Rocky Mountain Chocolate Factory, Inc., a Delaware corporation, and its subsidiaries
is an international franchisor, confectionery manufacturer and retail operator.
Founded in 1981, we are headquartered in Durango, Colorado and manufacture an
extensive line of premium chocolate candies and other confectionery products.
Our subsidiary, U-Swirl International, Inc. (“U-Swirl”), franchises
and operates soft-serve frozen yogurt cafés. Our revenues and profitability
are derived principally from our franchised/license system of retail stores
that feature chocolate, frozen yogurt and other confectionary products. We also
sell our candy in selected locations outside of our system of retail stores
and license the use of our brand with certain consumer products. There were
3 Company-owned, 96 licensee-owned and 272 franchised Rocky Mountain Chocolate
Factory stores operating in 40 states, Canada, Japan, South Korea, the Philippines,
the Kingdom of Saudi Arabia and the United Arab Emirates. U-Swirl operated 8
Company-owned cafés and 210 franchised cafés located in 38 states,
Canada, Turkey and the United Arab Emirates. U-Swirl operates self-serve frozen
yogurt cafés under the names “U-Swirl,” “Yogurtini,”
“CherryBerry,” “Josie’s Frozen Yogurt,” “Yogli
Mogli Frozen Yogurt,” “Fuzzy Peach Frozen Yogurt,” “Let’s
Yo!” and “Aspen Leaf Yogurt”.
Approximately 50% of the products sold at Rocky Mountain Chocolate Factory
stores are prepared on the premises. We believe that in-store preparation of
products creates a special store ambiance, and the aroma and sight of products
being made attracts foot traffic and assures customers that products are fresh.
Our principal competitive strengths lie in our brand name recognition, our reputation
for the quality, variety and taste of our products, the special ambiance of
our stores, our knowledge and experience in applying criteria for selection
of new store locations, our expertise in the manufacture of chocolate candy
products and the merchandising and marketing of confectionary products, and
the control and training infrastructures we have implemented to assure consistent
customer service and execution of successful practices and techniques at our
stores.
We believe our manufacturing expertise and reputation for quality has facilitated
the sale of selected products through specialty markets. We are currently selling
our products in a select number of specialty markets including wholesale, fundraising,
corporate sales, mail order, private label and internet sales.
U-Swirl cafés and associated brands are designed to be attractive to
customers by offering the following:
inside café-style seating for 50 people and outside patio seating, where
feasible and appropriate;
spacious surroundings of 1,800 to 3,000 square feet;
16 to 20 flavors of frozen yogurt;
up to 70 toppings; and
self-serve format allowing guests to create their own favorite snack.
We believe that these characteristics provide U-Swirl with the ability to compete
successfully in the retail frozen yogurt industry. While U-Swirl continues to
pursue locations with the characteristics described above, we recognize that
its acquisition strategy may lead U-Swirl to purchase competitors with diverse
layouts.
The trade dress of the Aspen Leaf Yogurt, CherryBerry, Yogli Mogli, Josie’s
Frozen Yogurt, Fuzzy Peach, Let’s Yo! and Yogurtini locations are similar
to that of U-Swirl, although their locations use different color schemes and
are typically smaller than the U-Swirl cafés.
Our objective is to build on our position as a leading international franchisor
and manufacturer of high quality chocolate, other confectionery products and
frozen yogurt. We continually seek opportunities to profitably expand our business.
To accomplish this objective, we employ a business strategy that includes the
following elements:
Product Quality and Variety
We maintain gourmet taste and quality of our chocolate candies by using only
the finest chocolate and other wholesome ingredients. We use our own proprietary
recipes, primarily developed by our master candy makers. A typical Rocky Mountain
Chocolate Factory store offers up to 100 of our chocolate candies throughout
the year and as many as 200, including many packaged candies, during the holiday
seasons. Individual stores also offer numerous varieties of premium fudge and
gourmet caramel apples, as well as other products prepared in the store from
Company recipes.
Store Atmosphere and Ambiance
We seek to establish an enjoyable and inviting atmosphere in each of our stores.
Each Rocky Mountain Chocolate Factory store prepares numerous products, including
fudge, barks and caramel apples, in the store. In-store preparation is designed
to be both fun and entertaining for customers and to convey an image of freshness
and homemade quality. Our design staff has developed easily replicable designs
and specifications to ensure that the Rocky Mountain Chocolate Factory concept
is consistently implemented at each store.
Site Selection
Careful selection of a site is critical to the success of our stores. We consider
many factors in identifying suitable sites, including tenant mix, visibility,
attractiveness, accessibility, level of foot traffic and occupancy costs. Final
site selection occurs only after our senior management has approved the site.
We believe that the experience of our management team in evaluating a potential
site is one of our competitive strengths.
Customer Service Commitment
We emphasize excellence in customer service in our stores and cafés and
seek to employ and to sell franchises to motivated and energetic people. We
also foster enthusiasm for our customer service philosophy and our concepts
through our regional meetings and other frequent contacts with our franchisees.
Rocky Mountain Chocolate Factory holds a biennial convention for franchisees.
Franchisee Sourcing and Selection
The majority of new franchises are awarded to persons referred by existing franchisees,
to interested consumers who have visited Rocky Mountain Chocolate Factory stores
and to existing franchisees. We also advertise for new franchisees in national
and regional newspapers as suitable potential store locations come to our attention.
Franchisees are approved by us on the basis of the applicant's net worth and
liquidity, together with an assessment of work ethic and personality compatibility
with our operating philosophy.
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