To some, starting a business during the recent economic downturn might be an antidote for disaster.

But for Wilmington-based Giggles Drop-In Childcare owners Michelle and Zach Richards, it was the start of something new.

“We knew we were taking a risk,” said Zach, Giggles’ chief operating officer. “We knew that this could go really well, or end up really bad, but we were willing to take the risk.”

After giving birth to their first son, Michelle, then a science teacher at Ashley High School, quickly fell out of love with the idea of leaving her newborn at a day care for the majority of day.

“I just couldn’t do it,” said Michelle, Giggles’ CEO. “I knew once I returned to work in January, I would never see him … so I decided to not go back to work and became a part-time bartender.”

For Michelle and Zach, who was manning his own information technology-consulting firm, the rapid career change was a point of reflection to consider a new business model for child care in Wilmington.

“We realized that not all families need full-time child care and that a lot of families in town did not use drop-in [child care],” Michelle said. “We started talking about it at a higher level and came up with a model and goal that would exceeded child care standards … and that’s how it started.”

Named for the infectious laughter of their son, Trevor, the duo launched Giggles in 2008.
The newly formed company leased premium space in the Howe Creek office development on Military Cutoff Road for $22 per square foot, furnished its facility with equipment that resembles a scene from a Dr. Seuss book and hit the pavement to launch their new venture.

“I can’t tell you how many diapers I changed and how many hours we worked when we first opened,” Zach said chuckling. “It was a lot of hard work.”

And it’s hard work that may be paying off.

Since first launching more than three years ago, the firm’s profits have surged more than 30 percent, including modest gains in revenue during the Great Recession. The drop-in child care facility serves more than 2,500 families and continues to see steady growth year after year.

Now, the company will be franchising its drop-in child care concept across the country.
Purchasing a Giggles franchise will cost operators $25,000, and after opening, 4 percent of monthly gross sales will be paid to cover royalty fees, Zach said.

Potential franchisees also must have $70,000-$80,000 of liquid capital before being considered to purchase the brand. Zach added that Giggles’ partnership with BB&T Bank would also help potential franchisees with financing to further expand the company nationally.

“We certainly want whoever is going to franchise with our company to be financially solvent,” Zach said. “We’ve worked too hard to build this brand and company, and we want to make sure that it’s successful where ever it goes.”   

The concept appears to be taking off. A new Giggles will soon open in Alexandria, Va. this summer, and another is planned for metro Charlotte.

The company is working with other franchisees and Nicholas Silivanch, principal broker with Wilmington-based Team Silivanch of Coldwell Banker Commercial Sun Coast Partners, to identify additional locations in greater Wilmington, Charlotte, Fayetteville, Jacksonville, Asheville and Raleigh. The group is also identifying places in the boomburbs of Dallas-Fort Worth and northern Virginia.

“We are licensed in 43 states and are in the process of getting licenses in the seven remaining states,” Zach said of the franchise disclosure documents he crafted himself for the company’s expansion. “Our territories are selling like crazy. Our goal in five years is to have 50 franchises.” 

Michelle and Zach credit Giggles’ success to three major developments: the location of its facilities, high-tech solutions to curb parental safety concerns and competitive pricing.
By charging by the hour and offering flat monthly rates starting at $200, Giggles caters to families looking for a quick solution to their child care needs. The fee also includes snacks, though lunch and dinner costs an extra $4 each.

“We had a customer drop their children off wearing hair rollers, pajamas and slippers so she could return home and clean the house,” Zach said. “This is our niche. We provide a service to parents that want to have a date night and can’t find a babysitter or to a mother that wants to have a girls night or get their hair done.”

Zach added the firm also partnered with area fitness studios, spas and restaurants to increase its client base. It also offers assistance in other areas that can be difficult for some parents to handle on their own.

“We offer to help with potty training, speech therapy and after-school tutoring as well,” he said.

Parents also can monitor their children at the facility from a website, Zach said.
At its new locations, the group will begin providing electronic kiosks to improve registration at its sites.

“Parents will be able to complete the registration at the kiosk, print the forms off and hand them off to our staff,” Zach said.  

Establishing roots in high-end locations, like the Mayfaire area, is also a pivotal part of the group’s business plan. 

Recognizing the spending power of high-income households, the firm continues to identify locations like metro Charlotte’s Ballantyne and Matthews areas – locations where the average household nets more than $95,000 a year.

“It’s not that we are trying to cater to this particular segment of the population,” Zach said. “Giggles is a company for all, but you simply cannot deny the buying power this population has, so we opt to be in areas that have a high household income.”

Giggles will soon be relocating into 3,400 square feet of space in the phase two building of the Offices at Mayfaire development this month.

“We looked at a number of locations across the area, but decided to stay in the Mayfaire area,” Michelle said. “Mayfaire is becoming more and more of a destination for visitors and residents, and that’s good for our business.”

Plans call for their new digs to house multiple areas for various age groups and activities, including a “Big Kid Room” for older children that will include flat screen TVs, air hockey, a Nintendo Wii and a foosball table.

“A lot of the children look at the ‘Big Kid Room’ as a rite of passage,” Michelle said. “It’s been a big draw that keeps families bringing their children to us.”

Zach said Wilmington would continue to serve as the company’s corporate base, adding that as Giggles grows, the firm would need more corporate office space to accommodate support staff and training.

But despite Giggles’ growth, Michelle said making families feel welcomed and acknowledged continued to be a draw.

“We are very close with our families,” she said. “We call everyone our extended Giggles family … and that quality will continue as we expand.”