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FDD Talk 2017: What You Need to Know About the Kilwins Chocolates Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on June 1, 2017

in Chocolate Franchise, FDD Talk 2017: Food Franchises, Franchise Earnings, Retail Franchise

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In this FDD Talk 2017 post, you’ll learn the following:

  • Section I – Background information on the Kilwins Chocolates franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Kilwins Chocolates franchise, based on Item 7 of the company’s 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Kilwins Chocolates franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Kilwins Chocolates’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016 average and median Gross Sales for the 99 franchised Kilwins Stores that were in operation during the entire period of January 1, 2016 through December 31, 2016 and that reported Gross Sales to the franchisor, including 7 Stores that are seasonally operated and were not open for the entire 12-month period
  • 2015 average Cost of Sales and Non-Owner Payroll Costs for the 55 franchised Kilwins Stores from whom the franchisor was able to obtain applicable information
  • 2016 average Transaction Value for the 96 franchised Kilwins Stores that were in operation during the year January 1, 2016 to December 31, 2016 that reported complete transaction values to the franchisor, including Stores that intentionally operated seasonally for part of the year (as compared to Stores that may have been operating for part of the year because they opened or closed during 2016)

Section I – Background Information

8 Things You Need to Know About the Kilwins Chocolates Franchise

The “8 Ps”

1.  Although Kilwins Chocolates has been in business for 70 years, the company’s growth has remained moderate. In an effort to speed up growth, starting around 2010, Kilwins began a new marketing and branding initiative with plans to open about 10 new locations annually. According to CEO Don McCarty, Kilwins wanted to ensure that growth was done thoughtfully.

2.  As Kilwins grows, the company tries to stick to its “brand lens,” which company executives have ranked and named the “8 Ps: product, pricing, promotion, packaging, people, place, presentation and publicity.” The company reviews and redesigns the 8 Ps as needed in order to help Kilwins grow.

Unique Product Offerings

3.  To help Kilwins Chocolates stand out from the competition, the company continues to release new and unique items. A few years ago, Kilwins introduced its Single Origin Chocolates, which come from specific regions of the world such as the Dominican Republic, Peru, and Mexico. The beans are sourced from these countries and then produced in small batches in order to retain the region’s unique flavors. Some of the line’s products include Mexican Fudge Topping, Dominican Shredded Drinking Chocolate, and a 3 pack of Peruvian milk, dark, and white chocolate bars.

4.  In addition to selling chocolates that are manufactured at the “Chocolate Kitchen” facility in Petoskey, Michigan, each store sells Kilwins’ original recipe ice cream along with specialty made-in-store products such as fudge, caramel apples, brittles, and caramel corns. All specialty items are made fresh daily at each location and customers can watch as the treats are being made. One of Kilwins’ signature specialty items is the Nutcracker Sweets, a blend of popcorn, almonds, pecans, and caramel.

Maintaining High Quality Through Traditional Recipes

5.  Kilwins has maintained the high quality of its products by using the same recipes handed down from original owners Don and Katy Kilwin. According to the company, all products made in the cold room, such as the Almond Toffee Crunch, have been made the same way since the beginning. Kilwins also still uses the original 1985 recipe for its ice cream. Except for some small improvements, the company has been using the same chocolate making equipment since 1965.

Company History

6.  In 1947, Don and Katy Kilwin opened Kilwin’s Bakery in Petoskey, Michigan. Soon after opening, the Kilwins began making candy. In 1971, the Kilwins sold the bakery to focus solely on chocolates and confections. The Kilwins sold the business to Wayne and Lorene Rose in 1978. A few years later, in 1982, the Roses officially began franchising Kilwins Chocolates.

7.  Today, Kilwins Chocolates is owned and operated by Don and Robin McCarty, who joined the Kilwins team in 1979. Kilwins Chocolates currently has over 100 locations across the United States.

Entrepreneur’s Franchise 500

8.  Kilwins Chocolates has appeared on Entrepreneur’s annual Franchise 500 list most years in the last decade, except in 2009, 2014, and 2015. The company’s highest rank was No. 160 in 2017, while its lowest rank was No. 497 in 2007.

Section II – Estimated Costs

  • Please click here for detailed estimates of Kilwins Chocolates franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Kilwins Chocolates’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

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