'Tis The Season
A part-time business racks up full-time profits for Carl Wiederaenders of Des Moines, Iowa, who operates his Calendar Club stores from mid-September to mid-February each year. With 1997 revenues of more than $2.4 million, Wiederaenders has already marked his calendar for this year's holiday season.
As a temporary mall tenant, Wiederaenders is part of a growing trend: entrepreneurs who capitalize on increased consumer traffic during the winter holidays, October through December. "[The best time to] be in retail is when people are shopping," Wiederaenders says. "And during the holidays, there are more people shopping than at any other time of the year."
Such specialty leasing, also called seasonal selling, started during the mid-1980s as a way for malls to fill empty storefronts and corridors with temporary carts, stores and kiosks. "It's an inexpensive way to build a store for yourself and put it in the busiest part of a mall, where thousands of people walk by every day," says Tom Vitacco, national sales director for retail licensing at Fannie May Candies.
Franchise and business opportunity companies such as Fannie May and Calendar Club provide entrepreneurs with a ready-made means of entry into temporary businesses as franchisees or licensees--and often make start-up easy by negotiating leases, providing merchandise or designing business plans.
Entrepreneurs who buy the Calendar Club business opportunity, for instance, use the company's name, operating system, procedures, displays and products. Special cash registers not only ring up sales, calculate sales tax and run daily register reports, but also dial into the distribution center at day's end so Calendar Club can replenish your inventory and automatically deduct its share from your bank account, leaving behind your 16 percent.
Calendar Club, founded in 1993, even provides its 90 operators with an assortment of calendars targeted to individual regions' demographics. For instance, a Calendar Club near a ski resort would stock more ski calendars than an urban location would.
Wiederaenders, who runs a home renovation business the rest of the year, joined Calendar Club in 1993 after managing a friend's store for a season. He opened five stores the following year, for a fee of $2,500 each. His revenues from mid-November to the first week of January that year surpassed $400,000. Last year, he oversaw 26 stores in the Midwest. He travels from location to location during the week and hires managers to help run his stores.
Sandra Mardenfeld, a freelance writer in New York City, has written for The New York Times Book Review and Working Woman.
With a seasonal business, you can capitalize on the selling season and run several stores, as Wiederanenders does, or just one or two. Whichever option you choose, a key to success is choosing a product you personally like.
Mike Spehn grew up in Chicago, where Fannie May Candies were a part of life. So when he decided to invest in a business opportunity, signing on as a Fannie May licensee was a natural decision. "I still have family and friends in Chicago, and going back to Chicago always means picking up some Fannie May Candies to bring home," explains the Lake Forest, California, entrepreneur.
So in the summer of 1997, Spehn invested $60,000 to open two Fannie May kiosks for the holidays. (Each distributorship costs $30,000 and includes a custom kiosk, signage, a cash register, a week-long training program, initial inventory and an exclusive territory.) Fannie May's holiday season starts before Thanksgiving and ends just after Easter. At press time, Spehn was in the middle of his selling season. He plans to add between two and five kiosks next year.
Of course, sweet success doesn't come without effort. Spehn, who also manages a children's retail store, works double shifts and relies on some 12 employees to keep his kiosks running. "Even when I go home, I spend a couple more hours on the computer [working out] systems, the budget, etc.," he says.
Founded in 1920, Fannie May began licensing temporary retail kiosks last year, with 25 kiosks in shopping centers in 10 states. The company started its kiosk program to capitalize on the shops' best season; the 340 company-owned stores do most of their business around Christmas, Valentine's Day and Easter. Within five to seven years, Fannie May hopes to have 400-plus kiosks nationwide.
Sites For Sore Eyes
Location is an important factor in a seasonal business' success. Some companies find locations for their seasonal licensees or franchisees; others require you to secure your own spot. Before buying such an opportunity, make sure the company offers a full refund if you can't find a suitable site.
If you're seeking a location on your own, be aware that rental policies vary from mall to mall. Call malls in your area and ask for a specialty temporary leasing application. In many cases, you'll be asked to submit a picture or sketch of the proposed unit. If you're a brand-new tenant, the mall may also request a business plan, references, a catalog or samples of your product.
Rental costs--which depend on the size of the property, the amount of traffic the mall gets and the time of year--range from $800 per month and up from January through October. Rent for the entire holiday season (November and December) can range from $8,000 to $20,000.
Cost isn't the only consideration when choosing a location. Research several malls, paying attention to the average sales per square foot, occupancy rates, foot-traffic count and the number of parking spaces.
Remember, malls seek the right product mix, so look for a location where your product will be a good fit. "I might have 50 people send me applications for gold jewelry [kiosks], but we already have many gold jewelry stores in the mall. We don't want [temporary tenants] to be in direct competition with our permanent tenants," says Deborah Georgetti-Piro, director of specialty temporary leasing for Corporate Property Investors, a New York City company that owns and manages 17 mall properties nationwide.
