that resale helps the planet as well as their wallets.

12010 NARTS Operating Survey

NextGen and Subscribing

What is NextGen?

NextGen is a Children’s Resale Service Bureau, specifically established to support children’s resale store owners. We provide training, support, a point of sale system, a custom website, other web platforms, services and tools. Founded by former children’s resale franchisees, our goal is to provide an owner-friendly alternative to franchising and, a safer, affordable alternative to going it alone.

» About Us

What are the benefits of becoming a NextGen Client?

With decades of experience in children’s resale, NextGen provides support for owners every step of the way by phone, e-mail, and trainings. NextGen provides state-of-the-art point of sale (POS) and inventory management system, web services and tools needed for a productive and profitable operation.

» More on Client Benefits

Request a free consultation

Interests*(check all that apply)  Free Phone Consultation Website Web Services The Knowledge Base Point of Sale (POS)
Are you currently an owner of a children's resale/consignment business?  Yes No
Are you in the beginning stages of researching information on children's resale/consignment?  Yes No
Are you further along in the process, nearly ready to open?  Yes No
Your Name*
Email*
Phone (*required for free consultation)
Message (optional)

Why do Children’s Resale stores choose to subscribe to NextGen’s Point of Sale (POS) System and Web Services over other POS Systems and web services on the Market?

NextGen’s POS and Web Services are built specially for Children’s Resale Shops with functions, features, and resultant payoffs nowhere else available. The POS fully supports consignment as well as buying outright and is highly web-enabled.  The POS and Web Services pay for themselves many times over. NextGen’s services and supports are proactive. Ask any children’s resale store owner what they value most, but rarely enjoy; the answer is invariably time. NextGen knows that without ample, ongoing support, the benefits of store systems and services are seldom realized for lack of owner time to take advantage of them. NextGen doesn’t simply fix problems in response to store calls for support, it actively provides the support needed to avoid calls.

Does NextGen only serve NEW children’s resale stores?

NextGen serves both new and existing owners. New Owners, “Whole Clients,” are provided the entire NextGen System. Existing Owners, “Select Clients,” select those elements of the NextGen System where they see the most need.

Request a free consultation

Interests*(check all that apply)  Free Phone Consultation Website Web Services The Knowledge Base Point of Sale (POS)
Are you currently an owner of a children's resale/consignment business?  Yes No
Are you in the beginning stages of researching information on children's resale/consignment?  Yes No
Are you further along in the process, nearly ready to open?  Yes No
Your Name*
Email*
Phone (*required for free consultation)
Message (optional)

How much does the NextGen System Cost?

NextGen System Prices are shown on the Pricing Page.  A comparison of NextGen and Franchise Prices are shown on the NextGen Cost Comparison Table referenced below.

» NextGen cost comparison table
» More on Costs and Capital (NextGen Clients Only)

Franchising

Why do children’s resale stores choose to become franchisees?

Franchises provide know-how and systems that help resale stores get up and running. They tell store owners exactly what to do, and how to do it. For individuals without experience in children’s resale, this can be a tempting offer.

What are the drawbacks of being a franchisee?

In exchange for their business system they demand stiff royalties and fees ($25,000 – $40,000 up front + at least 5% of gross sales). Franchisees must agree to abide religiously with franchise dictates and to pay penalties where they fail. Franchisees effectively sign away the right to challenge the Franchisor on any count, and effectively forgo the right to engage in the resale children’s business other than as a Franchisee.

How do the costs of full NextGen Clients compare with those of Franchisees?

Fee Franchisee1 Full NextGen Client
One-Time Fees
Franchise vs Client Fee $25,000 – $40,000 $5,000
Computer System $14,861 – $18,000 $5,000-$8,000
Annual Fees
Guidance/Systems/Support $16,250(% Gross Sales) $1,000 (1st yr only)
Franchise Advertising Fund $1,000 – $3,250 n/a
Minimum Advertising $9,750 – $16,250 (required) $5,000 (suggested)
Periodic Fees
Renewal Fee (due every 5th year) $5,535 – $10,000 N/A

1 Franchisee cost data was taken from the following legal documents: “Kid to Kid Franchise Disclosure Document,” May 29, 2008; “Once Upon a Child Franchise Disclosure Document,” March 16, 2009; “Children’s Orchard Franchise Disclosure Document”, March 20, 2009. Assumed $325,000 annual sales

Request a free consultation

Interests*(check all that apply)  Free Phone Consultation Website Web Services The Knowledge Base Point of Sale (POS)
Are you currently an owner of a children's resale/consignment business?  Yes No
Are you in the beginning stages of researching information on children's resale/consignment?  Yes No
Are you further along in the process, nearly ready to open?  Yes No
Your Name*
Email*
Phone (*required for free consultation)
Message (optional)

Operating Independently

Why is it hard to operate a children’s resale store independently?

The time and expense required for independent owners to learn the children’s resale business is more than most can afford. They’re out of the business before they know it. Nor are the POS Systems and Web Platforms available to independent owners of the caliber needed to support a profitable buy outright operation—the key to success in this segment of the resale market.

