In this FDD Talk 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 2018 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 2018 FDD
- Section IV – Number of franchised and company-owned Kilwins Chocolates outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Kilwins Chocolates’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average and median Gross Sales for the 105 franchised Kilwins Stores that were in operation during the entire period of January 1, 2017 through December 31, 2017 and that reported Gross Sales to the franchisor, including 8 Stores that are seasonally operated and were not open for the entire 12-month period
- 2016 average Cost of Sales and Non-Owner Payroll Costs for the 87 franchised Kilwins Stores from whom the franchisor was able to obtain applicable information
- 2017 average Transaction Value for the 102 franchised Kilwins Stores that were in operation during the year January 1, 2017 to December 31, 2017 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 2017)
Section I – Background Information
17 Things You Need to Know About the Kilwins Chocolates Franchise
1. Since opening the first store over 70 years ago, Kilwins has maintained slow and steady growth across the United States. One of the brand’s newest stores opened in early August 2018 in Carytown, Virginia. The new Kilwins is the fourth in the state of Virginia; the others are in Williamsburg, Charlottesville, and Alexandria.
2. The new store is owned by the Poh family who previously had a carpet business in Carytown. Kilwins officials asked the Pohs if they were interested in opening a shop in the same location as their former carpet business. Valerie and Derek Poh said that they jumped at the chance to put another family business there.
3. Valerie and her sister, who will be managing the new store, visited the Kilwins flagship facility in Michigan for training. Poh said she was impressed by not only the quality of the ice creams, chocolates, and more, but also the dedication to each employee and franchisee. She added, “It feels like a very family-oriented business. They care a lot of about their franchisees and their products.”
Franchisee Named 2018 South Carolina Young Entrepreneur of the Year
4. In early May 2018, Ashley Clark, the co-owner of Kilwins Chocolates, Fudge and Ice Cream in Greenville, South Carolina, was named the 2018 South Carolina Young Entrepreneur of the Year.
5. Clark, who graduated from Clemson University with a degree in English, said that she had plans to become a lawyer. She was working in a law firm and making preparations to attend law school when she told her father that working at the law firm didn’t feel like a “real job.” Clark’s father, who is also an entrepreneur, suggested that she look into franchising a Kilwins as he was familiar with the store in Blowing Rock, North Carolina.
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6. Clark now co-owns and operates the Kilwins in Greenville with her husband Landon. She said that September of this year marks the fifth anniversary of her franchise. Clark added that the management of people has been the most rewarding, most challenging, and most surprising aspect of being a Kilwins franchise owner.
7. Just like all Kilwins franchise owners, Clark and her husband were trained at Kilwins corporate headquarters in Michigan. Clark learned how to make Kilwins’ signature products, and about 70 percent of her store’s items are made in-house. Some of the most popular items at Clark’s Kilwins are almond toffee crunch, fudge, and ice cream. She said a new item is also very popular — dark chocolate sea salt bark, which Clark said is her favorite item.
8. Scott Whelchel, area manager and consultant for the Greenville Small Business Development Center, nominated Clark for the award. He said he has been impressed with her commitment to her business and the community. Welchel said, “She is a learner, dedicated to growing as a business owner, investing in and serving people. She and Landon had taken personal risks in changing up the hiring process and rethinking employee relationships at Kilwins. They were open, they listened, and they found a better way to engage and retain the employees they need.”
Offering Public Tours of Main Kitchen
9. Kilwins offers a tour of the Kilwins Chocolate Kitchen in Northern Michigan, which the company says is a “must see” when visiting the area. Tours run Monday-Friday from 10:00 a.m. to 7:30 p.m. on the half hour and include a comprehensive review of how the company makes its Turtles, Truffles, Chocolates, Caramel, Corns, Brittles, and other confections. Free samples are also offered at the end of every tour.
10. According to the Chocolate Tours section of the Kilwins website, the company controls all stages of making and delivering products. In order to ensure that its stores and customers get the highest quality products possible, Kilwins has invested in special storage facilities and trucks that closely control temperature and humidity.
11. To this day, Kilwins still uses the original recipes from its founders and also continues to develop new recipes and ideas over time. Kilwins also says that nearly all of its cold room products, like its Almond Toffee Crunch, have been hand-made since the company’s start. The brand believes that hand-making these products ensures a higher quality.
12. Additionally, Kilwins has been expertly molding and enrobing (coating) chocolates with the same equipment and processes since 1965. Over the years, the brand has made some improvements and has added new chocolate milling equipment that allows Kilwins to create new and unique blends of chocolate.
13. Kilwins, also known as Kilwins Chocolates, was founded in 1947 as Kilwin’s Candy and Gifts by Dan and Katey Kilwin in Petoskey, Michigan. Initially, the Kilwins’ shop sold baked goods as well as candies. However, in 1971, the Kilwins sold the bakery portion of the business to focus solely on chocolate, candies, and confections. In 1976, Jim Szocinski, who had worked for the Kilwins since 1961, opened a second Kilwins store in Traverse City, Michigan.
14. The Kilwins continued to run the business until 1978 when they sold the company to Wayne and Lorene Rose. The Roses started franchising the Kilwins concept in 1982 and continued to slowly push expansion around the country. A few years later, in 1985, Kilwins began making and selling its proprietary “Original Recipe” ice cream.
15. The Roses maintained ownership of Kilwins until 1995 when Don and Robin McCarty, who started working for the company in 1979, bought Kilwins and promised to continue creating high-quality treats. Since then, the McCartys have pushed Kilwins’ growth and in 2005 they opened a second distribution center in Florida to support the locations in the South.
16. To highlight Kilwins’ strong growth, the brand opened a new manufacturing and flagship retail store in 2010 in its hometown of Petoskey. Kilwins now has a presence in 23 states and celebrated its 70th anniversary in 2017.
Entrepreneur’s Franchise 500
17. Kilwins Chocolates ranked No. 94 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Kilwins Chocolates franchise costs, based on Item 7 of the company’s 2018 FDD.
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 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 91
- Outlets at the End of the Year: 98
- Net Change: +7
- Outlets at the Start of the Year: 98
- Outlets at the End of the Year: 107
- Net Change: +9
- Outlets at the Start of the Year: 107
- Outlets at the End of the Year: 111
- Net Change: +4
- Outlets at the Start of the Year: 4
- Outlets at the End of the Year: 4
- Net Change: 0
- Outlets at the Start of the Year: 4
- Outlets at the End of the Year: 2
- Net Change: -2
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 2
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- The averages presented below were prepared from the company’s internal operating records, which, in turn, were prepared from information obtained from franchisees. To the best of the company’s knowledge, this information has been prepared according to generally accepted accounting principles. The information presented in this Item 19 has not been audited.
Gross Sales (2017)
- Gross Sales figures include revenues reported for calendar year 2017 from the sale of goods to retail customers, including the full range of required products.
- This section represents the results from 105 franchised Kilwins Stores, and no company-owned Stores.
- These Stores represent all Stores that were in operation during the entire period of January 1, 2017 through December 31, 2017 and that reported Gross Sales to the franchisor, including 8 Stores that are seasonally operated and were not open for the entire 12-month period.
- The franchisor excluded from the results 8 franchised Kilwins Stores which were not open, even seasonally, for the entire 12-month period from the results.
- The franchisor separately listed only those states in which it has three or more franchisees who are operating Stores so that it does not provide information (even in summary form) that could be directly linked to any of its franchisees, or that others could use to determine the performance of any particular Store. However, data for all of the Stores (except those excluded Stores as explained above) were included in the “total” figures under the heading “All States.”
All States (105 Stores)