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What changed in WINMARK CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of WINMARK CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+86 added−89 removedSource: 10-K (2026-02-25) vs 10-K (2025-02-26)

Top changes in WINMARK CORP's 2025 10-K

86 paragraphs added · 89 removed · 80 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAdditionally, our franchisees use other vehicles to drive non-store sales including social media platforms (Facebook and Instagram) as well as third-party e-commerce platforms (Shopify) and marketplaces (eBay). ​ 2 Table of Contents The following table presents the royalties and franchise fees contributed by each of our brands for the past three years and the corresponding percentage of consolidated revenues for each such year: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Royalties and Franchise Fees ​ ​ ​ ​ ​ ​ ​ ​ (in millions) ​ % of Consolidated Revenue ​ 2022 2023 2024 2022 2023 2024 Plato’s Closet ​ $ 29.4 ​ $ 30.2 ​ $ 30.8 36.2 % 36.3 % 37.9 % Once Upon A Child ​ 21.1 ​ 23.1 ​ 24.2 25.9 ​ 27.7 ​ 29.8 ​ Play It Again Sports ​ 13.6 ​ 13.8 ​ 14.1 16.7 ​ 16.6 ​ 17.3 ​ Style Encore ​ 3.1 ​ 3.1 ​ 3.1 3.8 ​ 3.8 ​ 3.9 ​ Music Go Round ​ 1.5 ​ 1.5 ​ 1.5 1.8 ​ 1.8 ​ 1.9 ​ ​ ​ $ 68.7 ​ $ 71.7 ​ $ 73.7 84.4 % 86.2 % 90.7 % ​ The following table presents a summary of our net store growth and renewal activity for the fiscal year ended December 28, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVAILABLE ​ ​ ​ ​ ​ ​ ​ TOTAL ​ ​ ​ ​ ​ TOTAL ​ FOR ​ COMPLETED ​ ​ ​ 12/30/2023 OPENED CLOSED 12/28/2024 RENEWAL RENEWALS % RENEWED Plato’s Closet 506 14 (5) 515 ​ 55 ​ 55 ​ 100 % Once Upon A Child 416 16 (2) 430 ​ 51 ​ 50 ​ 98 % Play It Again Sports 294 13 (5) ​ 302 ​ 22 ​ 21 ​ 95 % Style Encore 66 4 (1) 69 ​ 15 ​ 15 ​ 100 % Music Go Round 37 — (3) 34 ​ 2 ​ 1 ​ 50 % Total Franchised Stores (1) 1,319 47 (16) 1,350 145 ​ 142 98 % ​ (1) All stores are owned and operated by franchisees.
Biggest changeAdditionally, our franchisees use other vehicles to drive non-store sales including social media platforms (Facebook and Instagram) as well as third-party e-commerce platforms (Shopify) and marketplaces (eBay and Reverb). ​ 2 Table of Contents The following table presents the royalties and franchise fees contributed by each of our brands for the past three years and the corresponding percentage of consolidated revenues for each such year: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Royalties and Franchise Fees ​ ​ ​ ​ ​ ​ ​ ​ (in millions) ​ % of Consolidated Revenue ​ ​ ​ ​ 2023 ​ ​ ​ 2024 ​ ​ ​ 2025 ​ ​ ​ 2023 ​ ​ ​ 2024 ​ ​ ​ 2025 Plato’s Closet ​ $ 30.2 ​ $ 30.8 ​ $ 32.2 36.3 % 37.9 % 37.4 % Once Upon A Child ​ 23.1 ​ 24.2 ​ 25.9 27.7 ​ 29.8 ​ 30.1 ​ Play It Again Sports ​ 13.8 ​ 14.1 ​ 14.9 16.6 ​ 17.3 ​ 17.3 ​ Style Encore ​ 3.1 ​ 3.1 ​ 3.2 3.8 ​ 3.9 ​ 3.7 ​ Music Go Round ​ 1.5 ​ 1.5 ​ 1.7 1.8 ​ 1.9 ​ 2.0 ​ ​ ​ $ 71.7 ​ $ 73.7 ​ $ 77.9 86.2 % 90.7 % 90.5 % ​ The following table presents a summary of our net store growth and renewal activity for the fiscal year ended December 27, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVAILABLE ​ ​ ​ ​ ​ ​ ​ TOTAL ​ ​ ​ ​ ​ TOTAL ​ FOR ​ COMPLETED ​ ​ ​ ​ ​ ​ 12/28/2024 ​ ​ ​ OPENED ​ ​ ​ CLOSED ​ ​ ​ 12/27/2025 ​ ​ ​ RENEWAL ​ ​ ​ RENEWALS ​ ​ ​ % RENEWED Plato’s Closet 515 18 (7) 526 ​ 42 ​ 41 ​ 98 % Once Upon A Child 430 17 (6) 441 ​ 44 ​ 44 ​ 100 % Play It Again Sports 302 15 (8) ​ 309 ​ 18 ​ 17 ​ 94 % Style Encore 69 2 ​ (4) 67 ​ 8 ​ 8 ​ 100 % Music Go Round 34 3 (2) 35 ​ 4 ​ 4 ​ 100 % Total Franchised Stores 1,350 55 (27) 1,378 116 ​ 114 98 % ​ (1) All stores are owned and operated by franchisees.
The key elements of our franchise strategy include: ​ ● franchising the rights to operate retail stores offering value-oriented merchandise; ● attracting new, qualified franchisees; and ● providing initial and continuing support to franchisees. 3 Table of Contents Offering Value-Oriented Merchandise ​ Our retail brands provide value to consumers by purchasing and reselling gently used merchandise that consumers have outgrown or no longer use at substantial savings from the price of new merchandise.
The key elements of our franchise strategy include: ​ ● franchising the rights to operate retail stores offering value-oriented merchandise; ● attracting new, qualified franchisees; and ● providing initial and continuing support to franchisees. 3 Table of Contents Offering Value-Oriented Merchandise ​ Our brands provide value to consumers by purchasing and reselling gently used merchandise that consumers have outgrown or no longer use at substantial savings from the price of new merchandise.
Our Play It Again Sports franchise brand has experienced higher than average sales volumes during the winter season. Overall, the different seasonal trends of our brands partially offset each other and do not result in significant seasonality trends on a Company-wide basis. ​ Human Capital Resources Human capital resources are an integral and essential component of our business.
Our Play It Again Sports brand has experienced higher than average sales volumes during the winter season. Overall, the different seasonal trends of our brands partially offset each other and do not result in significant seasonality trends on a Company-wide basis. ​ Human Capital Resources Human capital resources are an integral and essential component of our business.
We recognize that employee development is a critical element of maintaining an engaged and inclusive work environment. Investing in our employees supports employee retention, morale and enhances the quality of work. We provide mentorship opportunities, leadership succession planning and encourage promoting from within to further strengthen our commitment to each employee.
We recognize that employee development is a critical element of maintaining an engaged and inclusive work environment. Investing in our employees supports employee retention, morale and enhances the quality of work. We provide learning and mentorship opportunities, leadership succession planning and encourage promoting from within to further strengthen our commitment to each employee.
We have taken, and intend to continue to take, all steps necessary to renew the registration of all our material service marks. ​ Seasonality ​ Our Plato’s Closet and Once Upon A Child franchise brands have experienced higher than average sales volumes during the spring months and during the back-to-school season.
We have taken, and intend to continue to take, all steps necessary to renew the registration of all our material service marks. ​ Seasonality Our Plato’s Closet and Once Upon A Child brands have experienced higher than average sales volumes during the spring months and during the back-to-school season.
