The franchise formula: Stores like Kilwins, Edible Arrangements didn’t start from scratch

Sarah Spaulding, left, and Patti Beland pour a batch of chocolate fudge Saturday at Kilwins in downtown St. Joseph. Phil and Janet Dykstra, co-owners of the store, opened their franchise store in 1998. (Don Campbell | HP Staff)

Sarah Spaulding, left, and Patti Beland pour a batch of chocolate fudge Saturday at Kilwins in downtown St. Joseph. Phil and Janet Dykstra, co-owners of the store, opened their franchise store in 1998. (Don Campbell | HP Staff)

By Tony Wittkowski | Business Reporter | The Herald-Palladium

ST. JOSEPH — Janet and Phil Dykstra had no intention of opening a franchise store.

Before they became the owners of Kilwins in downtown St. Joseph, the couple worked at Indiana Michigan Power. In 1997, they made a big career change when they learned that the Buchanan office Janet was working out of was being relocated. During a vacation trip to South Carolina, they stopped at an ice cream shop and marveled at what they were eating.

“My wife said, ‘This Kilwins has the best ice cream I’ve ever had,’” Phil Dykstra said. “She asked if they were a franchise and the rest fell into place. For us, it was that simple. We weren’t even thinking about opening a business.”

They learned Kilwins was based in Petoskey and gave the owner a call. The Dykstras set up an appointment the next week and everything went quickly from there. From the initial meetings in the summer of 1997, the Dykstras opened Kilwins in April 1998.

Franchise stores have gained popularity in recent years.

Franchisors are known to provide a tested and proven structure for business, freeing their franchisees from having to start from scratch. From Jimmy John’s to Pizza Hut, franchise stores can be spotted throughout Southwest Michigan.

According to the franchising consultant and resource organization FranNet, there are more than 3,000 franchise concepts in almost 300 industries. They range from hotels and restaurants to cleaning services. Franchises generate more than $2 trillion in revenue per year, with outlets employing more than 12 million people.

But running a franchise store isn’t a guaranteed path to success.

“We’re pleased where we are at right now, but starting a business is not easy,” Phil said. “We were store number 34 for them. That’s how small the franchise is. There are now a little over 100 stores. This was at the infancy of Kilwins.”

After their meeting with the owner, the Dykstras borrowed money to pay for the franchise fee. Kilwins then put the store together and the couple got a few weeks of training.

‘No easy task’

By that point, Janet was retired. Phil stayed with the power company for another three years to ensure their new business stayed afloat. While the business now runs seamlessly after 18 years, it was tough going in the beginning.

“We had to build up the staff, which was no easy task. We were kind of naive, thinking it would be us and a few people,” Phil said. “The owner (of Kilwins) told me to keep my regular job to start with, because revenue may not be to the point where we both could be running it.”

Phil worked at Kilwins on weekends and evenings. He put in 100 hours a week in addition to his other job. They went six months at a time without balancing a checkbook because there weren’t enough hours in the day. Phil said he remembers Janet crying and asking what they had gotten themselves into.

Edible Arrangements, in Benton Township, is pictured Thursday. The owner, Gail Rue, sold her house in Florida to help pay for the franchise fee.

Edible Arrangements, in Benton Township, is pictured Thursday. The owner, Gail Rue, sold her house in Florida to help pay for the franchise fee.

It took less than a year to get the store going. They put a rush on the opening because the strongest sales came in the summer for the ice cream/chocolate shop.

Gail Rue opened the Edible Arrangements franchise store in Benton Township in March 2015. Rue was going through some life changes and noticed a few online articles about opening a franchise.

She liked the crafty idea and use of fresh fruit for Edible Arrangements. After inquiring about opening one in the area and getting approval, Rue sold her house in Florida to cover the franchise fee.

Rue was then invited to the business’ headquarters in Connecticut, where she attended “Edible University.” She spent two days there, learning the trade of Edible Arrangements.

Overall, it took nine months from contacting headquarters to opening her business.

“Everything went smoothly. It doesn’t always happen that way,” she said. “After I found my location, my landlord helped me find a person to do the buildout. They stayed on schedule and things were delivered on time.”

