This cookie didn’t crumble

Cookies by Design is no longer in Carytown — but fear not, sweet-toothed readers. Owner Alisha Thompson is launching a venture in the same location called America’s Sweet Shop.

Thompson decided not to renew her five-year franchise agreement with Plano, Texas-based Cookies by Design after the company made changes to its operation that took away more than half of her sales.

For five years, Thompson operated her Richmond franchise serving local customers. The company’s signature product is a line of decorated cookies served on sticks and sometimes arranged in bouquets.

About 50 to 60 percent of Thompson’s sales were coming from orders through the Cookies by Design website. Franchisees pay a $30,000 franchising fee for the right to operate within a protected territory based on Zip code. Online orders were filled by the nearest franchisee, which meant Thompson’s store was shipping cookies to customers throughout the entire state, except for the Virginia Beach vicinity, where there is another franchise.

But that all changed in June, when the parent company opened a central kitchen in Texas to process online orders.

“I started getting phone calls from upset customers,” said Thompson.

The parent company was shipping orders from Texas to Thompson’s customers in Glen Allen and Mechanicsville. Before the change, Thompson was delivering them herself; now they were arriving in a cardboard box.

“I went from 15 to 20 orders a week to just sending one or two. All of our online business was going to Texas,” said Thompson.

But lucky for her, all of this happened at the end of her franchise agreement. She said many of her counterparts across the country have years left to fulfill their agreements, and some are talking to franchise lawyers about their options. She said many have built up their franchise with hopes to sell, only to find now they can’t sell them because there are no online sales anymore.

“There was a legal battle as well as a moral battle forming that I didn’t want to be a part of,” said Thompson. “I want a happy business.”

So, she said, she had two choices. The first was to throw in the towel, close the shop and get a job to start paying off the rest of the loans against the business.  She didn’t say how much debt the business carried, but according to the Cookies by Design website the typical investment is between $111,500 and $187,500.

Or she could start a new venture in the same location, with the same equipment and the same staff.

“From when I was old enough to reach the kitchen counter, my mother and I baked chocolates and cookies,” said Thompson. “It’s always been a passion.”

Over the past year, Thompson heard corporate clients ask for two things: more variety — they could only give cookie bouquets so many times — and lower pricing, because their gift budgets were getting cut.

So she decided to take her passion and feedback from customers and come up with America’s Sweet Shop.

The new store, which opens Jan. 18, will offer a variety of candies, chocolates and baked goods.

She will continue to take orders and wants to keep shipping to her customers across the state and possibly beyond. Thompson also plans to bake and sell dog treats to cater to the dog-walking populous in Carytown.

But no cookies on sticks.

“I respect the [Cookies by Design] brand and have been careful not to break the non-compete agreement,” said Thompson. “But I can still make a mean chocolate chip cookie.”

Al Harris is a BizSense reporter. Please send news tips to [email protected]

Cookies by Design is no longer in Carytown — but fear not, sweet-toothed readers. Owner Alisha Thompson is launching a venture in the same location called America’s Sweet Shop.

Thompson decided not to renew her five-year franchise agreement with Plano, Texas-based Cookies by Design after the company made changes to its operation that took away more than half of her sales.

For five years, Thompson operated her Richmond franchise serving local customers. The company’s signature product is a line of decorated cookies served on sticks and sometimes arranged in bouquets.

About 50 to 60 percent of Thompson’s sales were coming from orders through the Cookies by Design website. Franchisees pay a $30,000 franchising fee for the right to operate within a protected territory based on Zip code. Online orders were filled by the nearest franchisee, which meant Thompson’s store was shipping cookies to customers throughout the entire state, except for the Virginia Beach vicinity, where there is another franchise.

But that all changed in June, when the parent company opened a central kitchen in Texas to process online orders.

“I started getting phone calls from upset customers,” said Thompson.

The parent company was shipping orders from Texas to Thompson’s customers in Glen Allen and Mechanicsville. Before the change, Thompson was delivering them herself; now they were arriving in a cardboard box.

“I went from 15 to 20 orders a week to just sending one or two. All of our online business was going to Texas,” said Thompson.

But lucky for her, all of this happened at the end of her franchise agreement. She said many of her counterparts across the country have years left to fulfill their agreements, and some are talking to franchise lawyers about their options. She said many have built up their franchise with hopes to sell, only to find now they can’t sell them because there are no online sales anymore.