Most small owner operated businesses fail within the first year. Why? Because they don’t know what they don’t know, as described in “The Top Ten Reasons Small Businesses Fail” by the New York Times.

What about how-to manuals and books on running a resale store?

Independent owners must rely on information found in resale how-to manuals and books. These publications are written mostly for consignment shops and for the resale industry in general, leaving out information important to children’s resale. The best and most comprehensive resources come from Too Good to be Threw and NARTS. However, while generally useful and rich in ideas, they’re incomplete and lacking important specifics regarding Children’s Resale, e.g. pay and pricing parameters, web platform design and optimization… .

Buy Outright vs. Consignment

Should I consign or buy outright?

If you’re opening a children’s resale store and have the capital to buy outright, it is more profitable to do so. It is also easier, once you have your systems in place, since you avoid a lot of back and forth with customers. Buying outright does not have the labor intensive record-keeping that consignment requires for each seller and each piece of inventory. Buying outright involves more risk than consignment, but the payoff is greater.

That said, absent the capital to buy outright, new owners can start out buying on consignment and move to buying outright overtime; NextGen’s Point-of-Sale (POS) system is the only POS on the market that fully supports both consignment and buying outright, making the transition easier to manage.

Request a free consultation

Interests*(check all that apply)  Free Phone Consultation Website Web Services The Knowledge Base Point of Sale (POS)
Are you currently an owner of a children's resale/consignment business?  Yes No
Are you in the beginning stages of researching information on children's resale/consignment?  Yes No
Are you further along in the process, nearly ready to open?  Yes No
Your Name*
Email*
Phone (*required for free consultation)
Message (optional)

Why is consignment not as profitable for children’s resale?

Because the prices at which children’s toys, equipment and clothing must sell are too low for owners to pay sellers 40-50% of their sale price and still profit.2

2NARTS Operating Survey 2010

Why is buy outright more profitable than consignment for children’s resale?

In one word: volume. Children grow fast, which makes the supply and demand for children’s resale merchandise higher than other types of resale. Buy-outright children’s resale shops can buy and sell in volume, turning over inventory more quickly than a consignment shop. Buying outright allows shops to accumulate inventory more quickly, and to pay sellers less for each item. More items coming in and more items being sold lead to higher profits. Children’s consignment shops cannot approach the profits enjoyed by children’s buy-outright shops. It’s not a coincidence that all franchised children’s operations buy outright.

Is there a downside to buying outright?

Yes. Buying outright involves more investment and more risk than buying on consignment. Buying each item with your own money means you keep all the profits (unlike consignment), but it also means you lose it all if the item doesn’t sell. For this reason, owners must know what to pay and how to price. They must know how to generate profitable sales, and they must have the systems necessary to operate efficiently.

Is buying outright for me?

Buying outright is not for the undercapitalized, the faint-of-heart, or the person looking for a side business. Buying outright is for those willing to invest in the know-how, systems and services needed to succeed.  Even when a NextGen client starts buying on consignment, the plan is to graduate to buying outright and higher profits over time.   Buying outright is the most profitable way to run a children’s resale business.

Other Important Questions

What must I do to establish the business legally?

There are a variety of legal forms your business might take: sole proprietorship, partnership, S corporation, C Corporation, or Limited Liability Company (LLC). Assuming you choose to be a Limited Liability Company (LLC)—our favorite—decide on a name, register with the state, prepare an operating agreement and open a business bank account. We have not yet had a client for whom the LLC business form did not make sense, and with our help, we’re told “setup is a breeze.”

» More about Establishing an LLC (NextGen Clients Only)

Where should I locate?

Your odds of success increase many fold with a “good” location. While exceptional management can keep a poorly located store in operation, a poorly located store will never yield the returns enjoyed by the owner(s) of a well-located store. The key Factors: the right demographics, neighboring businesses, traffic patterns, parking and visibility. Do your homework.

» More about Choosing a Location (NextGen Clients Only)

Request a free consultation

Interests*(check all that apply)  Free Phone Consultation Website Web Services The Knowledge Base Point of Sale (POS)
Are you currently an owner of a children's resale/consignment business?  Yes No
Are you in the beginning stages of researching information on children's resale/consignment?  Yes No
Are you further along in the process, nearly ready to open?  Yes No
Your Name*
Email*
Phone (*required for free consultation)
Message (optional)

How can I secure a fair and manageable lease?

“In leasing, commercial tenants don’t get what they deserve, they get what they negotiate” – Dave Witterton, The Lease Coach

» More about Leases (NextGen Clients Only)


Learn More About Becoming a NextGen Client

Request a free consultation

Interests*(check all that apply)  Free Phone Consultation Website Web Services The Knowledge Base Point of Sale (POS)
Are you currently an owner of a children's resale/consignment business?  Yes No
Are you in the beginning stages of researching information on children's resale/consignment?  Yes No
Are you further along in the process, nearly ready to open?  Yes No
Your Name*
Email*
Phone (*required for free consultation)
Message (optional)