Merlin’s Shop of Mystical Wonders is a 1996 film starring Ernest Borgnine. Despite what the title would imply, the film is more of a horror film than a fantasy movie. In this film, Borgnine plays a grandfather telling his grandson a story about the wizard Merlin opening up a store in modern-day America. He tells him two separate stories about Merlin and the store.
The movie was mocked and riffed by Mystery Science Theater 3000 in an episode in the tenth and final season of the show.
In the first story an obnoxious columnist examines the store, berates Merlin, and threatens to write a negative article in the newspaper that will cause his readers to avoid the store. Merlin gives the columnist a book of spells as proof that he is actually the legendary wizard. The columnist takes the book home and casts a few spells. The magic makes him age, kills his cat, and causes the columnist to see the image of a demon. The columnist's cat then comes back to life (due to the magic from Merlin's book) and proceeds to chew into the columnist's neck causing blood to spill all over his hand. The columnist tries to kill the cat with a pitchfork but it fails, so he casts a spell that makes him breathe fire, and he burns his cat alive. He then attempts to make himself young again by casting a spell that involves drinking his wife's blood. The columnist takes a long needle and sticks it in his wife's arm, and begins to extract her blood, but when he begins to say the spell, the magic from the book turns him into a baby. The columnist's wife then raises her former husband as her child.
In the second storyline (which is an edited version of a short film, The Devil's Gift) a thief steals a toy monkey from Merlin's shop and sells it to a thrift/antique store, where it is quickly bought as a birthday present for a young boy. Merlin discovers its theft and begins trying to track the monkey down, as its magic can be very dangerous in the wrong hands; indeed, every time the monkey strikes its cymbals, a nearby living thing dies. The boy's father realizes that the toy is evil, and attempts to bury it, but it finds its way back into the boy's house. Before the monkey can cause any more damage, Merlin shows up and takes the toy back to his shop. (Notably, in the original short film's ending, the monkey "wins;" it causes the violent deaths of the boy and his family. The limitations of the editing techniques used to give the story its new, happy ending can be detected if one listens to the audio in the background while Merlin picks up and gently chides the monkey: the boy and his father can be faintly heard, screaming in agony.)