February Part I - Franchises for Lovers

A chocolate shop franchise with all the right ingredients

In 1982, the first Rocky Mountain Chocolate Factory shop was opened in the resort town of Durango, Colorado. Today, there are 380 stores in 43 states, collectively pulling in a tasty $112 million in annual sales. Of that total, approximately $10 million comes in the month of February, with a heavy crush during the four days preceding Valentine's Day. Although this is a big day in the chocolate business, Greg Pope, Sr. VP of Franchise Development says the Rocky Mountain Chocolate Factory is positioned for year-round sales. "Our competitors like See's and Godiva depend on the four biggest holidays; they are primarily destination gift stores. Our customers are impulse buyers. They might buy for themselves any day of the year and then come back to buy for their valentines in February," says Pope.

To capture the impulse market, Rocky Mountain Chocolate Factory shops are located in resort towns and malls where there is a lot of foot traffic and people just wandering around. To grab their interest and pull them in, the stores are built with demonstration areas up front. "It's a great marketing advantage," says Pope. "Customers can see and smell the fudge bubbling in a big copper kettle or watch the cook spin a skewered apple in hot caramel. It's hard to resist something so delicious being made before your eyes. And of course, we give everyone a sample."

Concentrating on the impulse buyer provides a stable business environment for franchisees. "Without question, it smoothes out the seasonal bumps. That's our bread and butter," says Pope. "The impulsive purchase is what sustains us as a business proposition. Then the holiday times build upon themselves year after year as customers get to know the store brand. Franchisees will see same store sales gain year after year at those destination times as they build a following of loyal customers."

Traditional methods, unique products
Every Rocky Mountain Chocolate Factory shop is designed to exude the same nostalgic charm as the original with traditional oak and brass fixtures. The focal point for every shop is a huge 500-pound marble slab that literally sucks the heat out of the fudge while the cook shapes it with paddles into a giant 22-pound loaf. There are also numerous smaller pots of melted milk, dark, and white chocolate for dipping fruits, nuts, pretzels and cookies. As much as 50% of the candy sold in the shops is made onsite. The favorite at Valentine's Day is chocolate dipped strawberries.

The other half of the tasty inventory comes from the company's 53,000 square foot chocolate factory located on the outskirts of Durango. Truffles in exotic flavor varieties, nut clusters, butter creams, caramels, and an excellent new line of sugar-free and no-sugar-added candies are shipped to the franchise shops on refrigerated trucks.

Rocky Mountain has several unique items that you just won't find anywhere else. First, there is the company's signature piece, the Bear. It's a paw-sized concoction of chewy caramel, roasted nuts, and a heavy coating of chocolate. (The company's mascot is a bear named Truffles.) Then there is the trademark "big" chocolates. These unusually large chocolates came about by accident. In the beginning, the founders didn't know how to make chocolate - they literally learned on a ping pong table. They made the candy centers too big, not compensating for the added size and weight when coating the pieces in chocolate. If they didn't look quite right they would dip them again. The resulting mountain-sized pieces instantly caught on and have remained the Rocky Mountain benchmark ever since. Occasionally the company adds to their "mistake," like when they developed a king-sized peanut butter cup appropriately dubbed the "Bucket".

So Rocky Mountain chocolates are big, they smell yummy, and they look pretty good, too. But how good do they taste? There is a Money magazine mounted on the founder's office wall which features Rocky Mountain Chocolate winning the coveted 3-heart rating in a 30-member panel blind taste test. Rocky Mountain chocolate beat out See's Candies, Perugina, Teuscher, Godiva and Fanny May for the "richest chocolate, with intense natural flavor."

Rocky Mountain seems to be doing everything right and is being rewarded with record growth. "We are opening between 40-50 locations a year," says Pope. "We see tremendous potential to grow on the East Coast where most of the U.S. population is. And we anticipate ramping up very quickly over the next few years," maintains Pope.