Once you've found a mall that fits your needs, don't delay. Properties with good markets book fast, and malls give returning clients consideration over newcomers. To guarantee a spot, apply for your space at the beginning of the year.
What's In Store?
Maintaining adequate inventory can be tricky for seasonal entrepreneurs. Your selling period is short, and you need enough stock on hand to fill orders--but not so much that items go unsold. Before buying a franchise or business opportunity, ask what kind of assistance the company provides in selecting inventory, and make sure orders can be filled rapidly.
"Anytime you're in retail, [inventory] is a guess," says Steven Fink, who has operated a seasonal Swiss Colony storefront, selling gift packages of sweets, cheese and beef, since 1993. "It's an educated guess, but it's a guess." The Spring Valley, California, entrepreneur bases his initial shipping order on his previous season's sales. His third year in business, though, sales boomed--and in a last-minute air-freight shipment, Fink ordered a few hundred more gift packages than he needed. He kept his stores open past Christmas to sell them off and donated the remainder to charity.
With sales increasing 15 percent each year (he sold more than 1,500 gift packs last season), Fink is already planning his 1998 locations. He initially discovered Swiss Colony's seasonal opportunity through a newspaper ad. He liked the product, and the company's November/December selling season corresponded with the slow season of the three furniture stores he owns. Last year, Fink, his wife, Myrna, and eight employees ran two stores.
Monroe, Wisconsin-based Swiss Colony opened its first retail outlet in 1962, and its first seasonal franchise opened in 1986. "Rents in regional malls got so high, we knew we couldn't continue on a year-round basis," explains Donna Bartley, the company's national franchise manager. Because 75 percent of its sales occur in November and December, Swiss Colony began focusing on seasonal opportunities. Today, 32 seasonal franchisees sell the company's products from 100 kiosks and storefronts.
Swiss Colony's franchise fee is $500 per location per year. Franchisees must also have working capital equivalent to 60 percent of the store's projected sales. (For example, $60,000 in projected sales would require $36,000 in working capital.) Before franchisees sign on, Swiss Colony finds locations for them and puts together a financial game plan. It also helps with lease negotiations, design and layout, inventory selection, labor scheduling and training. Franchisees' gross sales range from $15,000 to $160,000 per store per season, depending on location and size of the store.
If you're looking for a way to test the waters of entrepreneurship, a seasonal franchise or business opportunity could be just what you're looking for. With opportunities as varied as the customers hurrying through a busy mall, there's sure to be one that fits your needs.
Next month, we'll tell you how to start your own independent kiosk or cart business.
The seasonal decorations in Tim Hayden's Country Clutter franchise, a country-themed retail store in Hillsboro, Texas, made such an impression that customers mistook it for a Christmas store.
Apparently, someone at headquarters liked Hayden's idea. In 1996, Vacaville, California-based parent company Country Visions Inc. introduced a seasonal-store program called Christmas Clutter.
"[Christmas Clutter] gives people options and creates a more festive, holiday atmosphere in the mall," says Ken Petersen, CEO of Country Visions. "That helps get customers in the mood to shop. Kiosks and temporary stores are the latest retail trend--and a great way to add `buzz' to a mall."
Hayden, who opened a Christmas Clutter companion store in 1997, used the seasonal store to entice new customers to his year-round shop. He offered a gift with each purchase of $25 or more at Christmas Clutter. The catch? Customers had to pick the gift up at his Country Clutter store, on the other side of the mall. Hayden says his extra three months' work, along with an estimated $40,000 investment, earned revenues of more than $175,000.
While the Christmas Clutter opportunity is open only to existing Country Clutter franchisees, Country Visions has also developed a new seasonal franchise program for the general public. Called Santa's Clauset, the shops, which will be open from October or November through the first week of January, have a $2,000 franchise fee and a minimum $34,600 liquid cash requirement. Franchisees are supplied with inventory and a fixture package. Some 50 Santa's Clauset stores are expected to open this year.
For more information about the companies in this article, call:
- Calendar Club: (888) 422-5637
- Country Visions Inc.: (888) 599-9685
- Fannie May Candies: (312) 432-3471
- Swiss Colony: (800) 356-8119
- For more information on temporary tenancy businesses, attend The International Council of Shopping Centers' yearly Temporary Tenant Short-Term Specialty Retailing Conference. For details, visit http://www.icsc.org or call (212) 421-8181 and ask for Member Services.
- To research shopping malls, consult retail-industry trade magazines and shopping-center directories, such as the Directory of Major Malls (Directory of Major Malls Inc., $449, 800-898-6255).
Calendar Club, email@example.com
Corporate Property Investors, 305 E. 47th St., New York, NY 10017
Country Visions Inc., http://www.santasclauset.com
Fannie May Candies, (714) 951-0444, http://www.fanniemaycandies.com
Swiss Colony, fax: (608) 328-8438