During the past three years, we renewed over 99% of franchise agreements up for renewal. ​ Competition ​ Retailing, including the sale of apparel, sporting goods and musical instruments, is highly competitive. Many retailers have substantially greater financial and other resources than we do.
During the past three years, we renewed 99% of franchise agreements up for renewal. ​ Competition ​ Retailing, including the sale of apparel, sporting goods and musical instruments, is highly competitive. Many retailers have substantially greater financial and other resources than we do.
The loss of any of the above vendors would change the vendor mix, but not significantly change our products offered. ​ To provide the franchisees of our Play It Again Sports, Once Upon A Child and Music Go Round systems a source of affordable new product, we have developed relationships with our significant vendors and negotiated prices for our franchisees to take advantage of the buying power a franchise system brings. ​ 4 Table of Contents Our typical Once Upon A Child franchised store purchases approximately 30% of its new product from Rachel’s Ribbons, Wild Side Accessories, Melissa & Doug and Nuby.
The loss of any of the above vendors would change the vendor mix, but not significantly change our products offered. ​ To provide the franchisees of our Play It Again Sports, Once Upon A Child and Music Go Round systems a source of affordable new product, we have developed relationships with our significant vendors and negotiated prices for our franchisees to take advantage of the buying power a franchise system brings. ​ 4 Table of Contents Our typical Once Upon A Child franchised store purchases approximately 30% of its new product from Wild Side Accessories, Melissa & Doug and Nuby.
For over 30 years, we have offered a sustainable solution for consumers to recycle their gently used clothing, toys, sporting goods and musical instruments. We estimate that, since 2010, stores in our resale brands have extended the lives of over 1.9 billion items.
For over 35 years, we have offered a sustainable solution for consumers to recycle their gently used clothing, toys, sporting goods and musical instruments. We estimate that, since 2010, stores in our resale brands have extended the lives of over 2.1 billion items.
Once a franchisee opens its initial store, it can open additional stores, in any brand, by paying a $15,000 franchise fee for a store in the U.S. and $20,000CAD for a store in Canada, provided an acceptable territory is available and the franchisee meets the brand’s additional store standards.
Once a franchisee opens its initial store, it can open additional stores, in any brand, by paying a $15,000 franchise fee for a store in the U.S. and $21,600CAD for a store in Canada, provided an acceptable territory is available and the franchisee meets the brand’s additional store standards.
Revenues from Canadian franchisees in 2024, 2023 and 2022 were approximately $7.3 million, $6.8 million and $6.4 million, respectively. For additional financial information, please see Item 8 — Financial Statements and Supplementary Data.
Revenues from Canadian franchisees in 2025, 2024 and 2023 were approximately $7.8 million, $7.3 million and $6.8 million, respectively. For additional financial information, please see Item 8 — Financial Statements and Supplementary Data.
We seek franchisees who: ​ ● have a sufficient net worth; ● have prior business experience; and ● intend to be integrally involved with the management of the business. ​ At December 28, 2024, we had 79 signed franchise agreements, of which the majority are expected to open in 2025. ​ Franchise Support ​ As a franchisor, our success depends upon our ability to develop and support competitive and successful franchise owners.
We seek franchisees who: ​ ● have a sufficient net worth; ● have prior business experience; and ● intend to be integrally involved with the management of the business. ​ At December 27, 2025, we had 82 signed franchise agreements, of which the majority are expected to open in 2026. ​ Franchise Support ​ As a franchisor, our success depends upon our ability to develop and support competitive and successful franchise owners.
Our franchise brands offer customers a better way to keep their clothes, sporting goods and music equipment out of landfills and in use for a fuller, longer product lifespan. In 2024 alone, stores across our five resale brands extended the lives of over 185 million items of clothing, toys, books, musical instruments and sports equipment.
Our brands offer customers a better way to keep their clothes, sporting goods and music equipment out of landfills and in use for a fuller, longer product lifespan. In 2025 alone, stores across our five brands extended the lives of over 195 million items of clothing, toys, books, musical instruments and sports equipment.
We believe that our franchise brands are competitive with other franchises based on the fees we charge, our franchise support services and the performance of our existing franchise brands. ​ 6 Table of Contents Equipment Leasing Operations ​ Our leasing operations consist of a middle-market leasing business through Winmark Capital Corporation, which is a wholly-owned subsidiary. ​ Our middle-market leasing business began operations in 2004.
We believe that our franchise brands are competitive with other franchises based on the fees we charge, our franchise support services and the performance of our existing franchisees. ​ 6 Table of Contents Equipment Leasing Operations Historically, leasing operations consisted of a middle-market leasing business through Winmark Capital Corporation, which is a wholly-owned subsidiary.
As of December 28, 2024, we employed 89 employees. None of these employees are covered by a collective bargaining agreement. Our franchisees are independent business owners, therefore, they and their employees are not included in our employee count and are not employees of Winmark Corporation. ​ Our employees are our most valuable resource.
As of December 27, 2025, we employed 87 employees. None of these employees are covered by a collective bargaining agreement. Our franchisees are independent business owners, therefore, they and their employees are not included in our employee count and are not employees of Winmark Corporation. ​ Our employees are our most valuable resource.
Music Go Round franchisees buy, sell and trade gently used and, to a lesser extent, new musical instruments, speakers, amplifiers, music-related electronics and related accessories. ​ The following table presents system-wide sales, which we define as estimated revenues generated by all franchise locations through both in-store and e-commerce sales, for each of the past three years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ System-Wide Sales ​ ​ (in millions) ​ 2022 2023 2024 Plato’s Closet ​ $ 638.8 ​ $ 647.6 ​ $ 653.0 Once Upon A Child ​ 466.2 ​ 504.8 ​ 517.9 Play It Again Sports ​ 324.1 ​ 328.2 ​ 331.9 Style Encore ​ 58.1 ​ 59.2 ​ 59.1 Music Go Round ​ 47.1 ​ 49.2 ​ 48.3 ​ ​ $ 1,534.3 ​ $ 1,589.0 ​ $ 1,610.2 ​ We have developed an e-commerce platform that allows franchisees of our Music Go Round, Play It Again Sports and Style Encore brands to market and sell in-store product inventory online.
Music Go Round franchisees buy, sell and trade gently used and, to a lesser extent, new musical instruments, speakers, amplifiers, music-related electronics and related accessories. ​ The following table presents system-wide sales, which we define as estimated revenues generated by all franchise locations through both in-store and e-commerce sales, for each of the past three years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ System-Wide Sales ​ ​ (in millions) ​ ​ ​ ​ 2023 ​ ​ ​ 2024 ​ ​ ​ 2025 Plato’s Closet ​ $ 647.6 ​ $ 653.0 ​ $ 675.5 Once Upon A Child ​ 504.8 ​ 517.9 ​ 543.4 Play It Again Sports ​ 328.2 ​ 331.9 ​ 350.0 Style Encore ​ 59.2 ​ 59.1 ​ 61.7 Music Go Round ​ 49.2 ​ 48.3 ​ 51.4 ​ ​ $ 1,589.0 ​ $ 1,610.2 ​ $ 1,682.0 ​ We have developed an e-commerce platform that allows franchisees of our Music Go Round, Play It Again Sports and Style Encore brands to market and sell in-store product inventory online.
We also compete with Target and Walmart. ​ Our Style Encore franchise stores compete with a wide range of women’s apparel stores.
We also compete with Target and Walmart. ​ Our Style Encore franchise stores compete with a wide range of women’s (and to a lesser extent, men’s) apparel stores.
Winmark does not own or operate any corporate stores. ​ Of the 1,350 total franchised stores as of December 28, 2024, 159 were located in Canada. ​ Sustainability ​ As a leader in the circular economy, we have been at the forefront of the sustainability movement for over 30 years.
