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

• Section I – Estimated initial investment (franchise costs) for a Kilwins Chocolates franchise, based on Item 7 of the company’s 2022 FDD

• Section II – Initial franchise fee, royalty fee, and marketing fee for a Kilwins Chocolates franchise, based on Items 5 and 6 of the company’s 2022 FDD

• Section III – Number of franchised and company-owned Kilwins Chocolates outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

• Section IV – Background information on the Kilwins Chocolates franchise opportunity, including relevant news updates

• Section V – Presentation and analysis of Kilwins Chocolates’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2021 average and median Gross Sales for the 134 franchised Kilwins Stores that were in operation during the entire period of January 1, 2021 through December 31, 2021 and that reported Gross Sales to the franchisor

• 2020 average Cost of Sales and Non-Owner Payroll Costs for the 121 franchised Kilwins Stores from whom the franchisor was able to obtain applicable information

• 2021 average Transaction Value for the 132 franchised Kilwins Stores that were in operation during the year January 1, 2021 to December 31, 2021 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 2021)

• Section VI – Key ratios, comparables, computations, and analyses for the Kilwins Chocolates franchise opportunity (exclusive content for Platinum subscribers)

Section I – Kilwins Chocolates Franchise Costs

• Kilwins Chocolates franchise costs, based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee:  $30,000 to $40,000
• Lease/Rent:  $2,083 to $13,412
• Plans and Construction (includes architectural and building permits):  $197,994 to $338,493
• Store Construction Oversight and Review Fee:  $5,000
• Equipment:  $83,593 to $158,662
• POS:  $12,135 to $15,701
• Inventory:  $23,787 to $40,292
• Signs and Awnings:  $6,588 to $21,193
• Advertising:  $5,000
• Insurance:  $1,669 to $20,265
• Training Expenses:  $1,875 to $7,400
• Business Licenses:  $111 to $750
• Professional Fees:  $756 to $7,290
• Additional Funds (3 months):  $20,000 to $77,915
• Security Deposits:  $210 to $4,517
• Total:  $390,801 to $755,890

Section II – Kilwins Chocolates’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Kilwins Chocolates’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $30,000 to $40,000
• Royalty:  5% of Gross Sales
• National Marketing Fund:  1% of Gross Sales
• Regional Fund:  1% of Gross Sales
• Local Marketing Expenditure:  2% of Gross Sales

Section III – Number of Franchised and Company-Owned Kilwins Chocolates Outlets

Franchised

2019

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

2020

• Outlets at the Start of the Year:  133
• Outlets at the End of the Year:  137
• Net Change:  +4

2021

• Outlets at the Start of the Year:  137
• Outlets at the End of the Year:  146
• Net Change:  +9

Company-Owned

2019

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

2020

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

2021

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  4
• Net Change:  +1

Section IV – Background Information on the Kilwins Chocolates Franchise

17 Things You Need to Know About the Kilwins Chocolates Franchise

New Location Opens in Neighborhood That Lost Longtime Ice Cream Parlor

1.  In late March 2022, Jackie Jackson, a Kilwins franchisee in Chicago, said that she was opening another location in Andersonville, filling a need in the neighborhood following the closure of its longtime dessert parlor. Jackson’s new location is set to open by the end of summer or early fall of this year.

2.  Jackson, who owns Kilwins locations in her native Hyde Park, Navy Pier, and Michigan Avenue, decided to look into opening in Andersonville after it was named the second-coolest neighborhood in the world. But when Jackson visited Andersonville, she ran into George’s, a beloved ice cream shop owned by a family with long ties to the neighborhood. Jackson liked George’s product and decided the neighborhood wasn’t big enough for two ice cream shops. However, not long after, Jackson heard that George’s was set to close and decided to open a Kilwins in the neighborhood.

3.  Jackson has been in contact with George’s owners and staff and has offered its employees work at Kilwins. The store will employ about 16 people. She said, “We want this to be totally community-focused. We offered them work at Navy Pier and Michigan Avenue [Kilwins locations], so they have experience when we’re ready to open.”