“There was a legal battle as well as a moral battle forming that I didn’t want to be a part of,” said Thompson. “I want a happy business.”

So, she said, she had two choices. The first was to throw in the towel, close the shop and get a job to start paying off the rest of the loans against the business.  She didn’t say how much debt the business carried, but according to the Cookies by Design website the typical investment is between $111,500 and $187,500.

Or she could start a new venture in the same location, with the same equipment and the same staff.

“From when I was old enough to reach the kitchen counter, my mother and I baked chocolates and cookies,” said Thompson. “It’s always been a passion.”

Over the past year, Thompson heard corporate clients ask for two things: more variety — they could only give cookie bouquets so many times — and lower pricing, because their gift budgets were getting cut.

So she decided to take her passion and feedback from customers and come up with America’s Sweet Shop.

The new store, which opens Jan. 18, will offer a variety of candies, chocolates and baked goods.

She will continue to take orders and wants to keep shipping to her customers across the state and possibly beyond. Thompson also plans to bake and sell dog treats to cater to the dog-walking populous in Carytown.

But no cookies on sticks.

“I respect the [Cookies by Design] brand and have been careful not to break the non-compete agreement,” said Thompson. “But I can still make a mean chocolate chip cookie.”

Al Harris is a BizSense reporter. Please send news tips to [email protected]

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Scott Dickens
Scott Dickens
12 years ago

Fantastic story on a local merchant who’s not afraid to reinvent herself to continue doing the amazing job that she does. We’ve used her services for years for client gifts, with fantastic results/feedback. Congrats on the “new” venture! You’ll have my business as long as
you’re around providing exemplary product and world-class service.

Now if her spirit of business innovation were just contageous. 🙂

Scott Dickens
Rocket Pop Media

Eric Perkins
Eric Perkins
12 years ago

Great article that sheds useful info on potential perils that await unsuspecting franchisees. Most franchise agreements give the franchisor broad discretion and flexibility to develop alternative sales and distribution channels that effectively allow them to compete with their own franchisees. Internet-based sales is a great example. While some franchise systems develop a formula so both franchisor-franchisee share in the proceeds generated from such sales, others do not. The key for would-be franchisees is to carefully review and understand your franchise agreement before you sign, and to not be afraid to negotiate as best you can. Under the Virginia Retail Franchising… Read more »

Linda Heath, Financial Holographix
Linda Heath, Financial Holographix
12 years ago

Insightful article. I applaud Alisha for taking the high road by respecting her non-compete. This principle will serve her and her business well. I also agree with Eric. Buying a franchise is not an automatic guaranty of business success. Franchisors retain significant rights and it pays to think through the implications before cashing in one’s 401K (or 201K) to take the plunge. As long as Main Street has an access to capital problem, franchisors will have a harder time adding franchisees. This will tempt them to generate revenue through direct sales regardless of its effect on existing franchisees. I would… Read more »

Gus Iurillo
Gus Iurillo
12 years ago

In adding to the conversation, I think the other folks raise some salient points about one of the challenges associated with owning a franchise. That said, as a mult-unit franchise owner myself and someone who assists people in exploring the franchise avenue, there is another side to this story. Most franchisors make every effort to help their franchisees maximize their success since their bottom line, in the form of royalty revenue, depends upon it. As Eric pointed out, you should absolutely know what the FDD permits both you and the franchisor to do and you should review this document with… Read more »

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Franchise Talk - Franchising News For Entrepreneurs
12 years ago

[…] the entire state, except for the Virginia Beach vicinity, where there is another franchise. Read on… Share and […]

Anne Kennon
Anne Kennon
12 years ago

Kudos for Alisha for turning what could have been devastating and making it something all her own! Her great attitude and customer service are what made CBD a success in Richmond. I have no doubt her new venture will surpass her old one! I also echo previous comments for her in complying with her non-compete – the only thing better than succeeding is succeeding while following all the rules!

Michael Lind
Michael Lind
12 years ago

What an incredible display of entrepreneurial spirit! Every business owner faces challenges on a daily basis but I’ve heard of few with the ability to reinvent themselves so quickly and, in this case, maintain such a positive attitude despite great adversity. Congratulations on launching your new business and best wishes for great success in 2010!

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West of the Boulevard News » Blog Archive » Cookies By Design- Changing Things Up
12 years ago

[…] to Richmond Biz Sense- Cookies by Design is no longer in Carytown — but fear not, sweet-toothed readers. Owner Alisha […]