Winmark does not own or operate any corporate stores. ​ Of the 1,378 total franchised stores as of December 27, 2025, 165 were located in Canada. ​ Sustainability ​ As a leader in the circular economy, we have been at the forefront of the sustainability movement for over 35 years.
The franchise fee for our initial store and additional store in Canada is based upon the exchange rate applied to the United States franchise fee on the last business day of the preceding fiscal year. The franchise fee in March 2025 for an initial store in Canada will be $36,000CAD, and an additional store in Canada will be $21,600CAD .
The franchise fee for our initial store and additional store in Canada is based upon the exchange rate applied to the United States franchise fee on the last business day of the preceding fiscal year. The franchise fee in March 2026 for an initial store in Canada will be $34,200CAD, and an additional store in Canada will be $20,500CAD .
These have been done on their own or in connection with a technology partner. ​ Our Plato’s Closet franchise stores primarily compete with specialty apparel stores such as American Eagle, Gap, Abercrombie & Fitch, Old Navy, Hollister and Forever 21.
These have been done on their own or in connection with a technology partner. ​ Our Plato’s Closet franchise stores primarily compete with specialty apparel stores such as American Eagle, Gap, Abercrombie & Fitch, Old Navy, and Hollister. We compete with other franchisors in the teenage resale clothing retail market.
At December 28, 2024, there were 1,350 franchises in operation in the United States and Canada and over 2,800 available territories.
At December 27, 2025, there were 1,378 franchises in operation in the United States and Canada and over 2,800 available territories.
We compete with other franchisors in the teenage resale clothing retail market. ​ Our Once Upon A Child franchisees compete primarily with large retailers such as Walmart, Target and various specialty children’s retail stores such as Carter’s and Gap Kids.
We also compete with Target and Walmart. ​ Our Once Upon A Child franchisees compete primarily with large retailers such as Walmart, Target and various specialty children’s retail stores such as Carter’s and Gap Kids.
At December 28, 2024, the franchise fee for all brands was $25,000 for an initial store in the U.S. and $33,200CAD for an initial store in Canada.
At December 27, 2025, the franchise fee for all brands was $25,000 for an initial store in the U.S. and $36,000CAD for an initial store in Canada.
Consumers that visit musicgoround.com , playitagainsports.com or style-encore.com can find all product listed by participating stores in one convenient location. All product listings are available for in-store pickup, and certain products may be available for shipment.
Consumers that visit musicgoround.com , playitagainsports.com or style-encore.com can find all product listed by participating stores in one convenient location. Product listings are available for in-store pickup or for shipment. Our e-commerce platform assists our franchisees in marketing, increasing brand awareness, and driving consumers to local stores, which provides further opportunities for our stores to purchase product from consumers.
Additionally, we provide training to our management team and employees regarding diversity and inclusion and we continue to actively work to increase representation among underrepresented demographic groups within our employee base. 7 Table of Contents Available Information We maintain a Web site at www.winmarkcorporation.com, the contents of which are not part of or incorporated by reference into this Annual Report on Form 10-K.
We have in the past and will continue to place a strong emphasis on our employee’s welfare, health, and safety. ​ 7 Table of Contents Available Information We maintain a Web site at www.winmarkcorporation.com, the contents of which are not part of or incorporated by reference into this Annual Report on Form 10-K.
In May 2021, we made the decision to no longer solicit new leasing customers and pursue an orderly run-off of this leasing portfolio. Given this decision, we anticipate that leasing revenues, expenses, contribution and cash flows will continue to decrease throughout the run-off period.
Our middle-market leasing business began operations in 2004. In May 2021, we made the decision to no longer solicit new leasing customers and pursue an orderly run-off of this leasing portfolio. As of December 27, 2025, the run-off of the portfolio was completed and we no longer had any leasing customers or leased assets.
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Our e-commerce platform assists our franchisees in marketing, increasing brand awareness, and driving consumers to local stores, which provides further opportunities for our stores to purchase product from consumers.
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We have in the past and will continue to place a strong emphasis on our employee’s welfare, health, and safety. ​ We recognize the benefits of and are committed to a culture of diversity and inclusion, where each individual is valued for their own unique perspective and experiences.
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As of December 28, 2024, 55% of our overall employee count and 55% of our management team identify as female.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unable to collect payments due from our franchisees, it would materially adversely impact our results of operations and financial condition. ​ We operate in an extremely competitive industry. ​ Retailing, including the sale of apparel, sporting goods and musical instruments, is highly competitive.
Biggest changeIf we are unable to collect payments due from our franchisees, it would materially adversely impact our results of operations and financial condition. ​ 8 Table of Contents Our franchisees’ reliance on a required point-of-sale system, including our efforts to modernize that system, could disrupt franchisee operations and adversely affect our business . ​ Our franchise system depends on the continued availability, reliability, and performance of the point-of-sale (“POS”) system and related in-store technology that our franchisees are required to use.
In addition, evolving labor and employment laws, rules and regulations could result in potential claims against us as a franchisor for labor and employment related liabilities that have historically been borne by franchisees. ​ We may be unable to protect against data security risks. ​ We have implemented security systems with the intent of maintaining the physical security of our facilities and protecting our employees, franchisees, lessees, customers’, clients’ and suppliers’ confidential information and information related to identifiable individuals against unauthorized access through our information systems or by other electronic transmission or through the misdirection, theft or loss of physical media.
In addition, evolving labor and employment laws, rules and regulations could result in potential claims against us as a franchisor for labor and employment related liabilities that have historically been borne by franchisees. ​ We may be unable to protect against data security risks. ​ We have implemented security systems with the intent of maintaining the physical security of our facilities and protecting our employees, franchisees, customers’, clients’ and suppliers’ confidential information and information related to identifiable individuals against unauthorized access through our information systems or by other electronic transmission or through the misdirection, theft or loss of physical media.
As of December 28, 2024, we were in compliance with all of our financial covenants under these facilities; however, failure to comply with these covenants in the future may result in default under one or both of these sources of capital and could result in acceleration of the related indebtedness.
As of December 27, 2025, we were in compliance with all of our financial covenants under these facilities; however, failure to comply with these covenants in the future may result in default under one or both of these sources of capital and could result in acceleration of the related indebtedness.
As of December 28, 2024 each of our five brands have the following number of franchise agreements that will expire over the next three years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2026 2027 Plato’s Closet 43 40 36 ​ Once Upon A Child 44 50 38 ​ Play It Again Sports 19 14 18 ​ Music Go Round 4 6 5 ​ Style Encore 8 6 7 ​ ​ 118 116 104 ​ ​ We believe that renewing a significant number of these franchise relationships is important to our continued success.
As of December 27, 2025 each of our five brands have the following number of franchise agreements that will expire over the next three years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2027 ​ ​ ​ 2028 Plato’s Closet 40 36 34 ​ Once Upon A Child 48 37 31 ​ Play It Again Sports 13 18 15 ​ Music Go Round 4 5 6 ​ Style Encore 5 7 6 ​ ​ 110 103 92 ​ ​ We believe that renewing a significant number of these franchise relationships is important to our continued success.
At the end of the term of each franchise agreement, each franchisee may, if certain conditions are met, “renew” the franchise relationship by signing a new 10-year franchise agreement.
ITEM 1A: RISK FACTORS ​ We are dependent on franchise renewals. ​ Each of our franchise agreements is 10 years long. At the end of the term of each franchise agreement, each franchisee may, if certain conditions are met, “renew” the franchise relationship by signing a new 10-year franchise agreement.
To the extent any pandemic, epidemic or other public health emergency adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this Annual Report. ​ We are dependent on franchise renewals. ​ Each of our franchise agreements is 10 years long.
