Party City Buys Franchise Locations For $31 Million

Building up a retail brand can be a tough task to take on. While some may wait until there’s funding to open an initial round of stores and then slowly open up more as it expands, others may choose another route: franchising.

The franchising industry allows any person who is approved by the main retail company to license out the use of its name and products. Utilizing franchisees to help with the expenses during a retailer’s ramp up time is seen by some to be a faster way of opening up a high number of stores more quickly.

Business is good for party supplier retailer Party City. As we reported earlier this month, Credit Suisse analysts shared Party City’s target price is $19 which is $5 higher than its current price while everyday business grew three percent in 2016. With $60 million in 2016 revenue brought in from sports and movie theater avenues, it’s no wonder Party City is looking to expand its corporate-owned store count.

The party supply retailer shared this week that it has plans to dole out $31 million in an agreement to acquire a franchisee group. With 18 franchise stores in North Carolina and South Carolina, Party City’s corporate holdings will significantly increase its majority stake. Party City’s 765 company-owned stores has now grown to 783 with its franchise stores reduced to 146 locations.

Party City’s CEO, James M. Harrison, commented to Chain Store Age about this expansion of corporate-owned locations. He said “This latest franchise acquisition expands our footprint in the Carolinas and provides us with an opportunity to strengthen the brand integrity of these locations and to explore opening additional company-owned stores in this market over time. We will continue to evaluate accretive franchise acquisitions going forward in order to expand our company-owned footprint, improve the operational efficiencies of these stores and enhance the customer experience.”