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How Much Does It Cost to Open Once Upon a Child Franchise?

Do you want to open a children store business by buying Once Upon a Child franchise? If YES, here is how much it cost to open a Once Upon a Child franchise successfully. If you are looking towards opening a Once Upon a Child Franchise, it will be nice for you to have a of what the company represents before going ahead to enquire about the total cost of opening the franchise in your location.

Once Upon A Child started operations in 1984 and they began selling franchise in 1992. They have their corporate headquarters at Minneapolis, Minnesota and presently they have an estimated 385 franchise units in operation.

Winmark Corporation is the franchisor for Once Upon A Child and the franchisees own and operate Once Upon A Child retail stores from which they sell quality used and new children’s apparel, toys, equipment, furniture and accessories. Stores also offer new merchandise to supplement the selection of used goods.

Here are areas where you are expected to spend money and the cost associated with it and please note that you must pay to Once Upon A Child “Initial Fees” to cover the cost of goods and services that it provides to you before your Store opens. The Initial Fees include the Initial Franchise Fee and the initial cost of Once Upon A Child’s point-of-sale system and proprietary software;

How Much It Cost to Open Once Upon a Child Franchise

1. Initial Franchise Fee: $15,000 to $25,000

If you are opening a single Store, you must pay an “Initial Franchise Fee” of $25,000 to Once Upon A Child. The Initial Franchise Fee is $15,000 if you are currently opening a second or subsequent Store or if you are an existing franchisee of one of the franchisor’s other franchised concepts.

Please note that you must sign a separate Franchise Agreement for each Store, and you must pay the Initial Franchise Fee for each Store in a lump sum to Once Upon A Child when you sign the Franchise Agreement. The Initial Franchise Fee is nonrefundable.

2. Point-of-Sale (POS) System: $20,700 to $26,600

You must use in your Store the point-of-sale system (the “POS System”) which Once Upon A Child has selected for your Business System, and you must enter into a Computer Software License Agreement with Once Upon A Child for use of its proprietary software program (the “Proprietary Software”).

The initial cost of the POS System and Proprietary Software will range from $20,700 to $26,600 for each Store, which includes the DRS Maintenance Fee. This amount is not refundable. You will generally purchase the POS System and Proprietary Software immediately before you attend Once Upon A Child’s second week of training.

The franchisor, through its subsidiary Winmark Business Credit, Inc., may lease to you the POS System or other equipment necessary to operate your Business. The monthly payment and finance charges will vary based on the value of the leased equipment, type of leased equipment, your financial health, your credit history, the type of lease, and other factors.

3. Continuing Fee: 5% of your “Gross Sales”

Due Date:  On or before Wednesday of each week for the previous week. “Gross Sales” means the total revenues you receive from the sale of goods and services, whether by cash or by check, credit card or trade, in connection with the Store, less customer refunds and returns and sales or similar taxes. Gross Sales includes any sales permitted though the Internet.

Gross Sales do not include wholesale transactions from Once Upon A Child franchisees to other Once Upon A Child franchisees in good standing with the franchisor. In certain situations, other franchisees may be paying a lower percentage rate for continuing fees than you are.

All new franchisees are required to pay the percentage rate stated in the disclosure document. However, a franchisee with an earlier Franchise Agreement may have been required to pay a lower percentage rate than the stated amount or may be required to pay less upon renewal of their Franchise Agreement.

In the future, Once Upon A Child may change the continuing fees for new and renewing franchisees unless your Franchise Agreement specifically grants you the right to renew your Franchise Agreement at a lower rate. Please note that Once Upon A Child requires you to allow it to withdraw continuing and other fees directly from your bank account.

4. Marketing Fee: $1,500 per year

Due Date:  Due January 1 of each year.

5. Cooperative Advertising:

Maximum amount is 5% of your Gross Sales. Due Date:  Established by the franchisor or franchisees. The franchisor or local Once Upon A Child franchisees may establish an advertising cooperative in your area. The local advertising cooperative will establish the amount of cooperative advertising fees.

If a company-owned store is a member of your cooperative, it will have voting power equal to that of franchised stores. Company-owned stores will not have controlling voting power in any local cooperative. Please note that there are currently no company-owned Once Upon A Child stores.

6. Local Marketing Expenses

Minimum amount, when combined with cooperative advertising expenses, is 5% of your Gross Sales. Due Date:  Minimum amount must be spent during each calendar year. To the extent your annual contributions to cooperative advertising programs are less than 5% of the Gross Sales for your Store, you must conduct additional advertising and marketing activities in your local geographic area.

Your local advertising activities, however, will not eliminate your obligations to contribute to cooperative advertising programs.