To the extent any pandemic, epidemic or other public health emergency adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this Annual Report. ​ ​ 11 Table of Contents ​ ITEM 1B: UNRESOLVED STAFF COMMENTS ​ None. ​
To the extent that we make additional investments that are not successful, such investments could have a material adverse impact on our financial results. ​ 8 Table of Contents We may sell franchises for a territory, but the franchisee may not open. ​ We believe that a substantial majority of franchises awarded but not opened will open within the time period permitted by the applicable franchise agreement or we will be able to resell the territories for most of the terminated or expired franchises.
There can be no assurance that we will sustain our current level of franchise openings. ​ We may sell franchises for a territory, but the franchisee may not open. ​ We believe that a substantial majority of franchises awarded but not opened will open within the time period permitted by the applicable franchise agreement or we will be able to resell the territories for most of the terminated or expired franchises.
ITEM 1A: RISK FACTORS ​ Our business, results of operations, financial condition, cash flows and the market value of our common stock can be adversely affected by pandemics, epidemics or other public health emergencies, such as the outbreak of COVID-19. ​ Our business, results of operations, financial condition, cash flows and the market value of our common stock can be adversely affected by pandemics, epidemics or other public health emergencies, such as the outbreak of COVID-19.
To the extent that we make additional investments that are not successful, such investments could have a material adverse impact on our financial results. ​ 10 Table of Contents Our business, results of operations, financial condition, cash flows and the market value of our common stock can be adversely affected by pandemics, epidemics or other public health emergencies, such as the outbreak of COVID-19. ​ Our business, results of operations, financial condition, cash flows and the market value of our common stock can be adversely affected by pandemics, epidemics or other public health emergencies, such as the outbreak of COVID-19.
There can be no assurance that we will sustain our current level of franchise openings. ​ We may make additional investments outside of our core businesses. ​ From time to time, we have and may continue to make investments both inside and outside of our current businesses.
While the sources of stock price fluctuation can be common across companies, the magnitude of these fluctuations can vary for different companies. ​ We may make additional investments outside of our core businesses. ​ From time to time, we have and may continue to make investments both inside and outside of our current businesses.
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While the sources of stock price fluctuation can be common across companies, the magnitude of these fluctuations can vary for different companies. ​ 10 Table of Contents ​ ITEM 1B: UNRESOLVED STAFF COMMENTS ​ None. ​
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The POS system supports core store-level operations and provides information used in the administration of our franchise system. As a result, disruptions or performance issues affecting this system could adversely impact franchisee operations. We are pursuing a strategic initiative to modernize our POS platform to address legacy constraints and improve the franchisee and in-store experience.
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The replacement or significant modification of a mission-critical POS system is complex and involves operational and execution risk. If we do not successfully design, implement, test, integrate, or deploy enhancements or a new POS system in a manner that minimizes disruption, franchisee operations could be adversely affected.
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Implementation challenges could result in system instability, workflow interruptions, data or reporting inconsistencies, or other operational disruptions during development, rollout, or post-deployment stabilization. In addition, our POS environment relies on third-party vendors and internal support resources, and delays or failures by these parties could extend disruption or delay stabilization.
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Disruptions associated with our required POS system, including those arising from a failed or poorly executed modernization effort, could strain franchisee relationships, negatively affect the customer experience at franchised stores, harm the reputation of our brands, and adversely affect our financial results. ​ We operate in an extremely competitive industry. ​ Retailing, including the sale of apparel, sporting goods and musical instruments, is highly competitive.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeSee Item 1A: Risk Factors for further discussion regarding data security risks. ​ Our Information Technology team, under the direction of the Chief Financial Officer and with the assistance of industry- leading third parties with over 20 years of expertise, is tasked with monitoring cybersecurity and operational risks related to information security and system disruption.
Biggest changeSee Item 1A: Risk Factors for further discussion regarding data security risks. ​ Our Information Technology team, under the direction of the Chief Financial Officer and Vice President of Technology, with the assistance of industry- leading third-parties with over 20 years of expertise, are tasked with monitoring cybersecurity and operational risks related to information security and system disruption.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur facilities are sufficient to meet our current and immediate future needs. ​ ITEM 3: LEGAL PROCEEDINGS ​ We are not a party to any material litigation and are not aware of any threatened litigation that we believe would have a material adverse effect on our business. ​ ITEM 4: MINE SAFETY DISCLOSURES ​ Not applicable. ​ 11 Table of Contents PART II ​
Biggest changeOur facilities are sufficient to meet our current and immediate future needs. ​ ITEM 3: LEGAL PROCEEDINGS ​ We are not a party to any material litigation and are not aware of any threatened litigation that we believe would have a material adverse effect on our business. ​ ITEM 4: MINE SAFETY DISCLOSURES ​ Not applicable. ​ 12 Table of Contents PART II ​
ITEM 2: PROPERTIES ​ We lease 41,016 square feet at our headquarters facility in Minneapolis, Minnesota. We are obligated to pay rent monthly under the lease, and will pay an average of $851,700 annually over the remaining term that expires in 2029.
ITEM 2: PROPERTIES ​ We lease 41,016 square feet at our headquarters facility in Minneapolis, Minnesota. We are obligated to pay rent monthly under the lease, and will pay an average of $863,100 annually over the remaining term that expires in 2029.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor dividend information see Note 6 – “Shareholders’ Equity (Deficit).” ​ At February 24, 2025, there were approximately 46 shareholders of record of our common stock. ​ Purchases of Equity Securities by the Issuer and Affiliated Purchasers ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Maximum Number ​ ​ ​ ​ ​ ​ ​ ​ Shares Purchased as ​ of Shares that may ​ ​ Total Number of ​ Average Price ​ Part of a Publicly ​ yet be Purchased Period Shares Purchased Paid Per Share Announced Plan(1) Under the Plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 29, 2024 to November 2, 2024 — ​ $ — — 78,600 ​ November 3, 2024 to November 30, 2024 — ​ $ — — 78,600 ​ December 1, 2024 to December 28, 2024 — ​ $ — — 78,600 ​ (1) The Board of Directors’ authorization for the repurchase of shares of the Company’s common stock was originally approved in 1995 with no expiration date.
Biggest changeFor dividend information see Note 6 – “Shareholders’ Equity (Deficit).” ​ At February 23, 2026, there were approximately 40 shareholders of record of our common stock. ​ Purchases of Equity Securities by the Issuer and Affiliated Purchasers ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Maximum Number ​ ​ ​ ​ ​ ​ ​ ​ Shares Purchased as ​ of Shares that may ​ ​ Total Number of ​ Average Price ​ Part of a Publicly ​ yet be Purchased Period ​ ​ ​ Shares Purchased ​ ​ ​ Paid Per Share ​ ​ ​ Announced Plan(1) ​ ​ ​ Under the Plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 28, 2025 to November 1, 2025 — ​ $ — — 70,656 ​ November 2, 2025 to November 29, 2025 — ​ $ — — 70,656 ​ November 30, 2025 to December 27, 2025 — ​ $ — — 70,656 ​ (1) The Board of Directors’ authorization for the repurchase of shares of the Company’s common stock was originally approved in 1995 with no expiration date.
The total shares approved for repurchase has been increased by additional Board of Directors’ approvals and as of December 28, 2024 was limited to 5,400,000 shares, of which 78,600 may still be repurchased. ​ The table set forth in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matter” of this Annual Report is also incorporated herein by reference. ​ Performance Graph ​ In accordance with the rules of the SEC, the following graph compares the performance of our common stock on the NASDAQ stock market to the NASDAQ US Benchmark TR composite index and to the NASDAQ US Benchmark Retail TR industry index, of which we are a component.