4.  In expanding to Andersonville, Jackson said her team looked at the George’s space but found it too big. They settled on the former Transistor’s space a few blocks south, though the spot needs upgrades. On top of bringing in food preparation equipment, Jackson is planning an overhaul of the building’s plumbing and heating and cooling systems. She has applied for a Chicago Recovery Grant to help the buildout, which could cost upwards of $700,000.

5.  After opening a shop in Old Town in 2013, Jackson convinced Kilwins to allow her to open in her neighborhood of Hyde Park. The company prefers locations in tourist destinations, and Jackson fought hard to get it to sign off on a South Side location, she said. She later opened locations in Navy Pier and Michigan Avenue and now owns the Kilwins in suburban Geneva.

6.  Jackson added, “We have found that communities that are quaint really support local business. Hyde Park has been so supportive of us. We feel we’ll get the same support from Andersonville.”

Franchisee Donates a Portion of Sales to Ukraine Aid

7.  In early March 2022, Kilwins Chocolates, Fudge & Ice Cream in downtown Franklin, Tennessee announced that it was donating a portion of its sales from Saturday, March 6 to Hope House International’s Family Emergency Fund. Kilwins Franklin is owned by Landon and Ashley Clark, who own and operate five Kilwins stores.

8.  This idea came about from Kilwins Franklin general manager Melissa Wooten, who has a heart for Hope House International and Ukraine. Melissa and her husband, Tommy, have three adopted daughters from Ukraine and have been on several mission trips to Ukraine with Hope House.

9.  Twenty percent of sales from the five Kilwins stores owned by the Clarks will be donated to Hope House International’s Family Emergency Fund. In addition to Franklin, the Kilwins stores are located in Brevard, N.C., Highlands, N.C., Hendersonville, N.C., and Greenville, S.C.

10.  Hope House International serves orphans by assisting Christian families in Eastern Europe with adequate housing required to adopt orphans and raise them in their own country.

Making Ice Cream From Scratch

11.  Since 1985, Kilwins has been making Kilwins Original Recipe Ice Cream. The ice cream is “super premium,” with a creamy consistency and a delicious, rich texture. Kilwins perfected its ice cream recipe by making small batches. Today, Kilwins continues to use its original recipe as well as fresh milk and cream from family farms. Like many of its proprietary Kilwins products, the ice cream is Kosher-certified.

12.  Select ingredients are combined with Kilwins’ premium base, then inclusions like fudge, caramel, nuts, chocolate chips, and other quality confections are added, creating the best ice cream available, and it’s only sold in Kilwins stores. The ice cream is expertly frozen into specially designed tubs that protect the superior Kilwins quality. The ice cream is shipped only on Kilwins’ own temperature-controlled trucks, ensuring that optimum quality is maintained at all times.

13.  There are dozens of flavors, including Mackinac Island Fudge, Marsh-Mallow S’more, Pumpkin Pie, Superman, Turtle Cheesecake, and Georgia Peach. Kilwins stores also make waffle cones, hot fudge, and caramel toppings from scratch.

Company History

14.  Kilwins was founded in 1947 as Kilwin’s Candies and Gifts by Don and Katy Kilwin in Petoskey, Michigan. The company was initially a bakery and candy shop. Fudge was added in 1948. After a few decades, the Kilwins sold off the bakery portion of the business and decided to focus solely on making chocolate and confections. The menu expanded and caramel, caramel corn, peanut brittle, caramel apples, and ice cream were added.

15.  In 1978, the Kilwins decided to retire and they sold the company to Wayne and Lorene Rose. The Roses opened additional stores in Harbor Springs, Mackinac Island, and Traverse City. Growth continued under the Roses’ leadership and franchising started in 1982 with the first franchised store opening the following year.

16.  Kilwins continued to grow over the next decade and in 1995, the Roses sold the business to Don and Robin McCarty, who had joined the company as managers in 1979. Don McCarty continues to serve as Kilwins’ CEO. Today, there are Kilwins locations across the United States.

Entrepreneur’s Franchise 500

17.  Kilwins Chocolates ranked No. 84 on Entrepreneur’s 2022 Franchise 500 list.

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Kilwins Chocolates Franchise (Item 19, 2022 FDD)

• Presented below are historical financial operating results for certain franchised Kilwins Stores.