The only trouble came with the buildout cost, which was more than anticipated because the building size was larger than expected. After getting additional funding for her equipment, Rue held her grand opening.

Finding a market

Jim Paul, owner of Slumberland Furniture in Benton Township, opened his store in August 2011. It involved about a year and a half of work and preparation.

Opening the furniture franchise came by circumstance. Paul was a developer by trade, who once ran operations at Fairplain Plaza. He owned the property at 756 E. Napier Ave. and wanted to sell it to a potential business.

In 2010, Paul realized Benton Harbor was lacking furniture stores. He called Slumberland Furniture’s headquarters and was told they had a franchisee looking at the Southwest Michigan market. Things were looking good until the entrepreneur had a change of heart.

“The franchisee changed his mind and said they weren’t ready,” Paul said. “I took the opportunity and asked what it takes to be a franchisee.”

To join the Slumberland family, Paul paid $30,000 for the franchise fee. Prior to him signing, corporate looked at his financial statements to see if he was financially stable. Paul also had to meet with the senior management team for a personal interview.

Because the area was part of a market the company had earmarked for a store, Paul said the process was quicker. If an area hasn’t had any studies conducted for demographics and foot traffic, a corporation is not likely to grant a franchisee a store.

“They want their franchisees to be successful,” Paul said. “They have a growth pattern and a model that they want to have multiple stores in a TV market. With ours being in the South Bend market, they would love to see another store to open in that market. It’s more exposure.”

In order for a franchisee to operate its desired store, the corporation it works through must be registered in the state. Paul’s Slumberland in Benton Township became the second one to open in Michigan. The first opened in Iron Mountain.

“Slumberland Furniture has been franchising for close to 30 years,” Paul said. “The longer you have somebody in the franchising business, the smoother it goes. They just become more proficient.”

Location, location

Phil Dykstra didn’t know how to put together a business plan. He was thankful when the owner of Kilwins helped the Dykstras open in St. Joseph.

However, Phil recalls when the owner said St. Joseph was a “marginal location.”

“Traffic studies were done on what we could do. This was before all the tourism arrived,” Phil said. “Turns out, St. Joe has exploded over the last couple of years. When we started, we hit the ground running. The first several years it was a 25 percent increase every year. Back then there were a lot of openings in St. Joe.”

The first place the Dykstras were interested in setting up shop is where Jimmy John’s is now, at the corner of Broad and State streets. The building was empty, but a deal couldn’t be reached. Phil and Janet moved in next door, where they stayed until Kilwins moved in 2006 to its current location at 217 State St.

Shoppers visit Kilwins in downtown St. Joseph on Saturday afternoon. The Dykstras, who opened their Kilwins franchise in 1998, moved to this location at 217 State St. in 2006. (Don Campbell| HP Staff)

Shoppers visit Kilwins in downtown St. Joseph on Saturday afternoon. The Dykstras, who opened their Kilwins franchise in 1998, moved to this location at 217 State St. in 2006. (Don Campbell| HP Staff)

Rue said the real estate department at Edible Arrangements did testing for the area before suggesting locations based on size and price. Rue chose to be next to the Secretary of State’s office in Benton Harbor, where people wait for long periods of time.

“I had looked at where Little Caesar’s is along M-139, but there wasn’t too much parking and there was a drive-thru that went around where the store would be,” Rue said.

However, there are rules that come with having corporate help. Rue gets check-ups from the corporate office every six months to ensure the business is doing well and up to their standards. Last week, Rue got a field business leader who performed a quality assurance review to check on the display case, the store’s cleanliness and the employees.

Getting a franchise store with Kilwins takes a big commitment. According to Kilwins’ website, its franchise fee is now $40,000 and the corporation collects 5 percent of gross sales.

Phil Dykstra said it’s been a great ride in learning how to run the ice cream parlor. But when it came to finding success, sometimes a franchise owner needs a good partner.

“As far as running the franchise, it clicked for us because she’s good with the employees and public relations portion,” Phil said. “I’m more of the nuts and bolts person. We complemented each other.”

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on June 19, 2016)

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