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 2020 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 2020 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 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of Kilwins Chocolates’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 average and median Gross Sales for the 122 franchised Kilwins Stores that were in operation during the entire period of January 1, 2019 through December 31, 2019 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

• 2018 average Cost of Sales and Non-Owner Payroll Costs for the 113 franchised Kilwins Stores from whom the franchisor was able to obtain applicable information

• 2019 average Transaction Value for the 120 franchised Kilwins Stores that were in operation during the year January 1, 2019 to December 31, 2019 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 2019)

Section I – Background Information

17 Things You Need to Know About the Kilwins Franchise

Opens New Location in Virginia Beach

1.  In early May 2019, Kilwins announced that Kilwins Virginia Beach was set to open later in the month on Atlantic Avenue. Of the four locations in Virginia (at the time of the announcement), Chad and Laurel Salecker own two. Back in 2015, they opened Kilwins Williamsburg on Prince George Street. Adding a store at the beach was part of their plan, but they wanted the perfect location.

2.  The former Surf Taco on Atlantic Avenue, across from the Naval Aviation Monument Park, turned out to be just right. The Saleckers gutted the 1,500-square-foot space to give it wood-look tile floors, a white, pressed-tin ceiling, green walls, and shiny new equipment. The kitchen is open, to allow people to watch fudge being made on giant marble-topped tables.

3.  After graduating from St. John’s College in Annapolis with a degree in liberal arts, Chad Salecker wrecked his car. He needed a job, and one he could walk to. He got hired at a nearby Kilwins and worked there for almost 8 years. Salecker fell in love with the business and knew he wanted one of his own.

4.  He said the fun, family-friendly atmosphere drew him in, and he liked that the chain uses fair trade chocolate. All fudge, caramel corns, and brittles are made in house with Kilwins chocolate.

5.  The new shop will carry 12 fudge and ice cream flavors at all times and rotate additional flavors seasonally. According to Chad Salecker, “I’m not a chocolate snob, but I am an ice cream snob. Ours is phenomenal because we only use heavy whipping cream. It’s really thick and creamy. That’s why I’ve gained 20 pounds.”

6.  The Saleckers will be moving from Williamsburg to the Virginia Beach with their 4-year-old daughter, Ruby, and 6-year-old son, Sebastian. They will be hiring 20 to 30 employees for the summer and love to work with and mentor motivated students. But mostly, Chad Salecker wanted workers who like to have fun.

Highlights Family Who Brought Kilwins to Texas

7.  In late June 2019, localprofile.com featured a story about Alejandro and Mili Rodriguez, who were the first franchisees to bring Kilwins to Texas. Although Kilwins has locations in over 23 states, most of its stores are located around the Eastern part of the U.S. The Rodriguezes opened their Kilwins store in March 2018.

8.  Both were raised in Veracruz, Mexico, but Alejandro was born in Michigan and returned frequently throughout his childhood to visit family. He and his family have been making trips to the Kilwins there for as long as he can remember. When the family were traveling throughout Florida and Arkansas, they noticed how popular Kilwins had become in other states and realized that there weren’t any in Texas.

9.  In 2016, Alejandro wrote to the Kilwins franchise and made his pitch for a Collin County-based shop, only to be told that the franchise wasn’t ready yet due to distribution concerns – the ice cream is made in an Ohio dairy and the chocolates are made in Michigan. Since Texas is so far from the distribution points, the franchise was worried that the quality of the product might suffer.

10.  But in 2017, Kilwins contacted Alejandro and told him that they had worked out the logistics and were ready to begin franchising in Texas. Since then, other franchisees have opened Kilwins stores in San Antonio and Grapevine. A Roanoke location was set to open later in 2019.

11.  Mili runs the day-to-day operation of the shop with the help of nine employees who all know how to make the treats, including the arduous processes of making fudge and caramel, and melting the 10-pound Kilwins chocolate bars that are shipped to the store in order to hand-dip each and every item.

12.  Since Kilwins didn’t originate in Texas, many of their Plano customers are transplants who knew and loved Kilwins in other states. In March 2018 – Kilwins Plano’s first month in business – nearly all sales came from people who had anticipated the launch of the store because they had been to other locations. Many come in asking for specific items, including the Kilwins famous sea salt caramel ice cream. Mili added, “I think one of the most rewarding things is that people come in and tell us that having Kilwins in Plano is like having a piece of home.”

13.  At Kilwins Plano, some of the most popular items are the peanut brittle, chocolate-covered orange peels, and mocha truffles. Kids love the Superman ice cream – a swirl of red, blue, and yellow with a fruity flavor. Mili’s favorite is the Turtle Marshmallow, and Alejandro likes the Turtle Pretzel Rod, both of which are dipped in Kilwins chocolate, drizzled with caramel, and rolled in crushed pecans.

Company History

14.  Kilwins was founded in 1947 as “Kilwin’s Candies and Gifts” by Don and Katy Kilwin in Petoskey, Michigan. Initially, the Kilwins’ shop was a bakery and a candy shop. A year after opening the first shop, the Kilwins began making their now famous fudge. The Kilwins continued to make both baked goods and candies until 1971 when they decided to sell off the bakery portion of the business.

15.  A few years later, in 1976, the Kilwins opened a second shop in Traverse City, Michigan. The shop was owned and operated by Jim Szocinski, who first worked for Kilwins in 1961. In 1978, the Kilwins decided to retire and sold the business to Wayne and Lorene Rose. The Roses began franchising Kilwins in 1982 and a few years later, they expanded the Kilwins menu by adding “Original Recipe” ice cream.

16.  Over the next decade, Kilwins continued to grow around the United States. Then in 1995, the Roses sold Kilwins to Don and Robin McCarty, who had first joined the Kilwins business in 1979. Kilwins continued its expansion and by 2016, there were over 100 shops around the United States.

Entrepreneur’s Franchise 500

17.  Kilwins ranked No. 105 on Entrepreneur’s 2020 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 2020 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 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

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

2019

• Outlets at the Start of the Year:  125
• Outlets at the End of the Year:  133
• Net Change:  +8

Company-Owned

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

2019

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  3
• Net Change:  +1

Section V – Financial Performance Representations (Item 19, 2020 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 (2019)

• Gross Sales figures include revenues reported for calendar year 2019 from the sale of goods to retail customers, including the full range of required products.

• This section represents the results from 122 franchised Kilwins Stores, and no company-owned Stores.

• These Stores represent all Stores that were in operation during the entire period of January 1, 2019 through December 31, 2019 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 11 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 (122 Stores)