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Log In / Register | Oct 31, 2014

Former Children’s Resale Franchisee Launches Franchise Alternative

NextGen Resale Licensing , a new venture, is expecting to undercut Children’s resale franchises. 

Over the past eight years, Franchisees have been doing battle with the Children’s Orchard franchisor.  They’ve battled through arbitration and the courts, typically fighting Children’s Orchard Franchisor claims for future royalties and damages as their stores failed or as they attempted to escape prior to the end of their franchise terms. They formed an owner’s association  http://www.orchardcooperative.org/ to fight policies and practices they viewed as detrimental to franchisees and franchise alike—the author spearheading that effort.  They attempted to put light on their plight through postings on the Unhappy Franchisee Blog  http://www.unhappyfranchisee.com/category/franchisor/childrens-orchard/  Their efforts were futile.  The franchise shrunk from more than 80 stores when the current franchisor took the helm, to less than 40 today.

Now, one of the many franchisees targeted by the franchisor and one of the few to win a legal claim against them, is challenging the franchisor once again in what might fairly be termed a battle for the franchisor’s life, or for that matter, for the life of Children’s Resale franchising generally.  Diana Nazelli, a franchisee for 13 years, has put together a Children’s Resale Licensing company, NextGen, www.nextgenresale.com which she sees as “an owner-friendly alternative to franchising”, ...  “far better than a franchise at a fraction of the cost.” Unlike her previous legal tussles with Children’s Orchard, this battle is destined to play out on the commercial playing field and not in a courtroom, and with prospective resale business owners, the arbiters.  

Diana has no shortage of confidence in NextGen,and  expresses little worry about competition from children’s resale franchises. She testifies first-hand to what the well-known author and founder of theToo Good to be Threw site for resalers, Kate Holmes, colorfully states: “Maybe franchising’s the way to go if you’re changing oil, frying in oil, or cleaning up oil.  Personally, I think second-hand retailing is not franchiseable.” (Too Good To Be Threw, p18).  Diana couldn’t agree more.  “Themoment the initial training is over, the value goes straight down hill,” she says.

Nazelli proceeds to list the many reasons she believes NextGen’s licensing model to be the superior business model for growing children’s resale shops. She maintains that licensing is superior to franchising in terms of cost, owner freedom, and because it supports store-driven as opposed to brand-driven marketing. Licensing is also safer than going it alone without the know-how, advanced systems and support, all of which are on tap from NextGen.

  • Cost.  One-time fees are $25-40,000 for a franchisee, $4,900 for a NextGen licensee. Ongoing fees average more than $16,000 for a franchisee, $6,000-$9,600 for a NextGen licensee.
  • Owner Freedom.  Franchise agreement non-compete provisions effectively rule out the possibility of a franchisee ever operating independently of the franchise; there are no non-compete provisions in the licensing agreement.  Licensees may opt out at anytime they feel they are not getting their money’s worth.
  • Store-Centric Marketing. Franchise advertising is predominantly brand-centered in traditional media.  Licensee advertising is solely store-centered, and predominantly internet-based.  Indeed, NextGen expressly prohibits the use of the Nextgen name by licensees.
  • Know-How. Decades of best practice covering every detail of Children’s Resaling
  • Advanced Systems.  Robust Point of Sale (POS) system integrated with the store’s own full featured e-commerce website and social media platforms
  • Support.  On-site training; email, phone and on-line support 24/7

Diana is confident that NextGen licensing will spur the growth of Children’s Resale Shops around the world in a much bigger way than franchising and how-to books.  She’s a saleswoman for sure and fervently believes in licensing as the way to grow Children’s Resale.

Time will tell if Diana’s predictions come true, if licensing in fact moves to the head of the line in Children’s Resaling. What is certain is that the established franchisors now have a serious competitor.

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