• 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 (2021)

• Gross Sales figures include revenues reported for calendar year 2021 from the sale of goods to retail customers, including the full range of required products.

• This section represents the results from 134 franchised Kilwins Stores, and no company-owned Stores.

• These Stores represent all Stores that were in operation during the entire period of January 1, 2021 through December 31, 2021 and that reported Gross Sales to the franchisor, including 10 Stores that are seasonally operated and were not open for the entire 12-month period.

• The franchisor excluded from the results 12 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 (134 Stores)

• Average Per Store:  $830,553
• Median Per Store:  $725,276
• Number of Stores Above Average:  48
• Percent of Stores Above Average:  36%

Colorado (4 Stores)

• Average Per Store:  $675,066
• Median Per Store:  $689,267
• Number of Stores Above Average:  3
• Percent of Stores Above Average:  75%

Florida (32 Stores)

• Average Per Store:  $1,093,703
• Median Per Store:  $997,478
• Number of Stores Above Average:  15
• Percent of Stores Above Average:  47%

Georgia (5 Stores)

• Average Per Store:  $920,859
• Median Per Store:  $970,454
• Number of Stores Above Average:  3
• Percent of Stores Above Average:  60%

Illinois (10 Stores)

• Average Per Store:  $523,137
• Median Per Store:  $528,220
• Number of Stores Above Average:  5
• Percent of Stores Above Average:  50%

Michigan (21 Stores)

• Average Per Store:  $548,663
• Median Per Store:  $525,586
• Number of Stores Above Average:  9
• Percent of Stores Above Average:  43%

New Jersey (4 Stores)

• Average Per Store:  $403,070
• Median Per Store:  $345,763
• Number of Stores Above Average:  1
• Percent of Stores Above Average:  25%

New York (5 Stores)

• Average Per Store:  $663,992
• Median Per Store:  $556,133
• Number of Stores Above Average:  2
• Percent of Stores Above Average:  40%

North Carolina (12 Stores)

• Average Per Store:  $887,274
• Median Per Store:  $728,141
• Number of Stores Above Average:  4
• Percent of Stores Above Average:  33%

South Carolina (6 Stores)

• Average Per Store:  $854,837
• Median Per Store:  $861,167
• Number of Stores Above Average:  3
• Percent of Stores Above Average:  50%

Tennessee (3 Stores)

• Average Per Store:  $1,320,167
• Median Per Store:  $1,372,344
• Number of Stores Above Average:  2
• Percent of Stores Above Average:  67%

Texas (5 Stores)

• Average Per Store:  $726,081
• Median Per Store:  $665,040
• Number of Stores Above Average:  2
• Percent of Stores Above Average:  40%

Virginia (5 Stores)

• Average Per Store:  $730,032
• Median Per Store:  $636,742
• Number of Stores Above Average:  2
• Percent of Stores Above Average:  40%

Wisconsin (4 Stores)

• Average Per Store:  $858,214
• Median Per Store:  $542,136
• Number of Stores Above Average:  1
• Percent of Stores Above Average:  25%

Gross Sales – Non-Seasonal Stores with Full Cooking Capacity (2021)

All States (122 Stores)

• Average Per Store:  $866,741
• Median Per Store:  $653,637
• Number of Stores Above Average:  47
• Percent of Stores Above Average:  39%

Michigan (12 Stores)

• Average Per Store:  $608,536
• Median Per Store:  $549,558
• Number of Stores Above Average:  3
• Percent of Stores Above Average:  25%

• Out of the 134 individual Kilwins Stores included in Item 19, the Store with the highest Gross Sales did $2,453,310, and the Store with the lowest Gross Sales did $57,596.

Cost of Sales (2020)

• Cost of Sales includes the cost of purchased and manufactured product that is sold in the Store, computed as a percentage of Gross Sales.

• These figures are for Stores open during 2020, the most recent period for which figures have been reported.

• The information included in these figures was accumulated from internally generated Store financial statements and tax returns provided to the franchisor by 121 franchised Stores from whom the franchisor was able to obtain applicable information.