The total shares approved for repurchase has been increased by additional Board of Directors’ approvals and as of December 27, 2025 was limited to 5,400,000 shares, of which 70,656 may still be repurchased. ​ The table set forth in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matter” of this Annual Report is also incorporated herein by reference. ​ Performance Graph ​ In accordance with the rules of the SEC, the following graph compares the performance of our common stock on the NASDAQ stock market to the NASDAQ US Benchmark TR composite index and to the NASDAQ US Benchmark Retail TR industry index, of which we are a component.
The graph compares on an annual basis the cumulative total shareholder return on $100 invested on December 28, 2019 though our fiscal year ended December 28, 2024 and assumes reinvestment of all dividends. The performance graph is not necessarily indicative of future investment performance. ​ 12 Table of Contents ITEM 6: [RESERVED] ​ None. ​ ​
The graph compares on an annual basis the cumulative total shareholder return on $100 invested on December 27, 2020 though our fiscal year ended December 27, 2025 and assumes reinvestment of all dividends. The performance graph is not necessarily indicative of future investment performance. ​ 13 Table of Contents ITEM 6: [RESERVED] ​ None. ​ ​

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] 13 ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk 18 ​ ​ ​ Item 8. Financial Statements and Supplementary Data 18 ​ ​ ​
Biggest changeItem 6. [Reserved] 14 ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk 18 ​ ​ ​ Item 8. Financial Statements and Supplementary Data 19 ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

34 edited+1 added−5 removed11 unchanged
Biggest changeSee Note 3 – “Investment in Leasing Operations” for information regarding the lease portfolio. ​ Results of Operations ​ The following table sets forth selected information from our Consolidated Statements of Operations expressed as a percentage of total revenue and the percentage change in the dollar amounts from the prior period: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended Fiscal 2024 ​ ​ December 28, ​ December 30, ​ over (under) ​ ​ 2024 2023 2023 Revenue: ​ ​ ​ ​ ​ ​ Royalties 88.8 % 84.4 % 2.8 % Leasing income 2.2 ​ 5.7 ​ (62.0) ​ Merchandise sales 4.4 ​ 5.7 ​ (24.4) ​ Franchise fees 1.9 ​ 1.8 ​ 2.2 ​ Other 2.7 ​ 2.4 ​ 8.0 ​ Total revenue 100.0 ​ 100.0 ​ (2.3) ​ ​ ​ ​ ​ ​ ​ ​ Cost of merchandise sold (4.2) ​ (5.3) ​ (24.3) ​ Leasing expense — ​ (0.5) ​ (90.8) ​ Provision for credit losses — ​ — ​ (72.7) ​ Selling, general and administrative expenses (30.7) ​ (30.2) ​ (0.7) ​ Income from operations 65.1 ​ 64.0 ​ (0.7) ​ Interest expense (3.5) ​ (3.7) ​ (7.6) ​ Interest and other income 1.4 ​ 1.4 ​ (1.8) ​ Income before income taxes 63.0 ​ 61.7 ​ (0.3) ​ Provision for income taxes (13.9) ​ (13.4) ​ 0.8 ​ Net income 49.1 % 48.3 % (0.6) % ​ Revenue ​ Revenues for the year ended December 28, 2024 totaled $81.3 million compared to $83.2 million in 2023. ​ Royalties and Franchise Fees ​ Royalties increased to $72.2 million for 2024 from $70.2 million for the same period in 2023, a 2.8% increase.
Biggest changeSee Note 3 – “Leasing Operations” for information regarding the lease portfolio. ​ Results of Operations ​ The following table sets forth selected information from our Consolidated Statements of Operations expressed as a percentage of total revenue and the percentage change in the dollar amounts from the prior period: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended Fiscal 2025 ​ ​ December 27, ​ December 28, ​ over (under) ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2024 ​ ​ ​ Revenue: ​ ​ ​ ​ ​ ​ Royalties 88.7 % 88.8 % 5.8 % Leasing income 3.1 ​ 2.2 ​ 45.3 ​ Merchandise sales 3.8 ​ 4.4 ​ (8.8) ​ Franchise fees 1.8 ​ 1.9 ​ (1.3) ​ Other 2.6 ​ 2.7 ​ 6.1 ​ Total revenue 100.0 ​ 100.0 ​ 5.9 ​ ​ ​ ​ ​ ​ ​ ​ Cost of merchandise sold (3.6) ​ (4.2) ​ (8.1) ​ Selling, general and administrative expenses (33.0) ​ (30.7) ​ 13.7 ​ Income from operations 63.4 ​ 65.1 ​ 3.1 ​ Interest expense (2.8) ​ (3.5) ​ (14.4) ​ Interest and other income 1.1 ​ 1.4 ​ (14.1) ​ Income before income taxes 61.7 ​ 63.0 ​ 3.7 ​ Provision for income taxes (13.3) ​ (13.9) ​ 0.6 ​ Net income 48.4 % 49.1 % 4.6 % ​ Revenue ​ Revenues for the year ended December 27, 2025 totaled $86.1 million compared to $81.3 million in 2024. ​ Royalties and Franchise Fees ​ Royalties increased to $76.4 million for 2025 from $72.2 million for the same period in 2024, a 5.8% increase.
(2) Includes interest payable quarterly at 3.18%. (3) Refer to Part II, Item 8 in this report under Note 7 — “Debt” for additional information regarding long-term debt. ​ Our debt facilities include a Line of Credit with CIBC Bank USA and a Note Agreement and Shelf Agreement with Prudential.
(2) Includes interest payable quarterly at 3.18%. (3) Refer to Part II, Item 8 in this report under Note 7 — “Debt” for additional information regarding long-term debt. ​ Our debt facilities include a Line of Credit with CIBC Bank USA and a Note Agreement with Prudential.
Discussions of 2022 items and year-to-date comparisons between 2023 and 2022 that are not included in this Form 10-K, can be found in ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’ in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 30, 2023. ​ Overview ​ Winmark – the Resale Company is focused on sustainability and small business formation.
Discussions of 2023 items and year-to-date comparisons between 2024 and 2023 that are not included in this Form 10-K, can be found in ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’ in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024. ​ Overview ​ Winmark – the Resale Company is focused on sustainability and small business formation.
A detailed description of the risks to our business along with other risk factors can be found in Item 1A “Risk Factors”. ​ 13 Table of Contents In May 2021, we made the decision to no longer solicit new leasing customers and will pursue an orderly run-off of our middle-market leasing portfolio.
A detailed description of the risks to our business along with other risk factors can be found in Item 1A “Risk Factors”. ​ 14 Table of Contents In May 2021, we made the decision to no longer solicit new leasing customers and will pursue an orderly run-off of our leasing portfolio.
Also, our ability to carry out any of these activities on favorable terms, if at all, may be further impacted by any financial or credit crisis which may limit access to the credit markets and increase our cost of capital. ​ As of the date of this report we believe that the combination of our cash on hand, the cash generated from our business, our Line of Credit and our Shelf Agreement will be adequate to fund our planned operations through 2025. ​ Critical Accounting Policies ​ The Company prepares the consolidated financial statements of Winmark Corporation and Subsidiaries in conformity with accounting principles generally accepted in the United States of America.
Also, our ability to carry out any of these activities on favorable terms, if at all, may be further impacted by any financial or credit crisis which may limit access to the credit markets and increase our cost of capital. 17 Table of Contents As of the date of this report we believe that the combination of our cash on hand, the cash generated from our business and our Line of Credit and will be adequate to fund our planned operations through 2026. ​ Critical Accounting Policies ​ The Company prepares the consolidated financial statements of Winmark Corporation and Subsidiaries in conformity with accounting principles generally accepted in the United States of America.