Contact Information: Greg Pope, Senior VP Franchise Development, Rocky Mountain Chocolate Factory, Inc., www.rmcf.com, (800)438-7623.

Say It With a Bouquet

Candy Bouquet is a franchise with 820 stores in 40+ countries. Some are storefronts, the rest are virtual stores operated online by homebased franchisees. Owner and founder, Margaret McEntire, started the company in her garage in 1989. It is now the largest retail candy chain in the world.

Candy and flowers have always gone together on Valentine's Day, but only Candy Bouquet combines them into one product. Franchisees create arrangements using candies and chocolates in place of flowers, sometimes using balloons or stuffed animals. "Valentine's Day is not only our biggest holiday, it is our biggest single day of the year," says McEntire. "Christmas can be big too, but it's spread out over a month. For Valentine's Day, everybody waits until the last minute before they start thinking about it."

Most Americans would probably assume that Valentine's Day is an American holiday. But, according to McEntire, it is a worldwide phenomenon. "I didn't realize it until I started this business, but people do Valentine's Day elsewhere. I sold a franchise to a Malaysian princess years ago and she wasn't sure how well Valentine's Day would go there. She was surprised when even Malaysian teenagers were coming in with $100 to buy arrangements. Turns out, they considered it a value proposition because candy isn't going to die like cut flowers."

Here in the U.S., the most popular Valentine's Day bouquet is a dozen chocolate roses. There are also "patterns" like you might find at a wire service like FTD. "We have Valentine's Day kits so that a customer in L.A. can call a franchisee in New York and order kit #3. That's Chocolate Roses in dark chocolate," says McEntire.

Valentine's Day is important to Candy Bouquet but, surprisingly, corporate sales are big, too. "I had one guy in Minnesota who had a storefront, but he was doing so well with his corporate business he questioned the wisdom of paying all that rent," says McEntire. "He decided to close his shop and go homebased, just concentrating on his corporate business. Corporations like our products for birthdays, promotions, and Christmas gifts because it's usually less expensive than a gift basket. Plus, unlike a florist, we can really customize our arrangements to suit the particular corporate client, perhaps by including their product samples in the arrangement."

The candy used in the bouquets comes from all over the world. McEntire explains, "I get chocolates from Ireland, England, France, and Germany. But that's just a partial list. You name the candy factory, I've been there. I do try to stay away from junk candy though. I get ganache from a 5th generation chocolatier in Belgium and we have a whole line of bon bons that are made just for us."

Candy Bouquet is growing fast - it is among the top 100 fastest growing franchises. "This last year we grew faster than McDonald's," says McEntire. "This year, we've upped that by at least 20-25% more. And I don't see it slowing down at all."

What's behind this growth? It could be the quality and uniqueness of the product, but it might also be the easy entry. Franchise fees start at a mere $3,600 with a total investment ranging from only $7,400 to $48,000. That's about one-tenth the cost of most competing franchises. Then there are the royalties. Or rather, the lack of royalties. McEntire instituted a "no royalty fee" policy to avoid a conflict of interest with the franchisees. Instead, franchisees pay a flat monthly association fee of $35 to $200. The fee, which covers corporate expenses like office expenses and communications, is not tied to sales volume.

"We don't do anything like anybody else," says McEntire. "This is about as clean cut a company as you can find. When I started, I used my own startup cash. We are still debt-free so the company is mine, period. It makes it pretty easy to get things done and we move at a very fast speed around here. It is a true Blue Ocean company."

When asked about future plans for the company, McEntire said, "We are going to keep buying auxiliary companies to help with this particular company. Right now, for example, we own a wire factory that makes wire pieces longer than the typical florist wire. And we have our cello custom made and have a lot of our own private label lines. I'm looking into everything from buying a bank to other chocolate candy companies."

Margaret McEntire, Founder and Owner Candy Bouquet, http://www.CandyBouquet.com, (501)375-9990.