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Petsway rebrands under franchise agreement

After emerging from bankruptcy, local stores are joining Pet Supplies Plus

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Springfield-based Petsway Inc. has rebranded under a franchise agreement after exiting bankruptcy proceedings late last year.

Co-owner Karl Keller II said the company’s Chapter 11 reorganization plan called for converting all Petsway stores to the Pet Supplies Plus franchise. He said bankruptcy proceedings closed in December, two months after the court approved the plan.

“This is a tremendous opportunity for us,” he said of the franchise deal. “It’s going to be great for our customers because we’re going to be able to better serve them with more product and great service.”

Keller declined to disclose franchise costs with Livonia, Michigan-based Pet Supplies Plus. The company’s website lists an initial franchisee fee of $49,900 for a single unit, along with 2% royalties charged on monthly sales for the first 12 months and 3% after that. The company founded in 1988 sells food and supplies for dogs, cats and other small pets, and offers full-service dog grooming at its more than 500 stores in 35 states.

Keller, who also is company president of the 66-year-old family business, said in addition to the franchise deal, longtime Petsway employees Bill and Marisa Wake earlier this year became co-owners in the business. Bill Wake, who started with the company in 2000, was named vice president as part of the ownership transaction. Marisa Wake, who precedes her husband’s employment at Petsway by a year, remains vice president of marketing. The trio declined to disclose financial terms.

“They’ve been hard workers and both have worked here over 20 years,” Keller said, noting the bankruptcy exit provided a good opportunity for the leadership change. “For a number of years now, we wanted to do something like this.”

Rebranding activity
Keller and the Wakes debuted their first Pet Supplies Plus store March 26 at 1717 W. Kearney St. It’s the first of five Petsway stores set to be rebranded over the next year, the owners say.

“All the existing stores we have now – the four in Springfield and one in Nixa – they are still open and will continue to operate as Petsway, with the exception of the one on Kearney Street, which is Pet Supplies Plus now,” Keller said.

The owners aim to have rebranding work finished within the next year at all the stores: 1517 W. Battlefield Road, 2920 E. Sunshine St., 2833 S. Glenstone Ave. and in Nixa at 469 Aldersgate Drive. All Springfield stores are 8,000-12,000 square feet, while Nixa’s occupies 2,900 square feet, Keller said, adding the Battlefield Road location is next on the rebranding list, followed by Glenstone Avenue.

“It’s quite a lot of work to convert one of these stores over,” he said. “Each store is unique as far as what is required for fixtures and inventory. It’s substantial, but we don’t have a figure we want to put on each store.”

The transition to Pet Supplies Plus is the second rebranding and represents the third name for the Springfield-based company, which started as Karl’s Aquarium in the 1950s, named after Keller’s father and founder Karl Keller Sr. The company adopted the Pet Warehouse name in 1989 and branded as Petsway in 2007.

Addressing challenges
Petsway filed for bankruptcy in December 2019. Keller said at the time that the bankruptcy proceedings were triggered by unprofitable stores in Poplar Bluff and St. Peters, which are now closed. He said the company is on a payment plan for 44 unsecured claims totaling roughly $2.7 million.

Its bankruptcy filing listed estimated assets of $50,001 to $100,000. The creditor with the largest unsecured claim is OakStar Bank at around $1.6 million after collateral is accounted for, according to the filing.

The owners say they’ve followed Pet Supplies Plus for a number of years, making it a point to visit the stores when attending trade shows in various cities.

Keller said part of the Petsway bankruptcy work involved having to cut costs, which resulted in the closure of the Poplar Bluff and St. Peters stores. A second part is having a plan to survive and move forward.

“That’s where the opportunity to become a [Pet Supplies Plus] franchise came in,” he said. “With the PSP stores, we’ll be better able to compete against the big guys.”

According to past reporting, Keller cited competition from big-box stores, such as PetSmart Inc. and Petco Animal Supplies Inc., as a contributor to Petsway filing for bankruptcy.

The franchise move comes as the American Pet Products Association announced in March the pet industry generated an all-time high of $103.6 billion in annual sales last year, up 6.7% over 2019 retail sales of $97.1 billion.

Bill Wake said the local company gains better access to vendors with greater distribution of products, both in variety and volume, through Pet Supplies Plus’ larger store counts. That includes Pet Supplies Plus’ branded products: Redford pet food for dogs and cats, and Play On toys and accessories, including beds, cat litter, brushes and shampoo, according to its website.

“There’s going to be more in every category, and just more in our ability to get it and keep it stocked,” he said.

Marisa Wake said keeping product and materials stocked during the coronavirus pandemic has been a challenge, compounded by being an independent pet store. That frequently puts the company at the bottom of the list for shipping when vendor supplies are low, she said.

“The products would go to bigger stores before they’d get to us,” she said. “So, a lot of times we would be delayed.”

As work is set to start soon on rebranding the second Pet Supplies Plus store in Springfield, an April 10 grand opening event for the Kearney Street shop is planned. However, the business partners have their eyes on expanding beyond the current Springfield and Nixa franchise territory – possibly starting next year.

“Our first goal is convert the existing stores, and we’ll go from there,” Keller said.

Web Editor Geoff Pickle contributed.

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