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 2019 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 2019 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 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Kilwins Chocolates’ financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average and median Gross Sales for the 110 franchised Kilwins Stores that were in operation during the entire period of January 1, 2018 through December 31, 2018 and that reported Gross Sales to the franchisor, including 16 Stores that are seasonally operated and were not open for the entire 12-month period

• 2017 average Cost of Sales and Non-Owner Payroll Costs for the 94 franchised Kilwins Stores from whom the franchisor was able to obtain applicable information

• 2018 average Transaction Value for the 108 franchised Kilwins Stores that were in operation during the year January 1, 2018 to December 31, 2018 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 2018)

Section I – Background Information

15 Things You Need to Know About the Kilwins Chocolates Franchise

Opens Second Central Ohio Location

1.  In late May 2019, Kilwins Chocolates opened its second Central Ohio location; it is also only the third shop in the whole state of Ohio. The new store is owned and operated by Stephanie and Ernie Malas, who first opened a Kilwins in Dublin’s Bride Park in 2017.

2.  The couple were inspired to open their own Kilwins store after vacationing with family in Florida and getting ice cream at one of the locations. Ernie Malas said, “We really loved the old-fashioned ice cream shop feel and decided to bring that feeling back to Ohio. We went there a couple times on each vacation and we loved it.”

3.  The success of their first Kilwins Chocolates store convinced the Malases to open a second location. According to Ernie Malas, the employees’ long-term commitment to the business is what will set his shop apart from others and add to success. He said, “We have a lot of family and friends who work for our shops. We are very tight with our employees.”

Runs Charitable Foundation to Help Children Affected by the HIV/AIDS Crisis in South Africa

4.  Kilwins Chocolates is a company committed to corporate citizenship and strives to actively participate in local charitable opportunities with both tangible and intangible gifting. In 2004, Kilwins established SAME: South African Medical Expeditions, a registered international nonprofit organization focusing on the needs of orphans and vulnerable children affected by the HIV/AIDS crisis in South Africa.

5.  SAME’s focus is primarily on impoverished and/or HIV/AIDS infected children. SAME’s target areas are the impoverished rural primary schools and communities of Timbavati and Sigagula, east of Acornhoek, in Mpumalanga Province, South Africa.

6.  When Kilwins first sent volunteers to South Africa to provide medical services to children orphaned by HIV/AIDS, the volunteers found that many of the kids left behind were also infected with HIV. Through SAME’s relationships and cooperative efforts with South African providers, the program is providing daily love, food, medical care, and HIV testing and other medical treatment to orphans and vulnerable children.

7.  SAME’s strategy for effectively helping the children is to network in communities to identify the caregiver that loves these little ones and who is taking care of them – maybe an older sibling, grandmother, or neighbor. Caregivers are doing their best and need help so SAME’s volunteers come along side them, providing assistance and education so that they can better care for the children. Additionally, SAME identifies needs, identifies existing local people and organizations that are meeting needs, establishes local relationships, and helps the local South African people do it better.

8.  Kilwins runs a separate website for the SAME organization where anyone is welcome to make a charitable donation. According to SAME, 100% of the proceeds donated go directly toward helping the organization’s efforts in South Africa. With these donations, SAME is able to provide the following:

• Over 2,100 meals per month to orphans and vulnerable children.
• Monthly food parcels to 33 orphan and vulnerable children homes containing nearly 100 children.
• Assistance to two daycare centers serving up to 140 pre-school children.
• Free weekly pediatric medical clinics serving nearly 800 patients.
• Parasite treatment to over 1,000 children every six months.
• Weekly TB/HIV treatment and support clinics to HIV+ patients.
• Community center with supplementary after-school education, food, activities, and support of orphans and vulnerable children.
• Daily food, clothing, blankets, and supplies for over 100 orphan and vulnerable children homes containing nearly 200 children.
• Ongoing training for healthcare workers and home-based caregivers within the communities.
• Free weekly transportation to government-run HIV clinics.
• HIV testing, HIV/AIDS prevention, counseling, and treatment for all the children in the program’s care.
• Providing and installing malaria nets and malaria education in all orphan and vulnerable children homes served by SAME.

Company History

9.  Kilwins Chocolates was founded in 1947 as Kilwin’s Candies and Gifts by Don and Katey Kilwin in Petoskey, Michigan. Initially, the store was a bakery and candy shop, with the Kilwins making a wide variety of sweet treats. Eventually, in 1971, the Kilwins sold off the bakery portion of the business to focus solely on making candies.

10.  A few years later, in 1976, a second Kilwins store opened in Traverse City, Michigan. This store was owned by Jim Szocinski, who had worked for the Kilwins since 1961. The two Kilwins stores were successful and continued to produce high-quality handcrafted treats over the next few years.

11.  Then in 1978, the Kilwins sold the company to Wayne and Lorene Rose, who began franchising the Kilwins Chocolates concept in 1982. In 1985, Kilwins expanded its menu with the introduction of a proprietary “Original Recipe” ice cream.

12.  Over the next decade, Kilwins Chocolates continued to grow slowly in the United States and in 1995, the business was acquired by Don and Robin McCarty, who had first joined the Kilwins business in 1979. The McCartys continued to expand Kilwins in the United States and by 2007, there were 60 Kilwins Chocolates shops in the country.

13.  As the business kept expanding, a second distribution center was opened in Florida in 2005 to support the Kilwins stores in the South. In 2010, Kilwins Chocolates opened a new manufacturing and flagship retail store in Petoskey.

14.  In more recent years, Kilwins Chocolates opened its 100th store in 2016 and celebrated its 70th anniversary in 2017. Today, there are Kilwins Chocolates shops across the United States.

Entrepreneur’s Franchise 500

15.  Kilwins Chocolates ranked No. 68 on Entrepreneur’s 2019 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 2019 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 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  98
• Outlets at the End of the Year:  107
• Net Change:  +9

2017

• Outlets at the Start of the Year:  107
• Outlets at the End of the Year:  111
• Net Change:  +4

2018

• Outlets at the Start of the Year:  111
• Outlets at the End of the Year:  125
• Net Change:  +14

Company-Owned

2016

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  2
• Net Change:  -2

2017

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2018

• 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, 2019 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 (2018)

• Gross Sales figures include revenues reported for calendar year 2018 from the sale of goods to retail customers, including the full range of required products.

• This section represents the results from 110 franchised Kilwins Stores, and no company-owned Stores.

• These Stores represent all Stores that were in operation during the entire period of January 1, 2018 through December 31, 2018 and that reported Gross Sales to the franchisor, including 16 Stores that are seasonally operated and were not open for the entire 12-month period.

• The franchisor excluded from the results 16 franchised Kilwins Stores which were not open, even seasonally, for the entire 12-month period.

• 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 (110 Stores)