This percentage of renewal has ranged between 98% and 100% during the last three years. ​ Our ability to grow our operating income is dependent on our ability to: (i) effectively support our franchise partners so that they produce higher revenues, (ii) open new franchises, and (iii) control our selling, general and administrative expenses.
This percentage of renewal has ranged between 98% and 99% during the last three years. ​ Our ability to grow our operating income is dependent on our ability to: (i) effectively support our franchisees so that they produce higher revenues, (ii) open new franchises, and (iii) control our selling, general and administrative expenses.
The decrease is primarily due to lower average corporate borrowings when compared to last year. ​ Income Taxes ​ The provision for income taxes was calculated at an effective rate of 22.0% and 21.8% for 2024 and 2023, respectively.
The decrease is primarily due to lower average corporate borrowings when compared to last year. ​ Income Taxes ​ The provision for income taxes was calculated at an effective rate of 21.6% and 22.0% for 2025 and 2024, respectively.
This section of this 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
This section of this 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
During 2024, our royalties increased $2.0 million or 2.8% compared to 2023. ​ Management continually monitors the level and timing of selling, general and administrative expenses. The major components of selling, general and administrative expenses include compensation & benefits, marketing & advertising, professional services, and occupancy.
During 2025, our royalties increased $4.2 million or 5.8% compared to 2024. ​ Management continually monitors the level and timing of selling, general and administrative expenses. The major components of selling, general and administrative expenses include compensation and benefits, marketing & advertising, professional services, and occupancy.
The components of the Consolidated Statements of Operations that reduce our net income but do not affect our liquidity include non-cash items for depreciation and amortization and compensation expense related to stock options. ​ We ended 2024 with $12.3 million in cash, cash equivalents and restricted cash compared to $13.4 million in cash, cash equivalents and restricted cash at the end of 2023. ​ Operating activities provided $42.2 million of cash during 2024 compared to $44.0 million provided during 2023.
The components of the Consolidated Statements of Operations that reduce our net income but do not affect our liquidity include non-cash items for depreciation and amortization and compensation expense related to stock options. ​ We ended 2025 with $10.5 million in cash, cash equivalents and restricted cash compared to $12.3 million in cash, cash equivalents and restricted cash at the end of 2024. ​ Operating activities provided $44.9 million of cash during 2025 compared to $42.2 million provided during 2024.
As of December 28, 2024, we were in compliance with all of the financial covenants under the Line of Credit, the Note Agreement and the Shelf Agreement. ​ The Line of Credit provides for up to $20.0 million in revolving loans and $30.0 million in delayed draw term loans.
As of December 27, 2025, we were in compliance with all of the financial covenants under the Line of Credit and the Note Agreement. ​ The Line of Credit provides for up to $20.0 million in revolving loans and $30.0 million in delayed draw term loans.
Cost of merchandise sold decreased to $3.4 million in 2024 from $4.5 million in 2023. The decrease was due to a decrease in Direct Franchisee Sales discussed above.
Cost of merchandise sold decreased to $3.1 million in 2025 from $3.4 million in 2024. The decrease was due to a decrease in Direct Franchisee Sales discussed above.
(See Note 6 — “Shareholders’ Equity (Deficit)” and Note 7 — “Debt”). ​ We have debt obligations and future operating lease commitments for our corporate headquarters. As of December 28, 2024 , we had no other material outstanding commitments. (See Note 1 2 — “Commitments and Contingencies”).
(See Note 6 — “Shareholders’ Equity (Deficit)”. ​ We have debt obligations and future operating lease commitments for our corporate headquarters. As of December 27, 2025 , we had no other material outstanding commitments. (See Note 1 2 — “Commitments and Contingencies”).
Franchise fee revenue is recognized over the estimated life of the franchise, beginning when the franchise opens. An overview of retail brand franchise fees is presented in the Operations subsection of the Business section (Item 1). ​ Leasing Income ​ Leasing income decreased to $1.8 million in 2024 compared to $4.8 million for the same period in 2023.
Franchise fee revenue is recognized over the estimated life of the franchise, beginning when the franchise opens. An overview of retail brand franchise fees is presented in the Operations subsection of the Business section (Item 1). ​ Leasing Income ​ Leasing income increased to $2.6 million in 2025 compared to $1.8 million for the same period in 2024.
In 2024, we renewed 98% of franchise agreements up for renewal.
In 2025, we renewed 98% of franchise agreements up for renewal.
The increase is primarily due to having additional franchise stores in 2024 compared to 2023. ​ Franchise fees of $1.5 million for 2024 were comparable to $1.5 million for 2023. Franchise fees include initial franchise fees from the sale of new franchises and transfer fees related to the transfer of existing franchises.
The increase is primarily from higher franchise retail sales and from having additional franchise stores in 2025 compared to 2024. ​ Franchise fees of $1.5 million for 2025 were comparable to $1.5 million for 2024. Franchise fees include initial franchise fees from the sale of new franchises and transfer fees related to the transfer of existing franchises.
At the end of each accounting period, royalty amounts due are based on franchisee sales information. As of December 28, 2024, the Company’s royalty receivable was $1,219,800. ​ The Company collects initial franchise fees when franchise agreements are signed and recognizes the initial franchise fees as revenue over the estimated life of the franchise, beginning when the franchise is opened.
At the end of each accounting period, royalty amounts due are based on franchisee sales information. As of December 27, 2025, the Company’s royalty receivable was $1,279,600. ​ The Company collects initial franchise fees when franchise agreements are signed and recognizes the initial franchise fees as revenue over the estimated life of the franchise, beginning when the franchise is opened.
As of December 28, 2024, we had 1,350 franchises operating under the Plato’s Closet, Once Upon A Child, Play It Again Sports, Style Encore and Music Go Round brands.
As of December 27, 2025, we had 1,378 franchises operating under the Plato’s Closet, Once Upon A Child, Play It Again Sports, Style Encore and Music Go Round brands.
During 2024, selling, general and administrative expense decreased $0.2 million, or 0.7%, compared to the same period last year. ​ Management also monitors several nonfinancial factors in evaluating the current business operations and future prospects including franchise openings and closings and franchise renewals.
During 2025, selling, general and administrative expense increased $3.4 million, or 13.7%, compared to the same period last year. ​ Management also monitors several nonfinancial factors in evaluating the current business operations and future prospects including franchise openings and closings and franchise renewals.
Direct Franchisee Sales decreased to $3.6 million in 2024 from $4.8 million in 2023 . The decrease is due to a decrease in buying group and technology purchases by our franchisees. ​ Cost of Merchandise Sold ​ Cost of merchandise sold includes in-bound freight and the cost of merchandise associated with Direct Franchisee Sales.
Direct Franchisee Sales decreased to $3.3 million in 2025 from $3.6 million in 2024 . The decrease is due to a decrease in technology purchases by our franchisees. ​ 15 Table of Contents Cost of Merchandise Sold ​ Cost of merchandise sold includes in-bound freight and the cost of merchandise associated with Direct Franchisee Sales.