Please note that if you do not spend at least 5% of Gross Sales for the calendar year for cooperative or local advertising, Once Upon A Child may require that you pay it the difference between what you should have spent for advertising during the calendar year and what you actually spent, with the money to be spent on advertising initiatives in your market in the subsequent year, at Once Upon A Child’s discretion.

7. Advertising Fee

If Once Upon A Child imposes this fee, you will pay up to 2% of your Gross Sales. Due Date:  If Once Upon A Child imposes this fee, it will be due on or before Wednesday of each week for the previous week. Please note that Once Upon A Child may, with 60 days’ notice, increase your minimum advertising expenditures up to a total of 6% of your Store’s Gross Sales.

Of the 6%, up to one-third (or 2% of Gross Sales) will be paid in the form of an “Advertising Fee” to Once Upon A Child for deposit in an “Advertising Fund” to be managed by the franchisor. The balance of the 6% minimum advertising requirement must be used for cooperative advertising and local advertising.

8. Transfer Fee: $10,000

Due Date:  Before completion of transfer. Please note this fee is payable when the Franchise Agreement or a substantial portion of the assets of the Store or any controlling interest in the franchisee is transferred.

9. Audit Expenses: Cost and expenses related to audit

Due Date:  After inspection or audit. Please note that this payable only if understatement is greater than 2%.

10. Renewal Fee: $5,000

Due Date:  30 days before renewal of Franchise Agreement.

11. DRS Maintenance Fee

The fee for the term of the current Franchise Agreement is $1,000. Upon renewal, the then-current rate for the fee will be applied. Due Date:  The fee will be due upon placement of order of the POS System, and upon renewal of the Franchise Agreement.

Please note that this fee is for upgrades to the antivirus and database engine software that supports the DRS software and is payable when you initially order your POS System and upon renewal of your Franchise Agreement.

12. Technology Fee: Currently, $0

Due Date:  Periodically, if established.

13. Remodeling Expenses

Will vary under circumstances. Due Date:  When incurred. You must modernize your Store upon notice from Once Upon A Child, although it cannot require you to do so more than once every 5 years. The modernization must conform to the standards that Once Upon A Child requires at that time for similarly situated new Once Upon A Child Stores.

The scope of modernization may range from simply repainting the Store to completely refurbishing the entire Store, including replacement of fixtures, sign supplies, equipment, and POS System.

Once Upon A Child cannot estimate the current costs for a modernization project because the scope and extent of the modernization will vary based on the then-current brand standards, the condition of the Store, and the cost of labor and materials at that time.

Please note that you may make these payments in whole or in part to Once Upon A Child’s approved third parties and/or preferred vendors. Before you modernize your Store, you must submit your modernization plans to Once Upon A Child for its approval.

14. Insurance: Will vary under certain circumstances

Due Date:  When Once Upon A Child requests reimbursement.

Please note that this is payable to Once Upon A Child if you fail to pay insurance premium and Once Upon A Child pays it for you.

  1. Inventory: Will vary under circumstances

Due Date:  When incurred.

You will need to continually replenish your Store inventory (both new and used items).

Please note that your quarterly costs for inventory will vary significantly, depending on such factors as seasonal changes in demand and your Store sales, although these costs generally will range from $65,000 to $80,000.

  1. Interest Expenses: Lesser of 18% per year or maximum rate permitted by law

Due Date:  When due.

Please note that this is Payable if Continuing Fee or other amounts due Once Upon A Child are not timely paid.

  1. Lease Payment: Will vary under certain circumstances

Due Date:  When due.

Please note that this is Payable if you sign a lease agreement for the equipment used in your store.

  1. Costs and Attorneys’ Fees: Will vary under circumstances

Due Date:  When incurred.

Please note that Once Upon A Child may recover costs and reasonable attorneys’ fees if you lose in a dispute with it.

In summary, here is the Investment Table (Estimated Initial Investment)

  • Initial Franchise Fee – $25,000 – $25,000
  • Fixtures and Supplies – $35,000 – $55,000
  • Signs – $8,000  – $11,000
  • Security System and/or Cameras – $1,000 – $4,000
  • Point-of-Sale (POS) System – $20,700 – $26,600
  • Leasehold Improvements – $11,000 – $21,000
  • Build-Out – $18,000 – $47,000
  • Deposits and Business Licenses – $1,000 – $17,000
  • Opening Inventory – $65,000 – $80,000
  • Miscellaneous Pre-Opening Expenses – $30,000 – $60,000
  • Rent – First 3 Months – $10,000 – $17,000
  • Additional Funds – 3 Months – $30,000 – $33,000

ESTIMATED TOTAL – $254,700 – $396,600