PayMore, a consumer electronics seller, plans to expand a major franchise. The company recently signed a five-unit development deal in the Philadelphia area with a seasoned restaurant operator, and according to Stephen Breus, co-founder and CEO of the company, it is looking for the “right” unit operators to help grow the brand across the United States and beyond.
The company’s business model is relatively straightforward. You buy used electronic devices from customers for cash, store credit, or trade value, and then sell those electronic devices to other customers. According to Erik Helgesen, president and co-founder of PayMore, the company makes all in-store purchases and the bulk of sales are online. PayMore operates its own e-commerce platform, which it calls “megastore”, and also uses third-party platforms such as eBay and Amazon. Early franchisor Nicholas Facciano said his store in Cary, North Carolina, makes two-thirds of its sales through e-commerce channels.
Megastore sales are treated just like in-store sales, and the order is routed to any location that has the required inventory. Outside of ownership, Helgesen said, PayMore does not charge franchisees any fees for sales made through the megastore.
According to Helgesen, the idea to open a company to resell the technology came about when he and Bruce got involved in the shipping business. They noticed that electronics was the best-selling part of the field, and thought they could sell better in a tech-focused store, with more sophisticated pricing and sales channels.
The two opened their first store in 2011 in Masabica, New York, to what Helgesen described as a “line out the door,” and were soon forced to open a side-by-side location there to handle demand. Since then, the unit’s growth has been slow. There are only four PayMore locations in operation today, two in New York and two in North Carolina, according to the company’s 2021 franchise disclosure document.
But the company only started franchising in 2019 and is working with Fransmart, a franchise development company, to grow. In addition to the five-unit deal in Pennsylvania, Prius said the company plans to open a site in Manhattan in 2022 and has an international development deal in the pipeline.
Branding is an important part of PayMore’s business. Prius said the company’s business model is adjacent to presentation, but the company positions itself as an “expert in the buying, selling and trading of electronic devices.” The strategy is paying off. Vacciano said his store does well with the “mother of football” demographic, a group of consumers who likely have a lot of second-hand electronics in their homes, but who might dismiss the idea of going to a pawn shop to sell them.
This situation is relatively unusual. There are similar concepts for gaming products — GameStop will buy used consoles and vintage games — but few catch up with the entire consumer electronics market. The personal aspect of PayMore is another highlight. It makes the process easy and convenient, Facchiano said, as opposed to selling an item on a Facebook Marketplace or going through a mail-order distributor. The company also performs extensive data scanning on all “smart devices,” ensuring that the next user cannot search your files or access any cloud accounts.
For sellers, this convenience comes at a cost. Facciano said his average margin is “about 50 percent.” He pays more for top sellers, like popular laptops and tablets he knows he can sell, and pays less for less popular or niche items he might have to post on Craigslist to move them.
This margin is recorded in the company’s franchise disclosure document. The company just revealed 2020 sales numbers for its Massapequa store, which generated more than $1.468 million in sales for a merchandise cost of nearly $770,000.
PayMore uses data from multiple sources to determine how much to pay for each item. Per Helgesen, the company’s point of sale system keeps track of every purchase the company makes at all of its locations and makes this data easily available in the store. For less popular items, Facchiano said he relies on sources like confirmed sales on eBay to rate an item.
However, not all electronic devices are valuable. When sellers come up with worthless devices, Helgesen says PayMore is offering to recycle the device for free. You should hear, but sellers are taking advantage of the program. Helgesen said the company has recycled thousands of devices in its 10-year history.
According to Helgesen, the company is making a franchise push “to reach critical mass faster and stronger.” From a 2020 survey of 2,000 adults, DeClutter estimated that Americans were sitting on $43 billion in unused technology, suggesting that PayMore won’t run out of hardware purchases anytime soon.