The following tables summarize financial information by segment and provide a reconciliation of segment contribution to income from operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 28, 2024 December 30, 2023 Revenue: ​ ​ ​ ​ ​ ​ ​ Franchising ​ $ 79,477,300 ​ $ 78,477,300 ​ Other ​ 1,811,800 ​ 4,766,200 ​ Total revenue ​ $ 81,289,100 ​ $ 83,243,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation to income from operations: ​ ​ ​ ​ ​ ​ ​ Franchising segment contribution ​ $ 51,593,300 ​ $ 49,375,900 ​ Other operating segment contribution ​ 1,337,300 ​ 3,904,700 ​ Total income from operations ​ $ 52,930,600 ​ $ 53,280,600 ​ ​ Revenues are all generated from United States operations other than franchising revenue from Canadian operations of $7.3 million and $6.8 million in each of fiscal 2024 and 2023, respectively. ​ 15 Table of Contents Franchising Segment Operating Income ​ The franchising segment’s 2024 operating income increased by $2.2 million, or 4.5%, to $51.6 million from $49.4 million for 2023.
The following tables summarize financial information by segment and provide a reconciliation of segment contribution to income from operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ December 27, 2025 ​ ​ ​ December 28, 2024 Revenue: ​ ​ ​ ​ ​ ​ ​ Franchising ​ $ 83,423,900 ​ $ 79,477,300 ​ Other ​ 2,631,800 ​ 1,811,800 ​ Total revenue ​ $ 86,055,700 ​ $ 81,289,100 ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation to income from operations: ​ ​ ​ ​ ​ ​ ​ Franchising segment contribution ​ $ 52,057,400 ​ $ 51,593,300 ​ Other operating segment contribution ​ 2,536,500 ​ 1,337,300 ​ Total income from operations ​ $ 54,593,900 ​ $ 52,930,600 ​ ​ Revenues are all generated from United States operations other than franchising revenue from Canadian operations of $7.8 million and $7.3 million in each of fiscal 2025 and 2024, respectively. ​ Franchising Segment Operating Income ​ The franchising segment’s 2025 operating income increased by $0.5 million, or 0.9%, to $52.1 million from $51.6 million for 2024.
Cost of merchandise sold as a percentage of Direct Franchisee Sales for 2024 and 2023 was 93.8% and 93.7%, respectively. ​ Selling, General and Administrative Expenses ​ Selling, general and administrative expenses decreased 0.7% to $24.9 million in 2024 from $25.1 million in 2023.
Cost of merchandise sold as a percentage of Direct Franchisee Sales for 2025 and 2024 was 94.6% and 93.8%, respectively. ​ Selling, General and Administrative Expenses ​ Selling, general and administrative expenses increased 13.7% to $28.4 million in 2025 from $24.9 million in 2024.
All of the of principal outstanding under the Note Agreement matures in 2028. ​ See Part II, Item 8, Note 7 – “Debt” for more information regarding the Line of Credit, Note Agreement and Shelf Agreement. ​ We expect to generate the cash necessary to pay our expenses and to pay the principal and interest on our outstanding debt from cash flows provided by operating activities and by opportunistically using other means to repay or refinance our obligations as we determine appropriate.
As of December 27, 2025, we had no revolving loans outstanding, and had delayed draw term loan borrowings totaling $30.0 million that mature in 2029. ​ See Part II, Item 8, Note 7 – “Debt” for more information regarding the Line of Credit and Note Agreement. ​ We expect to generate the cash necessary to pay our expenses and to pay the principal and interest on our outstanding debt from cash flows provided by operating activities and by opportunistically using other means to repay or refinance our obligations as we determine appropriate.
The increase is primarily due to an increase in the valuation allowance related to foreign tax credits. ​ Segment Comparison of Fiscal Years 2024 and 2023 ​ As of December 28, 2024, we have one reportable operating segment, franchising, and one non-reportable operating segment. The franchising segment franchises value-oriented retail store concepts that buy, sell and trade merchandise.
The decrease is primarily due to higher tax benefits on the exercise of non-qualified stock options. ​ Segment Comparison of Fiscal Years 2025 and 2024 ​ As of December 27, 2025, we have one reportable operating segment, franchising, and one non-reportable operating segment. The franchising segment franchises value-oriented retail store concepts that buy, sell and trade merchandise.
The following is a summary of our net store growth and renewal activity for the fiscal year ended December 28, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVAILABLE ​ ​ ​ ​ ​ ​ ​ TOTAL ​ ​ ​ ​ ​ TOTAL ​ FOR ​ COMPLETED ​ ​ ​ 12/30/2023 ​ OPENED ​ CLOSED ​ 12/28/2024 RENEWAL ​ RENEWALS ​ % RENEWED ​ Plato’s Closet 506 14 (5) 515 55 55 100 % Once Upon A Child 416 16 (2) 430 51 ​ 50 98 % Play It Again Sports 294 13 (5) 302 22 ​ 21 95 % Style Encore 66 4 (1) 69 15 15 100 % Music Go Round 37 — (3) 34 2 1 50 % Total Franchised Stores (1) 1,319 47 (16) 1,350 145 142 98 % ​ (1) All stores are owned and operated by franchisees.
The following is a summary of our net store growth and renewal activity for the fiscal year ended December 27, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVAILABLE ​ ​ ​ ​ ​ ​ ​ TOTAL ​ ​ ​ ​ ​ TOTAL ​ FOR ​ COMPLETED ​ ​ ​ 12/28/2024 ​ OPENED ​ CLOSED ​ 12/27/2025 ​ RENEWAL ​ RENEWALS ​ % RENEWED ​ Plato’s Closet 515 18 (7) 526 42 41 98 % Once Upon A Child 430 17 (6) 441 44 ​ 44 100 % Play It Again Sports 302 15 (8) 309 18 ​ 17 94 % Style Encore 69 2 (4) 67 8 8 100 % Music Go Round 34 3 (2) 35 4 4 100 % Total Franchised Stores (1) 1,350 55 (27) 1,378 116 114 98 % ​ (1) All stores are owned and operated by franchisees.
The decrease in segment contribution was due to a decrease in leasing income net of leasing expense. ​ Liquidity and Capital Resources ​ Our primary sources of liquidity have historically been cash flow from operations and borrowings.
The increase in segment contribution was due to the settlement of outstanding customer litigation in the Company’s equipment leasing business. ​ 16 Table of Contents Liquidity and Capital Resources ​ Our primary sources of liquidity have historically been cash flow from operations and borrowings.
The decrease in cash provided by operating activities in 2024 was due to a decrease in accrued and other liabilities. ​ Investing activities used $0.2 million of cash during 2024 compared to $0.4 million used during 2023. ​ Financing activities used $43.0 million of cash during 2024 compared to $43.9 million used during 2023.
The increase in cash provided by operating activities in 2025 was due to an increase in net income and a decrease in non-cash working capital. ​ Investing activities used $0.2 million of cash during 2025 compared to $0.2 million used during 2024. ​ Financing activities used $46.6 million of cash during 2025 compared to $43.0 million used during 2024.
The following table summarizes our significant future contractual obligations at December 28, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by period ​ ​ ​ ​ ​ Less than 1 ​ ​ ​ ​ ​ ​ ​ More than 5 ​ ​ Total year 1-3 years 3-5 years years Contractual Obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Line of Credit/Term loan (1)(3) ​ $ 35,977,400 ​ $ 1,395,500 ​ $ 2,791,000 ​ $ 31,790,900 ​ $ — ​ Notes Payable (2)(3) ​ 33,577,500 ​ ​ 954,000 ​ ​ 1,908,000 ​ ​ 30,715,500 ​ ​ — ​ Operating Lease Obligations ​ 4,258,600 ​ ​ 806,000 ​ ​ 1,679,300 ​ ​ 1,773,300 ​ ​ — ​ Total Contractual Obligations ​ $ 73,813,500 ​ $ 3,155,500 ​ $ 6,378,300 ​ $ 64,279,700 ​ $ — ​ (1) Includes interest payable monthly at rates ranging from 4.60% to 4.75%.