• These financial statements and tax returns have not been audited and the franchisor relies on the representations of the Store owners for their accuracy.

• The franchisor believes that the results below are a reasonable representation of the entire population of Stores, however, expense classification differences between Stores can have a material impact on the actual results reported, and, as a result, expense percentages actually achieved will vary from those reported below.

• Cost of Sales figures will vary significantly from Store to Store and you need to prepare your own estimates of the Cost of Sales you expect to achieve in your Store.

• Some of the items impacting Cost of Sales, many of which will have a material impact on actual Cost of Sales percentages, include: actual product sales mix; the cost of commodities, including chocolate, sugar, milk, and other materials over which you will have little control; the availability of local supply for products not supplied by Kilwins; the amount of product manufactured in the Store and the efficiency with which it is made; control over serving sizes by your employees; and customer pricing sensitivity in your market.

All States (121 Stores)

• Average Per Store:  30%
• Median Per Store:  28%
• Number of Stores Above Average:  61
• Percent of Stores Above Average:  50%

Non-Owner Payroll (2020)

• Non-Owner Payroll includes direct wages paid to employees, excluding any compensation paid to Store owners, computed as a percentage of Gross Sales.

• Payroll expenses used in this computation do not include any taxes or benefits incurred by the Store.

• These figures are for Stores open during 2020, the most recent period for which figures have been reported.

• The information included in these figures was accumulated from internally generated Store financial statements and tax returns provided to the franchisor by 121 franchised Stores from whom the franchisor was able to obtain applicable information.

• These financial statements and tax returns have not been audited and the franchisor relies on the representations of the Store owners for their accuracy.

• The franchisor believes that the results below are a reasonable representation of the entire population of Stores, however, expense classification differences between Stores can have a material impact on the actual results reported, and, as a result, expense percentages actually achieved will vary from those reported below.

• Payroll figures vary significantly from Store to Store and you need to prepare your own estimates of Payroll for your Store. Some of the items impacting actual Payroll, many of which will have a material impact on actual Payroll Cost percentages, include: the amount of time an owner works in the Store, the compensation of manager(s) employed, any applicable minimum wage requirements, the level of benefits other than wages provided to employees, local labor market competition, the mix of full-time and part-time employees, and the Store’s sales volume.

All States (121 Stores)

• Average Per Store:  24%
• Median Per Store:  22%
• Number of Stores Above Average:  44
• Percent of Stores Above Average:  36%

Transaction Value (2021)

• Transaction Value amounts are for single customer transactions in Stores reported for calendar year 2021 from the sale of goods to retail customers, including the full range of required products.

• This section represents results from 132 franchised Kilwins Stores, and no company-owned Stores.

• These Stores represent all franchised Stores that were in operation during the year January 1, 2021 to December 31, 2021 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 2021).

• The franchisor excluded from the results two franchised Stores that did not report complete information to it, and four Stores that closed.

All States (132 Stores)

• Average Per Store:  $15.39
• Median Per Store:  $15.31
• Number of Stores Above Average:  64
• Percent of Stores Above Average:  49%

Other Expenses

• Gross Sales, Cost of Sales, Payroll, and Transaction Value figures provide only a part of the information that you will need to evaluate the franchise opportunity.

• Franchisees will incur business expenses that are likely to be significant, and those expenses will vary considerably from one franchisee to the next.

• As a franchisee, you will be required to pay royalty fees and make local advertising expenditures, as well as to make contributions to the National Marketing Fund and Regional Fund (if a Regional Fund is formed for your market).

• Among the additional categories of expense that you may incur are:

• rent and occupancy costs;
• franchisee compensation over and above that earned from the operations of the Store business (such as a salary that you may draw);
• employee benefits, such as health, vacation, and pension plan contributions (none of which are included in the payroll numbers presented);
• debt service;
• insurance;
• Store facilities and property maintenance (and reserves for future maintenance);
• business and regulatory fees and licenses;
• ongoing and supplemental training expenses;
• recruitment expenses;
• legal and accounting fees; and
• bookkeeping and other professional services.

Section VI – Kilwins Chocolates Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️