Candy Express Bypasses Recession's Station

Clothing to Candy The Rosenbergs brothers, Joel, David, and Michael, owned and managed a chain of clothing stores in suburban Washington, D.C. for 20 years before changing paths in 1988 to candy retailing.

After devoting so much time to the clothing business, they were looking to develop a chain that sold products more immune to the cyclical trends and constant mark-downs that buffet the garment industry. "Candy is a replacement business by and large, and it has high margins." Says David Rosenberg, Candy Express CEO. "It cures all the ills that were in the clothing business. It's more recession proof." While scouting for a store location to sell European-style clothing, the Rosenberg's discovered a different kind of retailer was attracting the most customers in their chosen mall. It was a candy store. When they found out the confectionery store had the highest sales of any location in the mall, they knew they were on to something.

A Franchising Concept The brothers began planning their franchising concept, talking to distributors and developing the detailed merchandising that sets Candy Express apart from its competitors. They spent four or five months and thousands of illustrations perfecting their official store greeter, the Candy Boy.

Duties fell into place, with each brother handling what he knew best: David, CEO, merchandising, product development, store plan layouts and advertising; Joel, president, real estate, site selection and cosmetic store design, and screening prospective franchisees; Michael, vice president, store operations, franchising support and training.

Brother-in-law Dennis Sober is in charge of franchisee support. He is the son of Harold Sober, chairman of the Candy Express advisory board, and formerly vice president of F A Davis & Sons, a distributor based in Baltimore, MD.

Special Touches Brightly colored candies stand out against Candy Express' white walls, floor and fixtures. The Candy Boy waves to potential customers outside the store, and inside a candy clock bears the logo "Anytime is Candy Time." Refrigerated chocolates and a few, mostly upscale, count goods enjoy a spotlight near the cash register. Boxes of gourmet chocolates are also sold. Each store sells a selection of gumball machines, gift bags, boxes, and mugs, and store employees pack color-coordinated gifts for customers The stores average about 1,300 square feet, and display 6,000 pounds of candy in clear, plexi-glass bins and refrigerated glass cases. Candy is divided into price categories, most selling for $2.49 to $3.49 per half pound. Gourmet chocolates, nuts and refrigerated chocolates cost more. Within a price category, customers can mix and match their candy.

"The abundance of candy is really key to the irresistible aspect of Candy Express," says David Rosenberg.

It costs Candy Express about $180,000 to open a new store, a figure that includes the $25,000 franchise fee, $20,000 for inventory and $80,000 for construction, fixtures and bins.

Franchisees pay the corporation 6 percent of gross sales, plus 1 percent of gross sales for advertising and promotions planned through the corporate office.

Planned to Perfection The corporate office gives franchisees a "menu" or grid showing where bins should be placed in the store and what should be displayed in each bin, according to an overall floor plan designed especially for each store.

Franchisees can choose their own distributor but must buy the products specified by the Candy Express corporation.

Special promotions are planned each month for the stores-for example, Easter candy during March or salt water taffy during June.

Videos Ensure Uniformity To ensure uniformity and compliance with the company image, the main office sends out a video tape of how a promotion should look. Franchisees try to duplicate the look and then send back a video of their store.

A lot of selling space in each Candy express store is devoted to jelly beans, gummy candies, and low-calorie and sugarless confections. Sour Patch Kids are the hottest selling product for the stores right now, says David Rosenberg. He estimates 20 percent of their business is generated from low-calorie, sugar-free candy sales, which are especially strong in January when people try to lose those extra holiday pounds, he says.

Though he won't be specific, Rosenberg says Candy Express profit margins are "one of the highest in the candy business," adding that their profits top the 20 to 40 percent margins grocery stores and drug stores, their primary competitors, command.

Ideal Franchisee New owners get three weeks of training. One week is spent in staff headquarters, one week in an established store and one week in their new store. The operations manual is 541 pages. Successful managers from other stores and corporate employees help new owners during opening week.

"One of the key elements of our success is the thoroughness of the franchisee training," says Michael Rosenberg. "All the experience and expertise we garnered from our own retail stores, we've been able to transfer to our franchisees He also cites the corporate office's frequent checks on the stores and their direct involvement in merchandising as company strengths.

Joel Rosenberg says his ideal franchisees are a husband and wife team who have experience owning and managing a retail business. Other "family" combinations-a father and son, for instance-are also good. Rosenberg says he has found relatives make an especially promising team if one is skilled in bookkeeping and inventory management while the other is accomplished in customer relations, gift basket creation, and sales.

It's also ideal for an owner-manager to live nearby, but that's not a requirement. Candy Express does sell franchises to investor groups.

Candy Express has been featured on FNN, the Financial News Network, and in Entrepreneur magazine, for its franchising opportunities.

Rosenberg spends most of his day on the telephone, since the company gets 10 to 15 calls a day from potential franchisees.

A Sweet Future The Rosenberg brothers are bringing in new franchisees, keeping track of the hottest candies on the market, and coming up with new ways to sell even more candy.

"The fun atmosphere translates into sales," says Rosenberg. "It's a win-win situation for the franchisees, for us, and for the consumer.

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