The following table summarizes our significant future contractual obligations at December 27, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by period ​ ​ ​ ​ ​ Less than 1 ​ ​ ​ ​ ​ ​ ​ More than 5 ​ ​ ​ ​ ​ Total ​ ​ ​ year ​ ​ ​ 1-3 years ​ ​ ​ 3-5 years ​ ​ ​ years Contractual Obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Line of Credit/Term loan (1)(3) ​ $ 34,581,900 ​ $ 1,395,500 ​ $ 2,791,000 ​ $ 30,395,400 ​ $ — ​ Notes Payable (2)(3) ​ 32,623,500 ​ ​ 954,000 ​ ​ 31,669,500 ​ ​ — ​ ​ — ​ Operating Lease Obligations ​ 3,452,600 ​ ​ 828,200 ​ ​ 1,725,700 ​ ​ 898,700 ​ ​ — ​ Total Contractual Obligations ​ $ 70,658,000 ​ $ 3,177,700 ​ $ 36,186,200 ​ $ 31,294,100 ​ $ — ​ (1) Includes interest payable monthly at rates ranging from 4.60% to 4.75%.
The increase in segment contribution was primarily due to increased royalty revenues. ​ Other Segment Operating Income ​ The other segment operating income for 2024 decreased by $2.6 million, or 65.8%, to $1.3 million from $3.9 million for 2023.
The increase in segment contribution was primarily due to increased royalty revenues, partially offset by an increase in selling, general, and administrative expenses. ​ Other Segment Operating Income ​ The other segment operating income for 2025 increased by $1.2 million, or 89.7%, to $2.5 million from $1.3 million for 2024.
During 2024, we paid $38.9 million in cash dividends (including a $7.50 per share special cash dividend), and paid $9.2 million on notes payable (including $4.9 million in prepayment of notes that had scheduled amortization payments due in 2025-2027); partially offset by $5.0 million of proceeds from the exercise of stock options.
During 2025, we paid $49.1 million in cash dividends (including a $10.00 per share special cash dividend), and paid $2.4 million to repurchase 7,944 shares of our common stock; partially offset by $5.0 million of proceeds from the exercise of stock options.
Franchise fees collected from franchisees but not yet recognized as income are recorded as deferred revenue in the liability section of the consolidated balance sheet.
Franchise fees collected from franchisees but not yet recognized as income are recorded as deferred revenue in the liability section of the consolidated balance sheet. As of December 27, 2025, deferred franchise fee revenue was $7,929,600. ​ Recent Accounting Pronouncements ​ See Note 2, “Significant Accounting Policies — Recently Issued Accounting Pronouncements and Recently Adopted Accounting Pronouncements”. ​
The decrease is primarily due to a decrease in operating lease income and income on sales of equipment under lease resulting from the run off of the portfolio. ​ 14 Table of Contents ​ Merchandise Sales ​ Merchandise sales include the sale of product to franchisees either through our Computer Support Center or through the Play It Again Sports buying group (together, “Direct Franchisee Sales”).
The increase is primarily due to the settlement of outstanding customer litigation when compared to the same period last year. ​ Merchandise Sales ​ Merchandise sales include the sale of product to franchisees either through our Computer Support Center or through the Play It Again Sports buying group (together, “Direct Franchisee Sales”).
The decrease was primarily due to a decrease in compensation related expenses. ​ Interest Expense ​ Interest expense was $2.9 million in 2024 compared to $3.1 million in 2023.
The increase was primarily due to an increase in compensation related expenses and a non-recurring expense related to third-party software licenses for franchisees. ​ Interest Expense ​ Interest expense was $2.4 million in 2025 compared to $2.9 million in 2024.
Leasing income net of leasing expense for the fiscal year of 2024 was $1.8 million compared to $4.4 million in 2023. Our leasing portfolio (net investment in leases), was $0.0 million at December 28, 2024 compared to $0.1 million at December 30, 2023.
Leasing income net of leasing expense for the fiscal year of 2025 was $2.6 million compared to $1.8 million in 2024. $2.2 million of the $2.5 million of leasing income for the fiscal year of 2025 was related to the settlement of outstanding customer litigation.
Removed
Given the decision to run-off the portfolio, we anticipate that leasing income net of leasing expense will continue to decrease through the remainder of the run-off period.
Added
As of December 27, 2025, the run-off of the portfolio was completed as we no longer had any leasing customers or leased assets.
Removed
Our most significant financing activities over the past two years have consisted of payments on our notes payable, the payment of dividends, and net proceeds received from the exercise of stock options.
Removed
As of December 28, 2024, we had no revolving loans outstanding, and had delayed draw term loan borrowings totaling $30.0 million that mature in 2029. 16 Table of Contents ​ The Shelf Agreement allows us to offer privately negotiated senior notes to Prudential in an aggregate principal amount up to (i) $100.0 million, less (ii) the aggregate principal amount of notes outstanding at such point (including notes outstanding under the Note Agreement, which at December 28, 2024 was $30.0 million).
Removed
As of December 28, 2024, we had not issued any notes under the Shelf Agreement.
Removed
As of December 28, 2024, deferred franchise fee revenue was $7,483,300. ​ Recent Accounting Pronouncements ​ See Note 2, “Significant Accounting Policies — Recently Issued Accounting Pronouncements and Recently Adopted Accounting Pronouncements”. ​ 17 Table of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−0 removed1 unchanged
Biggest changeBased upon these revenues and expenses, a 10% increase or decrease in the foreign currency exchange rates would impact annual pretax earnings by approximately $730,000. To date, the Company has not entered into any foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates. ​
Biggest changeTo date, the Company has not entered into any foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates. ​ 18 Table of Contents
The Company had no interest rate derivatives in place at December 28, 2024. ​ None of the Company’s cash and cash equivalents at December 28, 2024 was invested in money market mutual funds, which are subject to the effects of market fluctuations in interest rates. ​ Foreign currency transaction gains and losses were not material to the Company’s results of operations for the year ended December 28, 2024, as approximately 9% of the Company’s total revenues and a de minimis amount of expenses were denominated in a foreign currency.
The Company had no interest rate derivatives in place at December 27, 2025. ​ None of the Company’s cash and cash equivalents at December 27, 2025 was invested in money market mutual funds, which are subject to the effects of market fluctuations in interest rates. ​ Foreign currency transaction gains and losses were not material to the Company’s results of operations for the year ended December 27, 2025, as approximately 9.1% of the Company’s total revenues and a de minimis amount of expenses were denominated in a foreign currency.
At December 28, 2024, the Company’s line of credit with CIBC Bank USA included a commitment for revolving loans of $20.0 million. The interest rates applicable to revolving loans are based on either the bank’s base rate or SOFR for short-term borrowings (twelve months or less).
At December 27, 2025, the Company’s line of credit with CIBC Bank USA included a commitment for revolving loans of $20.0 million. The interest rates applicable to revolving loans are based on either the bank’s base rate or SOFR for short-term borrowings (twelve months or less).
The Company had no revolving loans outstanding at December 28, 2024 under this line of credit. The Company’s earnings would be affected by changes in short-term interest rates only in the event that it were to borrow amounts under this facility.
The Company had no revolving loans outstanding at December 27, 2025 under this line of credit. The Company’s earnings would be affected by changes in short-term interest rates only in the event that it were to borrow amounts under this facility.
With the Company’s borrowings at December 28, 2024, a one percent increase in short-term rates would have no impact on annual pretax earnings.
With the Company’s borrowings at December 27, 2025, a one percent increase in short-term rates would have no impact on annual pretax earnings.
Added
Based upon these revenues and expenses, a 10% increase or decrease in the foreign currency exchange rates would impact annual pretax earnings by approximately $782,700.

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