The Port City is gaining a reputation for valuable exports: winning business concepts, and these concepts are gaining traction through franchising.

While franchising requires extensive planning and expertise, it’s a means of expanding at less expense than through adding corporate locations. The advantage is that investors have skin in the game, but they also need a very detailed game plan.

“You’ve got to have a trademarked name, an operations manual and training program, a system in place, and you’ve got to be able to execute the concept,” said Greg George, a franchise professional who is working with the co-owners of Shuckin’ Shack to franchise their popular seafood eatery within and beyond the lower Cape Fear.

With successful operations in Carolina Beach and downtown Wilmington, Shuckin’ Shack entrepreneurs Sean Cook and Matt Piccinin turned to George as they debated casting their net into the franchising pool. George has a track record with Wilmington-area businesses, having spearheaded the franchise expansions of Port City Java and Fuzzy Peach.

“It’s not just that franchisees are making money; they are creating jobs,” George said.

“They are adding a lot of value to this community. There were 20,000 franchises sold
last year in the U.S. It’s all about these people finding opportunity for themselves.”

George said the area is full of homegrown concepts that have legs.

Giggles Drop-In Childcare is one example. Having seen its current location in Mayfaire blossom, it plans to drop into a second neighborhood.

Assuming leasing and financial arrangements are wrapped up soon, the Wilmington-based childcare business founded in 2008 expects to open a new facility in Monkey Junction by late summer or early fall.

“We are about at capacity at the Wilmington store on any given day,” said Giggles chief operating officer Zach Richards, referring to the company’s successful solo location
in The Offices at Mayfaire II on Parker Farm Drive.

Richards opened the location with his wife in early 2013, and it now serves about 3,300 families.

Giggles, which differentiates itself from traditional childcare centers with features like hourly rates, “date night” pricing and after-school pickup at elementary schools, chose the New Hanover County site for its second area facility based on demographics.

“They’re pretty close to Mayfaire” in terms of demographic appeal, Richards said of the bustling Monkey Junction area.

The Richards are optimistic that they can replicate their original location a few miles down the road because the company’s first franchise, which opened last September in Cary, has thus far exceeded expectations. 

“It’s been a great experience,” said Matt Durand, a Wilmington area entrepreneur who with his wife, Christyanna, ended up turning a profit at the Cary Giggles center in just six months. And volume is growing.

“The week of spring break was our busiest week, and then things just took off from there,” he said.

“We want to see how this summer plays out” before exploring a second location on the north side of Raleigh,” he added.

“I think that speaks volumes as to the business model that Zach has created,” said Nicholas Silivanch, principal broker with Wilmington-based Team Silivanch of Coldwell Banker Commercial Sun Coast Partners. Silivanch is helping the Richards identify potential franchise locations nationally.

George, who was lured to Wilmington in 2003 by a Port City Java co-owner when the company was ready to sell franchises, is using the knowledge he gained with the
coffee chain and Fuzzy Peach to make the Shuckin’ Shack rollout as successful as possible.

“You need to grow regionally. That’s what Shuckin’ Shack is doing; that’s what Fuzzy Peach did,” he said. “These locations do very well.”

George explained that it’s much easier to build brand awareness when franchises are clustered and customers are likely to see multiple locations. Conversely, when franchises are far-flung, they can suffer – both in terms of identity and corporate support.

That’s why Shuckin’ Shack is looking to site its next few eateries close to home, George said. Cook and Piccinin are negotiating with potential franchisees who are interested in establishing new Shuckin’ Shacks in Topsail Beach, Porters Neck and downtown Charlotte. The Charlotte franchisee plans to establish several locations in the metropolitan area, George said.

Two of the restaurant’s potential franchisees are retired military personnel, which George sees as no coincidence.

“To be successful with a franchise, you have to follow instructions. The biggest mistake franchisees make is trying to do things their own way. These military people, they know
how to follow instructions. That is why they are going to be highly successful.”

The Richards also have their business model and their physical model well defined.

The new Monkey Junction location will be about the same size as the 3,400-square-foot Mayfaire operation, have a virtually identical look and feel and offer the same types of services for children 12 months to 12 years, Richards said. The company expects to staff the center with six to eight people, compared to the eight to 12 now working at Mayfaire, depending on business volume.

Silivanch confirmed that negotiations are underway for the second location but declined to identify the specific site.

Of course, the key to a business that has legs is meeting market demand. George pointed out that Port City Java was ready to grow just as the boutique coffee wave hit. Similarly, Fuzzy Peach got in on the frozen yogurt trend at just the right time, he said, adding that Shuckin’ Shack, with its lean operations model and concept of serving steamed seafood in a sports bar atmosphere, has rung up sizeable profits from the beginning.

Giggles is at least chuckling all the way to the bank.

The Parker Farm Drive location recorded a total of 14,869 visits during 2013. Year-to-date, sales at the location are up 20 percent and are projected to reach $400,000 this year. The facility made $325,000 in gross sales in 2013.

“There are only about three (drop-in care) organizations that are nationally having any traction whatsoever,” Richards said, explaining why the couple has been so aggressive in formulating plans for out-of-state expansion.

Investors must prove they have ample startup capital, tender a $20,000 franchise fee and pay 4 percent of gross sales as a monthly royalty fee once a franchise is operating, Richards said.

The couple is hoping to ink deals for 100 franchises in up to 35 states within five years, but some locations have already been taken off the table.

Regulations setting conditions for drop-in childcare businesses vary quite extensively, not just from state to state but also from locality to locality, Richards noted. North Carolina, for one, requires that a parent must be reachable by drop-in staff and if needed must be able to return to the facility within 15 minutes, requirements that seem to work well. But “too much red tape” exists in some other states, Richards concedes.
One state on the Richards’ “thumbs up” list is Pennsylvania. According to Silivanch, Giggles is seriously exploring two locations around the retail-rich King of Prussia area just outside Philadelphia. Richards just conducted on-site due diligence and will return to the Keystone State in August to engage in state-mandated training before Giggles can open its doors there.

“We weren’t even looking at Philly,” he disclosed, saying that a couple researching on  the Internet for drop-in franchising opportunities contacted him first.

Other potential franchise locations teed up for a closer look include Asheville and Washington State, Silivanch said.

“We’re humbled by our success,” Richards said of Giggles’ ongoing growth.