Building America's Future

Customer service, reasonable prices, and a tight focus are helping franchise firms grow and profit in a flat economy.

Running a business during a recession requires a special breed of entrepreneur � one who can adapt to a changing market, find creative solutions to problems, take risks cautiously, and demonstrate the courage to move forward.

Long-term economic pressures � such as those that this country has weathered for the past 18 months � can spell disaster for even the most tenacious business owners.

Nonetheless, amid the endless stories of corporate downsizing and business bankruptcies, many franchised businesses are thriving and growing. "Franchising is one bright spot in a lagging economy," says Gregg Reynolds, chairman of the International Franchise Association in Washington, D.C. "Last year, more than 18,500 new businesses were created, adding approximately 108,000 new jobs to the economy.

It is no surprise that franchising continues to ride out the economic turmoil that has caused many less-resilient types of businesses to fail. Traditionally, franchising's success over the past 30 years has been tied to its ability to identify and respond to rapid consumer and market changes, no matter how subtle or small.

While some franchisors' sales-growth strategies are aimed at the consumer's concern for saving money, a Silver Spring, Md., franchise has been growing steadily by targeting the consumer's sweet tooth. Candy Express is a candy franchise that offers an inexpensive luxury.

"In recessionary times, when we can't afford to but expensive things, candy is something that makes us feel better but doesn't cost a lot," says Joel Rosenberg, president of Candy Express. "Candy is one of the most stable industries," he says.

Unlike franchises that rely on customers' considered decisions to make a purchase, Candy Express is "an impulse business," says Rosenberg. "We thrive on the walk-in traffic," which is why all the company's franchises are in shopping malls. "Shopping malls are the new 'Main Street' of America," says Rosenberg.

Candy Express' 31 franchises nation-wide sell European gourmet chocolates, sugar-free candy, 35 different flavors of licorice, 40 varieties of "gummy" candies, and 60 varieties of jelly beans. The hottest item? "Tear-jerker gum," says Rosenberg. Kids love it, he says. "It's so sour their faces contort and they actually start crying." Lorrie and Tom Krawczyk sold 500 pounds of tear-jerker gum each week during the Christmas shopping season at their Candy Express franchise in Waterford, Mich.

Candy Express franchisees Lorrie and Tom Krawczyk treat customers royally and taste sweet success. In spite of the recession, says Lorrie, "business is wonderful." On a typical Saturday, she says, more than 800 people will make a purchase at the Krawczyks' store, and "during Christmas, we once had over 1,300 customers on one Saturday." Since the average sale is $3.50, the key to profitability is high volume. "Location is the single most important element in our business," says Rosenberg, "because we depend so heavily on walk-in traffic." The Krawczyks, opened their franchise in September 1991 and had fourth-quarter gross sales of $180,000.

For the Krawczyks, customer service is most important. "Every customer is greeted upon entering the store," says Lorrie, "and we treat everybody-including little kids-like kings." Rosenberg says the franchise's training program helps the franchisee learn the benefits of good customer relations.

"Our store will draw in the customer," says Lorrie, "but it's our service that will get them to come back." Start-up costs for a Candy Express run just under $200,000. The franchisor helps with site selection and lease negotiation.

The business is so location-sensitive, Rosenberg says, that "it is essential to help the franchisee with that area."

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